This
article shows that you need 12 years of your income to be sufficient to retire at age 65, to generate a lifetime income of 80%. I think that this is far too high. You only need to have an income of 40% to live comfortably, so 6 years would be sufficient. During your working life, you only spend 50% of your income, as 25% is saved for the future and 25% is used to pay for your home. When you retire, you will send less, so 40% is more than sufficient. This is explained in my book,
Practical Guide on Financial Planning.
When you mention when a person retire, he or she spend less.
ReplyDeleteCan you elaborate what do you mean when you spend "less"?
They do not have to travel to work and spend money on the work related expenses. When they retire, their children are likely to be independent, so they do not have to spend on the children.
ReplyDeleteKin lian,
ReplyDeleteIt depends also on your last drawn salary before 65. For example for the Ministers 40% is a lot.
The reduction in spending on children is more likely to be offset by increase in expenses for health and medical care.
ReplyDelete