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4 Retirement Planning Facts That Singaporeans Get Wrong About Retiring In Singapore

Retirement planning is always such a polarizing topic among Singaporeans.

Those who are currently in the retirement phase tend to regret that they did not start planning for retirement earlier. As such, they are constantly reminding the younger ones (e.g. children, grandchildren) to start planning for retirement early.

On the other hand, younger Singaporeans are still in the honeymoon phase and enjoying their life with little concern about whether they are able to afford retirement or not. Are the younger generation in Singapore getting it all wrong for retirement? Or is it that the older generation are overly concerned?

  1. Singaporeans Don’t Know The Exact Cost of Retirement

To find out about some of the retirement misconceptions that are held by Singaporeans, Straits Times partnered with OCBC Bank to survey Singaporeans about retirement lifestyle and the cost of retirement in an online survey named “Life Goals”. Here are some of the key findings from the OCBC Life Goals survey.

In the OCBC Life Goals survey, they found that 1 in every 2 Singaporeans do not know the actual cost of retirement. This means that half of the 5,000 participants underestimated the monthly expense needed for very down-to-earth retirement living choices, i.e. home cooked food, living in HDB and taking public transport.

Retirement Lifestyle
Monthly Expense
Basic –

·       Home cooked food/hawker food

·       Public transport

·       Live in HDB

$2,300
Intermediate –

·       Basic retirement lifestyle +

·       Car

·       Part time domestic worker

$2,900
Affluent –

·       Restaurant dining

·       Car

·       Full-time domestic worker

·       Lives in private property

$5,200
What’s Wrong With Not Knowing The Cost Of Retirement?

Underestimating the cost of retirement can have serious implications. The biggest one being that you will end up not having enough money to cover for your monthly expenses in your retirement years.

Thus, the first step towards retiring is to get the amount you need for retirement right. However, getting that number right is not easy, especially if you are not a financial planning expert. But not to worry, we have a team of retirement planning experts at Moneyline.sg that will be able to help you get that sorted. Get in touch with us today and we can do a free, comprehensive retirement planning roadmap for you.

  1. Singaporeans Think That Retirement Means All-Day At The Beach And No Work

The word retirement always come with the visual cue of laying on the beach and enjoying your tequila. Well, that is the ideal retirement that many of us would die to have. However, the reality is far harsher.

In fact, if you had underestimated the cost of retirement (see point 1 above), there is no way you can put down your work and retire at the beach with your tequila. Rather, you will still be slogging away at your day job to meet your monthly expenses until the day where you will be able to afford the no-work-beach-only retirement life.

Another perspective to consider is whether the no-work-beach-only retirement life is for you. Nobody ever dictated that you must stop working when you retire. Instead, retirement presents an option for you to step away from the hustle and settle in a job that you are passionate about. So, if the no-work-beach-only retirement life is not for you, then don’t conform.

  1. Retirement Planning Can Wait Till You Are In Your 40s

Delaying and pushing back stuff in your life is not uncommon. For a lot of matters in life, you can delay and push them back. However, when it comes to retirement planning, it is not something that you want to delay and push back. And here’s why.

There are three factors that will determine whether you will have enough savings for retirement: Time, savings rate and investment returns.

If you have a high savings rate and modest investment returns on your savings, then you don’t need much time on your side. You can wait till you are in your 40s to start your retirement planning. However, leaving a short runway to accumulate your retirement savings just creates more stress for yourself.

Target Retirement Savings
Time
Savings Rate
Investment Returns
$1,000,000+ 40 years $1,000 per month 3.5%

(based on Straits Times Index annualized return over the last 10 years)

30 years $2,100 per month 2%
20 years $4,000 per month 1%
10 years $8,000 per month 1%
What’s Wrong With Waiting Till You Are In Your 40s To Plan For Retirement?

Technically, nobody will fault you for waiting till you are in your 40s to plan for retirement. However, here’s the risk. The later you plan for retirement, the higher your chance of failing. Since the goal is to enjoy your retirement life, why set yourself up for failure? Why don’t you give yourself more time so that you will have more buffer on the savings rate and investment returns?

Start your retirement planning early with Moneyline.sg with the best retirement plans that help you improve your investment returns and savings rate.

  1. You Don’t Need Insurance Once You Retire

Insurance is a means of financial protection against an unexpected event. Although you have less liabilities to take care of while you retire, it doesn’t mean that you have no liabilities at all. Thus, insurance is also important even when you retire.

For instance, the risk of falling ill during your retirement years increases steadily with age. Falling ill will not only make you uncomfortable, but it will also add financial burden to your retirement savings. In the worst case scenario, the medical bills can be so high that it can even disrupt your retirement plans.

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