Many millennials have a yolo attitude towards retiring. As a millennial myself, I enjoy spending my savings on things within my reach, rather than saving for something that is so far in the future that I can’t even envision it.
Perhaps this mentality is common amongst millennials. We spend most of our youth studying hard to get decent grades in order to find a stable job. And, when we finally achieve the stability that we have been working towards, we have to start planning for our retirement. Who really has time for that?
Besides, it’s not like we’re gonna need a lot of money while retired, right?
Do The Math
Unfortunately, according to Channel NewsAsia, the average retiree will need to spend about $1,200 a month, despite being retired.
Which actually works out to quite a bit in the long run.
Let’s do the math.
If you retire from the age of 62 and live to the average life expectancy of 82.8 years, you will be in retirement for almost 21 years.
That comes up to almost $300,000 that you will need to retire. That’s a LOT of dough.
Bear in mind that the Ministry of Manpower states that the average Singaporean earns about $4,000 a month, so almost 30% of your monthly income will have to be put aside for retirement savings.
And that’s only to get by!
So if you plan to spend your retirement years laying on the beach at Sentosa sipping on cocktails or playing mahjong with your kakis you should probably start saving. Now.
Because according to The Straits Times, if you want to be in the top 20% and enjoy your retirement, you will need $4,120 a month instead.
According to Channel NewsAsia, 6 out of 10 Singaporeans only start saving for retirement in their 40s. Because of this, 33% of retirees are worse off after retiring and don’t have enough saved.
Perhaps most millennials don’t like to think about growing old, let alone plan for old age.
It Gets Worse
In case you thought the worst part was how much money you have to save, it only gets worse.
You are mistaken if you thought it all comes down to putting aside a portion of your monthly income. There are other unforeseen circumstances that can potentially affect how much money you will have when you retire.
Let’s look at some of them.
1. Life Expectancy
As technology improves, life expectancy will inevitably increase. This may lead to an increase in people who have not put enough money away for their retirement because they don’t expect to live as long.
Looks like people only expect to be around for a good time, not a long time.
But what if we are the next Jeanne Louise Calment, who lived up to 122-years-old?
Okay maybe not, but we would be caught in a major pickle if we lived past the average life expectancy of 83 without any savings to tide us through.
The future is obviously unpredictable, but factors like inflation make it even more so.
According to Seedly, car prices have hiked 300%, while the price of food has increased 100-200% between the 90s and 2010s. Don’t forget, we’re also the most expensive city in the world, 4 years running.
Who knows? By the time you retire, a plate of chicken rice could be $10. This could mean that even if you save up the $300,000 recommended average to retire, it may not even be enough in the foreseeable future.
Your CPF contributions as well as potential investments, or even endowment plans can help make the transition to retiree smoother. Unfortunately, it’s not possible to ensure that the future will happen exactly as you envision.
Even if we consider CPF monies, members can only receive predetermined payouts based on the balance in their Retirement Account. This figure starts from $700 a month.
A good place to start when it comes to having enough for your retirement is: start saving, even if it seems like you’re only going to retire an eternity from now. Don’t wait until your mid-40s.
It’ll be too late by then to think about retiring comfortably if you haven’t started saving by then.
Between paying the bills and caring for our parents, we already have enough to worry about. Sheesh.