Are We Ready To Retire In Singapore? (Part 1)
When we are young, we don’t want to think about getting old and retirement is an unfamiliar word in our vocabulary. Like it or not, we will all have to retire one day. Most of us are so busy with our daily lives that we ignore to plan for the future. But the day that you have to stop working will arrive sooner than you think. Are we ready to meet retirement?
All of us have different aspirations and different pictures of what retirement looks like but fundamentally we all want to be cash available and financially independent and very importantly to have good health to enjoy our retirement. Am I correct?
A recent study by HSBC shows the varying dreams of Singaporeans. Is this your dream too?
As Singaporeans live longer, we will all need a steady stream of retirement income to meet our living expenses. Statistics have shown that today, 1 in 2 Singaporeans aged 65 is going to live to age 85 and 1 in 3 is going to live to age 90 and beyond.
Assuming that we stop working at age 65 and without any additional income from then on and with the average life expectancy of Singaporeans to be at age 84, we will need to build a savings/retirement fund that can support our lifestyles for another 19 years minimally, assuming that we are also adequately insured medically.
This study by HSBC also indicates that more than 36% of working-age Singaporeans are not adequately prepared for retirement and 42% of pre-retirees haven’t started saving early enough.
Let’s study the chart above: We can segment our lives into 3 distinct stages. Ages 0-25 is typically where we build our life foundations through learnings, studies, and discoveries. Ages 26-49 is the most appropriate period for most of us to create and grow our wealth as we should be peaking at our career and also importantly, eligible for bank loans. During this period, we all work hard so that we can be ready for the next stage of our lives: retirement. From age 50 onwards, most of us hope to be financially independent including wealth preservation and preferably generating passive income.
Living a retirement life doing the things we love and having enough money to enjoy our passions is a dream we can all achieve, given proper planning.
Are we ready?
“Blessed is the man who trusts in the Lord, And whose hope is the Lord. For he shall be like a tree planted by the waters, Which spreads out its roots by the river, And will not fear when heat comes; But its leaf will be green, And will not be anxious in the year of drought, Nor will cease from yielding fruit.