Should I plan for my retirement now?
Most of us think that saving for our retirement can wait. For the young ones (like me :P), we're busy saving up for our upcoming BTOs, wedding, children etc. With these impending life stages, should I plan for my retirement now? At age 25?
To help me answer my question, I'll be using the DBS Retirement Planner which I chanced upon when doing ibanking and answer the following questions:
1. When would I want to retire?
- Honestly, IDK. The thought of working for another 40 years, till 65, make me quiver. Yet, the reality is that, without income, my family and I would find it hard to survive in this world. Also, I'm not entrepreneurial and could imagine myself in my 9-5 office job foreverrrrr....So, 65 shall be the age I envision myself to retire!
2. What is my desired monthly income during retirement @ 65?
- As a guide, the desired monthly income could be 70% of my current salary. As I will not be revealing my salary openly, I've inputted an estimated $3,500 which is a ballpark monthly income for those degree-holders with 3 years of working experience.
- Based on the site, the desired monthly income @ age 65 is $2,450 in today's value. Factoring inflation, it will be a jaw-dropping $8,122 when I'm 65 (siao bo).
- Now I'm really quivering.
3. How much have I set aside for retirement?
- As of now, I've nothing set aside for retirement! I mean, the money that I'm saving now, are more for my BTO, renovation, wedding and honeymoon costs.
- However, I could consider my investments (i.e only stocks) as a retirement fund. A conservative 3% annual return is inputted. For insurance, I'm not sure how it should be inputted because the only insurance I have is my hospitalisation plan and the mandatory DPS.
- Next, my CPF would likely be wiped out once I have my flat. As of now, would it be realistic for me to put $20,000?
- As for cash, I could consider setting aside $10,000 for retirement. I've inputted a 1% annual return since I'm currently using OCBC 360 which offers me at least a 1.2% p.a interest. Hopefully, this continues....
- As for future savings and income, I'm just preparing for the worst by not inputting any figure.
4. How much money do I need when I retire to provide for my desired lifestyle?
- With the above information keyed, my retirement report is now generated.
- In order to reach my goal, I will need to save $2,405/month. That's a tall order as I've not been saving this amount. Despite being a low maintenance, conservative and relatively frugal lady, based on my Jan and Feb spendings, I'd say my average spending is around $1,300. I'd be able to save that amount provided my boss increase my pay (heehee) and my spending stagnates. I've to bear in mind that as a single lady living with my parents and having paid dinner, my monthly spendings are already low. I can't imagine how much my spendings will increase with a flat and children to come!
- That said, the figures are just estimations. I may need to save more or less depending on various factors such as a change in desired lifestyle, bearing in mind that my salary should likely increase over the years (although I shouldn't be overly optimistic), and the liabilities I get as I age etc.
So, would I be planning for my retirement now? TBC..