This article was recently published on and is reproduced with permission. Currently managing a personal portfolio of more than SGD $450,000, the blogger (aka Cedric) aspires to have an average cash flow of a minimum $2500 per month either through realised capital gains or dividends. He is in his early 30s and has been passionate about investing since 2003. He lives in a 4-room HDB flat and dreams of becoming a millionaire - and is now pursuing a Masters in Applied Finance. He invests in a variety of instruments such as unit trusts, stocks and foreign currencies -- mainly Australian dollars and Japanese Yen.

"In my workplace, I see many people earning high 4-figure salaries but do not have much savings." Photo: Internet

Many close friends often label me as a salty man. This has a negative connotation because in Hokkien context, it is “kiam” or scrooge in English.

However, when I explain my rationale to them, suddenly they realize they either be prepared to work past 55 or be better off being more salty.

In today’s competitive workplace, there are not many people willing to work past 55, even if they are able to. Perhaps it is due to the increased pace of life and work pressure, many people just find it too stressful to cope beyond 55.

The problem is exacerbated if one has ailing parents, growing kids and mortgages to repay monthly.

Most people don’t retire at 55 simply because they cannot afford to do so, not because they choose not to.

Let’s work some simple figures. Most Singaporean men with university degrees start work at 25. If they aim to retire at 55, they have 30 years of working life. 

Assuming life expectancy of 85, they have another 30 years of income-less life to sustain after retirement.

For the retirement savings we put aside, we need to grow it at least at the prevailing 5.7% inflation rate in order to sustain the same kind of lifestyle when we retire.

CPF savings only grow 2.5% per annum, which is grossly not enough to cover inflation. Even if it is enough, most likely it is depleted to purchase HDB homes which easily cost $500,000 today.

Let’s assume again a modest lifestyle of $2,000 per month for a single person at age 55. This works out to be $2,000 x 30 years = $720,000 cash balance in today’s dollars. The amount will balloon to $900,000 if the single person requires $2,500 a month for the next 30 years.

If we factor a conservative 4% inflation, today’s $720,000 will be worth $2.34 million (future value) in 30 years time.

The same 4% inflation will make $900,000 today’s dollars worth $2.92 million.

It simply means that you need $2.92 million in 30 years time to buy something worth $900,000 today if inflation is 4%.

In order to enjoy the same modest lifestyle of $2,000 to $2,500 per month, the individual who retires at 55 needs to set aside between $2.34 million-$2.92 million for him to call it quits at age 55, 30 years later.

What if the individual lives beyond 85 and what if he can't invest his retirement funds at the prevailing inflation rates? Then, he probably needs to sell off his house.

Most Singaporeans who buy houses today stretch their loans to 35 years. This means that a 30-year-old couple will need to service their loans till they reach age 65 before they finally own their homes.

There are no prizes for guessing why the government is stretching the retirement age.


If you have a spouse, the savings required for retiring at 55 would be $720K x 1.5 (or 2). NextInsight photo

Some other observations I made are as follows:

(1) Most singles probably spend more than $2,500 a month, even if they earn just this much.

(2) Most people at 55 now do not have $720,000-$900,000 to lead a worry-free life up to age 85. What makes you think we can achieve the equivalent amount in future value 30 years later?

(3) Medical costs and inflation rates are at higher than 4%.

(4) You need to earn a minimum of $5,000 a month, save $2,500 a month and invest this sum at the prevailing inflation of at least 5% consistently for the next 30 years in order to retire at 55.

(5) The sums required may increase 1.5x to 2x if you have a partner. If you have kids, you need to pray that they give you some allowance if you have not achieved the required sum by age 55.

(6) You cannot afford to be retrenched or your retirement age has to be stretched even further.

(7) You cannot depend on your CPF savings for retirement if you have bought a house.

In my workplace, I see many people earning high 4-figure salaries but are known to not have much savings. They take for granted that their health, wealth and career will always be smooth sailing.

Let’s not be pessimistic about life but admit the fact that we can’t afford to retire if we are not prepared for it.

And I am not kiam, just getting prepared :)

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#9 Richie 2012-01-18 04:41
Richard, can't be that inflation is 10% p.a. It's about 5% last year, and 2-3% in recent years. Retiring in neighboring countries (Msia, Thai, Viet) actually is a good idea from economic pt of view, provided you can easily adapt and can make friends there.
+1 #8 Richard Lim 2012-01-17 10:00
Most Singaporean would be retrenched by the time they reach 45 to 50 years of age. Most of my friends even those with MBA degrees were retrenched by the time they hit 50. Due to the shorter economic cycle, holding onto the current job is a major problem for most.With inflation running @ 10% your 750K at today dollar will only be left 75K in ten years time. The only option for most Singaporeans is to downsize and shift to neighbouring countries where the cost of living is cheaper.
#7 bull market 2012-01-17 09:08
if you have passion in your work, it is already holiday everyday. So the concept of retirement is meaningless in this context.

And if you have passion in your work , then even the concept of money become somewhat meaningless.
+1 #6 Ow 2012-01-16 03:09
Don't forget we have Minimum Sum in CPF @ $131,000 at age 55. It's all cash unless you over-stretch on your property investment which will be auto-pledged anyway to cover the Min Sum. The Min Sum can be drawn down in equal instalments from age 65.
-1 #5 Dontbelazy 2012-01-15 23:45
We should be happy to work past 55 to even 70. Retirement creates too many problems - a lack of direction in life, a drastic reduction in social circles, incredible boredom, and a loss of identity. Unless you have a charity/volunta ry cause to contribute to. Or a non-commercial passion such as a hobby or an outdoor pursuit.
#4 GreenrOokie 2012-01-15 09:50
I see myself going for semi- retirement at 60 thereafter working till I die. I will work if I am able to till I die.. I wouldn't want to wake up in the morning counting my pennies and asking when is my time up. I prefer to prepare enough so that I would not be a burden to my loved ones by buying insurance and having enough savings but at the same time, lived my life to the max by showering love and generosity to those around me then saving for a comfort retirement just for myself
#3 ricky 2012-01-15 08:57
its just standard textbook theory that you need X amount to retire blah blah... why on earth you need the same amount of money when you are old..there are many possibility: like your kids can provide you a lifetime allowance like what many are today; think you do not need a 4 room flat for two old couple; and you can just do a reverse withdrawal and spend your money till you about to die..why leave your money reserve for your children ?
#2 Belle 2012-01-15 07:51
One could also downgrade one's home (if it's bigger than needed). Nowadays, too many people keep upgrading their homes & stretching their $ to do so. The time will come when the children have grown up and moved out and it's ok to get a small place.

Terrace > Condo
Condo > smaller condo
5-room HDB > 3/4 room.

It all depends on one's lifestyle expectations and weighing that against one's actual savings for retirement.
#1 Advan 2012-01-15 03:38
Thank you for the insights -- so if I retire at 62, it would be $2K x 12 months x 23 years of retirement = $550,000. This is easy-peasy. Then it's a question of the 2K being more generous -> let's say $3K. Of course, all these numbers have not factored in inflation. Neither have they factored in a less demanding lifestyle as one reaches 70s and 80s -- no more holidaying in far away places, less frequent eating out at restaurants, etc. On top of that, children would be able to contribute pocket $. As you can see, there are many variables so the estimtate for retirement savings that are needed are not so straightforward . Any retiree here who can share real-life experiences?

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