S$1,379 monthly to meet basic needs

This is the amount that a recent study done by the National University of Singapore’s Lee Kuan Yew School of Public Policy found to be necessary for basic retirement after 65 years old. S$1,379 a month for a single elderly and S$2,351 a month for a couple.

While I suspect that the study was done to help government policy in meeting the needs of our graying population, this is useful for us as well. It will form a basis of what we need for retirement.

Statistically speaking, in Singapore, males would be able to lead healthy lives till 73 and live till 79, while females will have healthy lives till 78 and live till 84. If we retire at 60, that will mean that we have 13-18 years of good health to enjoy our golden years before our health deteriorates. The news article is here.

Let’s say that we want a bit more than S$1,379 and desire a S$3,000 per month payout from when we are 60 to say 90, how much do I need? With a 4% annual rate of returns on our investments, we need $634,000. That is not a small amount. But with the right planning, it is achievable. And it is easier the earlier we start.

On the other hand, if we plan to retire at 65, Singaporean can rely on the CPF Life annuity plan. More information is on the CPF Life website. As you can see, it is not too bad and achievable. At this point, we must remind ourselves to think long term and with just a little foresight and planning, we can achieve a peace of mind. Just in case you are not familiar with what is a life annuity plan, it is an insurance plan which turns your savings into a monthly payout for the rest of your life. So the longer you live, the more you get paid. It is basically a guaranteed income for life, like a pension. To me, this is a peace of mind that is worth every cent since you need not worry about an income or your savings running out. I cannot think of anything worse than to run out of money and living a miserable life, where each day is spend worrying about the next day.

Of course, if you are like me and want to achieve financial independence earlier (so that we are not dependent on holding to a job), a bit more thought will be needed. Baby steps along the way.