Monday, January 4, 2010

Plan for your retirement as early as possible.


In my last post “Why people don’t plan for their retirement”, I mentioned that there are people who either “Work and pay” or “Work and play” in Singapore. That is a vicious cycle in my opinion. The earlier you get out of this vicious cycle, the earlier you can plan for your retirement. So why should we plan for our retirement as early as possible?

I have drawn a simple table as shown above. I have put in three starting age to plan for retirement as 30, 40 and 50. I assume that there is a saving of S$12000 for every year, and all the saving will be used for investment with 5% return annually. I also assume 60 as the retirement age.

If you start at age 30, you will have about S$800k with about S$40k from the return of investment annually when you are age 60.

If you start at age 40, you will have about S$400k with about S$20k from the return of investment annually when you are age 60.

If you start at age 50, you will have about S$150k with about S$7.5k from the return of investment annually when you are age 60.

You can see clearly that the earlier you start to save and plan for your retirement, the better for you when you reach your retirement age. Best of all it only take S$1k per month to do it. So do you want to plan now if you haven’t started planning for your retirement?

7 comments:

Eric See said...

Hi FA,

Impressive projection. But I remember you were saying you will buy a private properties in the near future. Won't the disruption of cash flow make this projection invalid?

Freedom Achiever said...

Hi Eric,

Buy and rent it out will increase cash flow.

Regards
Freedom Acheiver

Eric See said...

Correct. U need 100k to buy stocks to generate passive income. Buy you use the 100k to buy property, no more passive income?

Freedom Achiever said...

Hi Eric,

If your rental is more than the monthly loan payment of your house, that is passive income. Please read the articles @ http://singaporepropertyguides.blogspot.com/2009/10/is-condo-consider-good-assets.html to understand more.

Regards
Freedom Achiever

Eric See said...

oic thanks

Zander said...

Most of the people want to achieve financial freedom, but this is not possible if you don’t have any savings. You have to start planning for your retirement very early in your career so that you can live freely without much to worry in your future.

Fordwilliam said...

I am here to know some information about financial planning for retirement. What is a good way to start financial planning for retirement, savings bonds, certificates, stocks...?

financial planning for retirement

Have you started your journey towards financial freedom?

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