Singaporean workers are getting anxious about planning for their retirement. So was Rohith Murthy, until he decided to do something about it.
Last week, as I was catching up with a former colleague for some chit-chat and drinks, I mockingly reminded him that he had written ‘retired’ instead of ‘resigned’ in his resignation email.
We then debated on what the right age to retire is and what it means to retire–does it mean you stop working and rely on a passive flow of income from savings and investments? Does it mean you start working on your own time and accord?
While we couldn’t see eye to eye on these questions, one thing was clear: we are both anxious about retirement in our own ways.
Interestingly, I came across an article on The Business Times addressing how worried Singaporean workers are about their retirement prospects. The article, citing a survey done across East Asia, goes on to talk about how these Singaporeans’ existing planned retirement income can replace only a small share of their pre-retirement income.
Retirement planning can seem like a daunting task–but is it actually so?
When I think about it, these few questions always pop into my mind:
- When is the right age to retire: 55 or 65 years old?
- What should be my savings and investments portfolio now and at time of retirement?
- Will I be dependant on and living with my children and family?
- How much income do I need to live on during retirement?
I may or may not have the answers to the first three questions now. But the final question definitely got me thinking. The article published in BT yesterday seemed to also validate this.
I do like to crunch numbers. Numbers assure me that I am addressing a problem in a logical way. And logic assures me that a problem may not be unsolvable.
So here is the first exercise I decided to do to create a workable retirement plan. You may find it useful too.
I decided to first understand how much income I actually need to live on today. I started by charting out my expenses on a spreadsheet using the last 6 months of bank and credit card statements and other relevant bills and receipts.
At the end of this exercise, I have more clarity on the following:
- Do I spend more than I earn today?
- Would I incur these expenditures during retirement? E.g. travel-related, mortgage, etc.
- Have I identified items I spend on but rarely use or have stopped using?
- What is the base income I need to live on today (after deducting costs from 2 and 3)?
While this may not completely deflate my anxiety for now, I think it is a good first step to equip myself if and when I choose to pen my own ‘retirement letter’ one day.
If you’re going to try this yourself, please note that this exercise was not meant to be a guilt trip to remind you of all the splurges that seemed necessary then. It’s of vital importance that you stay objective and honest while typing your input into the spreadsheet.
By Rohith Murthy
Rohith leads Singapore’s SingSaver.com.sg, a financial comparison site aimed at helping consumers in Singapore save money and time by finding the right product at the best price online.