"I can retire just with my cash & CPF savings, simple as that!"

many of us wish our lives could be simpler now and in the future.

Unfortunately, as the world becomes more complex and uncertain, we cannot stand by the sidelines and wait for things to happen to us.

In my experience, no one has ever told me they can just switch into retirement mode without some form of planning.

I understand, you may feel burdened by the idea of having to plan for retirement, thinking it involves a lot of number crunching and projecting numerous possibilities.

Not to mention the things we have to worry about during retirement, such as long-term healthcare costs, lifestyle inflation, and possible market downturns.

My dad just turned 70 this year! Thankfully, he is blessed with good health. Despite his age, he continues to work and just signed a 1-year contract with the company he has worked at for over 40 years!

I asked him why he doesn’t want to retire despite having enough savings to last him a lifetime. (I did the calculation for him, assuming long-term inflation of 2.5% per annum. With all his assets, he can draw down twice his current salary for 30 years and still have some left over, kudos to him!).

He shared that he didn’t plan what he was going to do when he retires.

I guess that is one aspect many of us may neglect as well. Hence, retirement planning is not just about the numbers, though that may be important too.

Now back to the part about retirement planning: How much money do you need to retire?

It seems like a simple question, but for most of us, it’s a trick question because there is no quick answer. There are many variables to consider when planning for retirement and setting retirement goals.

Here are 2 simple questions you can ask yourself to help calculate your retirement numbers briefly:

1.How much monthly income do you need for retirement?

Generally, it's advisable to aim to replace 70% of your current income as the indicative retirement income you need, excluding 20% CPF contributions, income taxes, and mortgage payments.

• Assuming 70% of your current income is $4,000 per month:
• $4,000 x 12 months = $48,000 annually
• $48,000 x 25 years = $1,200,000

This means that to stop earning new income, you will want to have saved 25 times the amount you expect to need every year in retirement.

2.At what age can you currently retire?

Take $1,200,000 as the amount you need to save, and subtract the savings you have today.

• Assume you have saved $200,000 (excluding your CPF OA & SA balance):
• $1,200,000 - $200,000 = $1,000,000 (Your target)
• If you are 40 years old, assuming a growth rate of 4% per annum, your $200,000 will be worth $533,167 by age 65.
• $1,000,000 - $533,167 = $466,833
• Assume you can save $30,000 per year: $466,833 / $30,000 = 15.6 years

If you’re 40 now, you could retire at 55, provided that you can save $30,000 per year.

But remember that this is just an estimate, and there are more caveats. Inflation will eat into your savings, but investing your savings may help offset that along the way.

"Saving up for retirement gets easier when you start early."

Got your retirement numbers?

I use a software called Goalsmapper to chart out your future retirement income so we can identify any future shortfall that we can address today. Refer to the chart below, a sample retirement projection done for a client.

If you would like to experience and chart out your future retirement, please reach out!

Working longer to afford retirement is not a strategy!

Zest Chia

Executive Wealth Consultant | Associate Estate Planning Practitioner |

Licensed General Insurance Advisory

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