Thursday, November 09, 2006

Do you want to retire at age 54?

A newspaper survey said that Singaporeans want to retire at age 54 (on the average).

Sorry, this is not possible for the ordinary working person. You can retire at an erly age only if you come from a rich family or have a very high income.

A person who starts work at 25 should work and save for 40 years, until age 65, to have sufficient money to live for another 15 years (to age 80). You should save at least 10% of your earnings. The savings for your home or children should be separate items.

A saving of 10% is just sufficient for a basic lifestyle in retirement. If you want a more comfortable lifestyle, you should save at least 15%.

If you are not able to save sufficiently, you should be prepared to work longer, say up to age 70 years, or to live modestly.

You must invest your savings wisely, to get a good return for the future. You should invest in a product that gives you a fairly attractive return, such as a large, well diversified, low charge fund.

Do not invest in products that pays high commission to distributors (e.g agents) and make large profit margin for the financial institution. Take care of your own financial future. Do not allow other people to earn a lot of money at your expense.

Ideal Plan
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1 comment:

william said...

Hi Mr Tan,

There is an error in the link to the "Ideal Plan" in your post, it does not works because there is an extra http//: included in the link.

I don't think everyone wants to retire at age 54 even if they are rich. The richer you are the more you want so you won't retire. But in today's envrionment it is not a matter of your choice, rather you are forced to retire if you cannot find a job after 50.

The scary part is many people may not even have enough savings to make ends meet. so investment plan is only for those who have extra savings after setting aside the safety net.

I won't retire at 54 so long as I am healthy and remain employable, but to do something meaningful or what you have been unable to do in the past will be the ideal way to slow down a little. It is important to remain active and share your experience and knowledge and continue to be economically productive.

For those who invest, I agree absolutely that one should stay away from investment products, eg. unit trusts, that charge a hefty upfront and annual management fees, given that most of the funds performed badly especially in a market downturn. Why should you pay these fund managers to manage your money if they cannot protect your investment? they are suppose to be the pros and should know when to get out if the market is going down, simply by tracking benchmark like MCSI is a no brainer job!

Thanks and rgds

francis

November 09, 2006 5:56 PM

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