Singaporean individuals are taught the importance of saving from a young age. If a person can save a little at a time, it can help provide security and stability when they aren’t working.
When it comes to the best retirement plan in Singapore, there are many factors to consider when trying to answer the question, “How much money should I save for retirement?” Some of the most important factors are a person’s age and income. Each year that you delay buying the first home, you will have an opportunity to put some of your savings towards increasing your savings account or retirement fund. Each extra year of saving can provide an opportunity for more accrued interest that is growing on top of itself.
Why should you accumulate savings before retirement?
When you are young and have no dependents, you can afford to take risks with your money. However, as you grow older and start a family, it becomes imperative to start saving for your future. Investing is one of the most important events in anyone’s life and if you do not save enough money before retirement, there is a chance that your life will be miserable in old age.
There is no perfect answer to the question “how much savings should I accumulate before retirement?” because there is no one-size-fits-all solution.
Quick tips to start on the best retirement plan in Singapore
But there are some general guidelines that can help guide you in the right direction:
Step 1:
The first step is to determine how much income you’ll need in retirement. This will vary depending on your lifestyle and whether you plan to work part-time or full-time in retirement. In countries like the USA, the Center for Retirement Research at Boston College provides a helpful calculator that factors in many variables to help people determine how much money they need each year.
Step 2:
The next step is to determine what your current savings are and how long it could last if you stopped contributing now. For example, if you’re 30 years old and have $50,000 saved up, but plan on withdrawing $25,000 per year from your 401(K), then your nest egg would last about 15 years if left untouched. That assumes a 6 percent annual return on investment — about average for long-term investments — and no additional contributions during that time period.
If you want your savings to last longer than 15 years, then start increasing your contributions now. Contribute as much as possible while still keeping enough money available to live off of while working (and investing).
Start saving with Soul Wealthy Group, your retirement planning advisor
Ultimately, how much you should save before retiring will depend on how comfortable you are with retirement; if you’re positive that you won’t run out of money in the foreseeable future, then you can live on a lower income than someone who’s more uncertain.
But the general rule of thumb remains the same: the more savings you have, and the more stable those savings are, the better off you’ll be when it comes to making your retirement dreams come true. As your retirement planning advisor, we at Soul Wealthy, can help you make firm decisions and ensure you stick with them if you want plan on retiring comfortably.