For that matter, a retirement that's perfect for you may be either too simple or too extravagant for someone else! Everyone has different financial needs and standards of a comfortable post-retirement lifestyle.
Here are FOUR factors to help you formulate an amount that might be sufficient in your retirement include:
1. What's your style?
The kind of lifestyle you'd like to lead in your retirement will help to determine the necessary retirement income to sustain it. For instance, do you plan to stay home most of the time, or is it your longtime dream to travel, socialise often with friends over expensive meals or buy luxury items? And don’t just budget for these; you'd need to multiply the figure by the current going inflation rate to estimate what you'd need to have in 20 or 30 years when you retire.
2. How many years do you expect to live in retirement?
While this might be difficult to predict, start with this fact: Singaporeans are living longer. According to Singstat (2013), life expectancy for females is 85 years, and 80 years for males. Naturally, the longer you expect to live, the more money you'll need.
3. Will you have outstanding liabilities or loans?
If you still have mortgage and car payments to fulfill during retirement, it will also affect the overall amount you'll need to either save or have at your disposal in terms of payout or income. Knowing your exact outstanding loans will help in your decision to purchase solutions that would assist you in clearing these loans while still leading the kind of life you wish to have.
4. Inflation rule of thumb
In Singapore, inflation is high and can make a big difference to your nest egg, so it's important to factor this in when calculating your retirement goal. Assuming a flat inflation rate of 3% per annum, in 20 years time, $100,000 will only be worth around $55,000!
Confused about calculations?
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