The Singaporean Women’s Guide to Retiring by 45

Scheduling and saving for a secure retirement are a vital and unavoidable part of life. Men and women face different challenges when they plan for retirement. These obstacles are best tackled early and need careful preparation. If you are a Singaporean woman, the most critical thing to do is take action as soon as possible to secure a happy and sustainable future in your later years.

To begin with, most women enjoy a higher level of financial independence (read: shopping, spending and holidays) than someone like dependent on their spouse (married with children) due to lesser commitments. There is also an urgent need for life insurance as providing for elderly parents is usually the only reason for ensuring their life.

It is a common question: “How much do I need to retire?”. The answer is simple than you think if you take time to decide what is important and how you want to live in retirement.

The place to start is to figure out how much you are likely to spend each month after you retire. Admittedly, that number varies widely, since each person has their habits.

You can browse through your current expenses as an initial guide and adjust the amount for your retirement lifestyle.

Make sure to include enough capital for food, clothing, healthcare, transport, travel, insurance, utilities, recreation, household maintenance, communications, personal care, and other expenses. You should also include an estimation for inflation too since prices continue to creep upwards by at least 1 to 2 percent most years.

Life expectancy for Singapore women has increased over the years. This means that if you propose to retire at the age of 45, you will have limited days to enjoy and save. You know, the whole cruises in Hawaiian dresses and mom jeans, the whole shebang.

But living for long means you have to start chalking out your retirement savings plan. Do you know where to begin? Without figuring out how much you need to spend your retirement life without working and worrying about money?

Economic experts give two methods to save for retirement:

  • This method is based on a fixed percentage of savings annually. If you begin from the age of 25 and save 10% of your income per annum, by the age of retirement, you can collect four times your annual salary. However, that might not be enough for a country like Singapore where life expectancy is increasing. By mounting your saving up to 20% each year, you can accumulate eight times the annual income, by the term of your retirement.
  • If you are below 35 years, your priority should be to accrue your savings to the extent of your annual income, by the time you reach 35. After reaching 45, your total savings should be three times your yearly income.

How Much Money Will You Need after Retirement?

The first step that you need to take is to calculate the sum that you need to lead a comfortable retired life. To get your head around this, ask few of these questions to yourself:

  • How much will you need for monthly expenses?
  • Have you created an emergency fund to cover unforeseen expenses?
  • Do you have enough health insurance cover?
  • Is there anybody who is financially dependent on you?

When you conduct this exercise, remember to consider inflation. If you are aged 35 and live to be 75, rest assured that the value of the Singapore dollar will depreciate substantially over that period.

How much will the value of dollar fall by? That is hard to predict, but the inflation rate in the past can give you some idea.

How to Plan for Retirement in Singapore?

  • Begin by computing your funds–If you are a Singapore citizen or a permanent resident with the Central Provident Fund (CPF), log In to CPF website to calculate how much you have at present.
  • Maximize what you have – You have to start saving your money wisely from an early stage, maybe your mid 20’s. Amplify your CPF and pension contributions. Make sure your retirement funds and pensions earn as much as they possibly could. Work it out now to raise your income in the future.
  • Search substitute investment choices – Although CPF pays a decent investment rate, you can always use an investment option. Investment means capital growth with risk. Make the most of your CPF by looking into the CPF Investment Scheme and invest in shares. You need to have at least $40,000 or more in Special Account and over $12,000 in Ordinary Account.
  • Assess yourself – It depends on the income sources you have during retirement, and the number of years left to retirement. You can find financial calculator designed to let you assess your retirement income and find out how much savings you need to meet your aims.

 To find out how you can accrue your savings, have a look at this compound interest table. It shows how $1,200 investment expands in 40 years and what if you keep investing $1,200 annually.

Is It Possible to Save So Much?

It isn’t possible for most people. There is a definite limit to how much you can budget. If you want to retire at 45 by just scrimping and saving, my advice is to forget it. You need to be putting at least $5,000 or more into your retirement fund per month; that is more than the average Singaporean woman’s entire monthly income.

Almost whatever digits you come up with, the amount should seem large. So, the best way to accumulate so much is to start saving early. Manage your finances wisely and stick to the budget if need be. While no single approach fits everyone, calculating your “magic number” help you start a plan and save early enough to have the amount you need for a comfortable retirement.

If you want any hope of retiring early, your best bet is to grow and invest your money today. Like the ancient Chinese proverb says: “The best time to plant a tree was 20 years ago. The second-best time now.”


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