Never underestimate the power of consistent saving and compounding. 1k a month with 5 percent return for 20 years yields close to 400K versus 240K of capital investment.
400k gives you 20k annual income which is 1.5k per mth based on 5 percent return.
Together with CPF life which gives around 2k per mth, monthly income will be 3.5k. By the time we retired, we should aim to be debt free. Hence 3.5k is purely for our own expenses for food, clothing utilities etc which appears to be adequate based on my personal experience. How much you can eat per mth? You don’t buy clothes every month also? Public bus and mrt is relatively cheap. There will be adequate leftover for that yearly trip to overseas.
All the figures are nominal, if we assume 3 percent inflation over 25 years, our spending power will be halved. So the retirement income figures above will be essentially halved as well.
What does this means? Start saving now and aim to save more to Ensure adequate retirement income. Minimise debt and refrain from chasing the latest car or condo. Live below your means or at least don’t spend beyond your means. If you can save at least 1k cash per month, you can achieve the basic. Retirement life style. If u save more, you can do more.
Please plan early.... don’t forget hospital insurance such as MediShield life enhance coverage and life insurance policies. If you are the Passive person who is not interested in investing, a couple of endowment funds will help. They give around 3 percent return . So you need to save even more.
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