Are We Ready To Retire In Singapore:

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?

In the last article, we looked at various infographics regarding Singaporean’s readiness for retirement. All of us have dreams and goals which we worked hard for but do we all attain these dreams? The survey done by HSBC shows that 81% of Singaporean retirees have been unable to realize at least one of their dreams.

Being unable to attain our dreams is one thing but 27% of retirees are compelled to continue working part-time to maintain a comfortable lifestyle and another 15% of retirees continue to work because they cannot afford to retire full time.

We all dream that when we retire we will be able to do everything we ever wanted to do. But the reality is that without the benefit of having a financial plan, realizing our dreams could become more distant than we thought when we stop collecting our monthly pay checks. The bigger our dreams, the more planning and strategizing is needed.

This learning prompted me to question myself: 

• What are my dreams for retirement?
• Have I planned adequately for my retirement?
• How much do we need to retire?
• How do I start to build my retirement fund?
• How do I build a passive income to fund my retirement?

It is never too early to start planning for retirement. If I could start all over again, I would start building my retirement fund from my first paycheck.

What about you?