If you’re currently at the peak of your career or recently became a new parent, retiring may seem like a distant dream.

However, we will eventually stop working, whether by choice or by circumstances. This means that retirement planning is an actual “exit plan” and is important to have. Yet, it’s commonly brushed aside due to other priorities.

With a decrease in income (or maybe, zero salary), expenses like bills and spending are still incurred. Time is also a bonus when considering compounding interest!

How do I start planning for retirement?

Retirement planning is crucial, regardless of past disruptions like COVID-19. Start by conducting an honest self-assessment with a personal financial check-up. This will help you determine if your retirement goals are achievable and identify areas where adjustments are needed.

If you feel overwhelmed or unsure where to begin, here’s my 8-step guide to help you outline a clear path toward achieving your retirement dreams!

Easy guide to planning for your retirement: 8 simple steps to achieve your goal

It may seem like rocket science with plenty of calculations to be done. With these 8 steps, you can determine how much you need to save and work towards securing a comfortable retirement.

Step 1: Determine retirement age

The first step is to decide how old you wish to retire. This will help you estimate the number of years for which you need to save. Consider your personal goals, health, and financial situation when making this decision. Note that the earlier your dream retirement age, the shorter the period you have to work on accumulating the savings needed.

Jenelle’s retirement planning tips: As of 2024, the retirement age in Singapore is 63, and it is set to increase to 65 by 2030. This progression ensures that employees are protected from age-based retirement requests, allowing them to remain employed until the official retirement age.

Step 2: Estimate life expectancy

Next, estimate your life expectancy. This is instrumental for determining how long your retirement savings need to last over a specific number of years. You’ll also need to take into account factors such as your family’s health history, your desired lifestyle choices, and overall well-being.

Step 3: Calculate retirement income

Calculate your desired retirement income by reviewing your current lifestyle and expenses. Note down expenses such as housing, healthcare, transportation, and leisure activities. Are there other possible expenses that may surface?

Jenelle’s retirement planning tips: My advice to clients who are working towards retiring – aim for a retirement income that is at least 70-80% of your pre-retirement income.

 

Step 4: Assess current savings and investments

This takes more effort and is integral information you will need when planning the finances. Evaluate your current savings, investments and any other investment vehicles, such as the Central Provident Fund (CPF) in Singapore. Remember to take into account the rate of return on these financial instruments and review how they will contribute to your pool of retirement savings.

Step 5: Calculate the shortfall and account for Inflation

At this stage, subtract your current retirement savings from the amount required to meet your retirement income and expenses. This will give you an idea of how much additional savings you need to accumulate before retirement.

To set these financial figures against reality, don’t forget the impact of inflation on your retirement savings. Inflation erodes the purchasing power of money over time, so it’s necessary to account for this when calculating the amount required to save. Use a realistic inflation rate to adjust your retirement income needs accordingly.

Step 6: Calculate the required savings amount

Using the information obtained from steps 1 to 5, calculate the amount required to save today. Decide on an investment strategy that aligns with your risk tolerance and time horizon. This may involve investing in stocks, bonds, mutual funds, or other investment vehicles. Reach out to a financial advisor in Singapore, or use retirement planning calculators to obtain a more accurate estimate based on your specific circumstances.

If the calculated savings required seem unattainable, you may need to reassess your retirement goals or consider adjusting your savings plan. This could mean increasing your savings rate, reducing expenses, pushing back your retirement age, or exploring additional investment opportunities to boost your retirement fund.

 

Step 7: Consider tax implications

Many of my clients often forget this step when calculating how much they need to retire comfortably. Do take into account any tax incentives or benefits available for retirement savings in Singapore. This may include tax relief on CPF contributions, cash top-ups, SRS contributions, or other retirement-focused investment schemes.

Step 8: Monitor and review regularly

After determining the amount required to save today, monitoring and reviewing your retirement plan regularly is vital. This helps ensure that you stay on track as you work towards your retirement goals. Life circumstances and financial goals may change over time; adapting your savings and investment strategy accordingly is part of future planning too.

The best retirement plan in Singapore is to get started soonest. It is perfectly fine to start small and work progressively towards the required retirement fund. With this guide, I hope you can calculate the amount required to save today to retire in Singapore and work towards living out your desired retirement lifestyle. Need help to work out a stress-free retirement plan and gain more clarity amidst the financial jargon and fine print? 

Get in touch with me and I’d be happy to get you on track!