Oh Retirement ......
Its still too far away from me...
I am not sure....
I can't even make ends meet now , how to plan ?
Does the above sentences sound familiar to you? Let me share with you a good news. If you are a Singaporean or a Singapore PR today , by the fact that you have a job that contributes to CPF from age 25 to 60 , your CPF account should accumulate to about SGD $1mil in your lifetime.
Cool?
Now the bad news.
95% of Singaporeans make use of their CPF Ordinary account to purchase their home. If you are born after 1990, the property prices that you may see when you are ready to do any purchase are likely to take up at least 25% of your earned income. Therefore , the probability of an AVERAGE Singaporean to reach $1mil inside their CPF by the age of 60 or 65 is less than 5%.
Why is $1mil important milestone in retirement?
If you have $1mil dollars , you can consider
Invest in a dividend generating product that gives you 4% per annum which translate to $40k a year , $3500 a month. If we factor in inflation , this amount doesn't seems a lot but it can allows you to be assured of a income at least.
Purchase an annuity program that will provided some kind of downside guarantee and provides income stream for your retirement
even if you place inside bank savings account , if you divide the million into 30 years , you should still see about $2500 per month of retirement allowance.
In a nutshell ,
If you are below the age of 55 , you still have time to plan for your retirement. Retirement planning is important is because people find it tough to find employment after age 40 , no to say when reach 60 and above . Therefore , such planning provides you with the option and choice when you reach that stage.
CPF projection toolkit
CPF is always the first asset class we discuss with our clients when comes to the topic of retirement. However, feedback from the ground are mainly they cannot seem to find a tool to project how much they have during their retirement years. Such toolkit can assist you to seek clarity for your future.
If the above rings a bell with you , I would like to offer the CPF toolkit project FREE for you . Let me know if you would like to have a copy of your own CPF projection.
Cheers
Andrew Ang
Build wealth , Build Life
Comments