These youngish S’poreans have epic retirement plans & don’t know how much it costs

These days, Singaporeans have the longest life expectancy in the world, with one in two Singaporeans living beyond 85 years old.

What’s more, a CPF Board survey in 2019 also revealed that four in five Singaporeans want to maintain their current lifestyles during retirement.

As such, this raises the following question:

How much do you need for your ideal retirement plan?

It’s not a stretch to say that everyone has a dream plan in mind.

We asked some of our fellow colleagues about theirs and how they intend to achieve them.

To retire on a farm at 50

Daniel, aged 29, male

Planned age of retirement:

• 50

Desired monthly income for retirement:

• S$2,000

How long do you think you will be retired for?

• 30 years on a piece of farmland bought overseas, where I’ll build a ranch, and live off the earth surrounded by free-roaming livestock.

Plans that you have taken to start planning for retirement.

• I have done some financial planning (in consultation with several financial advisers) to work out a realistic savings/investment plan that is sufficient to sustain me in my retirement years.
• I have also begun committing resources to actually implementing said savings/investment plan, which is essentially forced savings/investment of close to
• $1,000 a month, every month for 25 years till I retire.

What will you watch out for to ensure that your plan is realistic?

• I will have to be sensitive to market trends which may impact the value of money or the value of my investments, as well as be conscious of my lifestyle and spending habits.

What are your plans if you live beyond your expected age of retirement?

• If my own savings and investment plans are fully exhausted by around that time, I will likely have to scale down on my lifestyle and rely on what I get from CPF LIFE.

How much he needs to set aside based on his plan:

• S$720,000 (S$2000 x 12 months x 30 years) 

How to achieve this?

• Set aside S$360,000 (S$2,000 x 12 months x 15 years) to provide his desired monthly retirement income from 50 to 65 years old.
• Ensure that he sets aside the current Enhanced Retirement Sum (ERS) of S$264,000 in his CPF Retirement Account at age 55 years old. He will then receive a steady stream of monthly payouts of around S$2,110 from age 65 for as long as he lives. This also means he does not have to worry about running out of his retirement savings.

To work until 70

Melanie, aged 25, female 

Planned age of retirement:

• 70. I want to work for as long as I can. #lifelonglearning 

Desired monthly income for retirement:

• S$3,000

How long do you think you will be retired for?

• About 10 years. I'm afraid of being bored or lonely. If I have the money, I would want to travel the world with my partner (if I have one) or spend time with my grandkids (if I have them), and catch up on my hobbies!

Plans that you have taken to start planning for retirement.

• I have three savings plans at the moment. I have been saving up a sum of money every month to put into each of these savings plans.

What will you watch out for to ensure that your plan is realistic?

• Inflation, rising costs of living as well as rainy days like retrenchment or even health problems. I will probably have to moderate some of my current lifestyle habits and save more too, in addition to upgrading my own financial knowledge.

What are your plans if you live beyond your expected age of retirement?

• Go back to work if I need the income. I would probably work part-time in a less stressful environment, if my health permits. But this also depends on whether or not I have a partner or children to take care of me.
• If I go back to work because I need the money, I don't think I have much of a choice in deciding whether or not I will work till I die.
• If I'm too old to work, I will probably look into saving or investment plans that are currently in place for senior citizens and see if I can get returns on my existing money from there.

How much she needs to set aside based on her plan:

• S$360,000 ($3000 x 12 months x 10 years) 

How to achieve this?

• To achieve her desired retirement income, she can set aside the current ERS of S$264,000 in her CPF Retirement Account at age 55 and defer her monthly payouts to 70. She will receive around $2,600 per month for as long as she lives.
• To get an additional $400 per month for 10 years, she’ll need to set aside $48,000 in savings.

To be a travel writer 

Andrew, aged 26, male 

Planned age of retirement:

• 60

Desired monthly income for retirement:

• S$2,500 per month.

How long do you think you will be retired for?

• 20 years, but I would continue to do freelance work that I enjoy, like writing. Other than that, I'd love to get a caravan, and travel around. Australia or New Zealand would be cool. Or even Southeast Asia. Travel and write about it. That would be great.

Plans that you have taken to start planning for retirement:

• I've bought insurance plans and I’m going to buy savings plans.

What will you watch out for to ensure that your plan is realistic?

• I haven’t actually thought about it in detail. But I have talked to friends who are insurance agents and they've given me some tips to look out for. I guess thinking about how much I'll realistically be spending at that age helps.

What are your plans if you live beyond your expected age of retirement?

• I don't intend to work again after I retire. I intend to enjoy life and stretch what savings I have by living simply.

How much he needs to set aside based on his plan:

• S$600,000 ($2500 x 12 months x 20 years) 

How to achieve this?

• If he sets aside the current ERS of $264,000 in his CPF Retirement Account at age 55, and defer his monthly payouts to 68, he can receive around $2,500 per month for life! Alternatively, he can also start his monthly payout from age 65 and get around $2,110 per month.

To travel around the world, including war zones

Jason, aged 25, male 

Planned age of retirement:

• 65

Desired monthly income for retirement:

• At least S$2,500, given how much the cost of living will increase. How long do you think you will be retired for?
• 20 years. I will probably sell my house and travel the world. I have a life goal of travelling to every country in the world, so I will likely leave the most dangerous countries till the end of my life. My ideal retirement will be dodging bullets in some war zone in Syria, overjoyed that I have finally done it.

Plans that you have taken to start planning for retirement.

• I do not think I can retire before 65; given increasing lifespans, I am not sure how realistic that is. In general, I intend to get my income through a mix of investments and savings, as well as family inheritance.

What will you watch out for to ensure that your plan is realistic?

• I will definitely try to watch my spending; after all, no amount of savings would help if I spend without thought. I would also pay attention to my investments, in order to ensure that I am not taking on too much risk. This is particularly true when I am older, where I cannot afford the risk.

What are your plans if you live beyond your expected age of retirement?

• I hope to have a conservative savings plan, such that I will have enough money post-retirement to live past my expected time of death. In the unfortunate scenario that this does not happen, I will likely be open to working for as long as I am healthy. 
• If my finances are still in shambles then, asking for help from my family could be an option, though I prefer not to, as I believe that I am responsible for my own retirement.

How much he needs to set aside based on his plan:

• $600,000 ($2500 x 12 months x 20 years) 

How to achieve this?

• Same as his colleague above -- he can start his monthly payout from age 65 and get around $2,110 per month for life (if he sets aside the current ERS of $264,000 at age 55), so he will not have to worry about running out of his retirement savings and becoming a burden to his family.

So… does this mean I need a lot of money to retire?

One oversight that our colleagues have, is that they are planning based on a retirement period of 10 to 20 years.

However, no one can predict when we will pass on, and with increasing life expectancy, the reality of us living longer is real. 

If the statistics are anything to go by, we should plan more carefully so that we don't run out of money.

CPF LIFE helps to address such concerns

You would also have noticed that the term CPF LIFE pops up pretty often in our calculations.

This is because this annuity helps to address the aforementioned concerns, by making sure that you will receive a regular stream of income for as long as you live.

Find out how the calculations in this article were done, and use tools by CPF to plan for your retirement here.