Saturday, 17 October 2015

My Retirement Goal

Retirement is  hot topic these days.

silver age; savings; piggy bank; retirement fund


With people living longer these days, having not enough money is a serious issue for many. It saddens me to see old people, who are frail, clearing the plates at hawker centres, cleaning the toliets in Singapore and so on. So much about our high GDP.

I want to make sure that I am well prepared to retirement, as such, I did a calculation on what I would need if I were to retire.

Honestly, I am looking at retiring at the age of 45. Then I am still young enough to enjoy life, and yet, have worked for more than 20 years. Also, I would have finished paying for my life policies, and as such, living the health insurances to pay for.

I am also aiming to get a place of my home way before 45 (preferably by 35), and completely pay for it by 45.

So, with that, I am looking at $3000 per year for health insurance, and $2,000 per month for other expenditures. This will be $27,000 per annum. To be conservative, I'll take it as $30,000 per year, based on today's money.

I am currently 31 years old, so 45 years old is about 14 years from now! With inflation assumed to be 3% per year, this means I will need $30,000 x 1.03^14 or $45,380 per year. I also assume that the money will need to last till I am 100 years old.

I did an analysis on earning an interest of 2% and 3% on my retirement funds,

I will need:

  •  $2.55 million dollars @ 3% interest
  • $3.40 million dollars @ 2% interest


Retirement fund = $2,550,000; Interest per annum on fund = 3%
Age
Amount Required
Amount left
45
 $              45,377.69
 $                2,579,760.98
46
 $              46,739.02
 $                2,609,012.61
47
 $              48,141.19
 $                2,637,697.56
48
 $              49,585.43
 $                2,665,755.50
49
 $              51,072.99
 $                2,693,122.98
50
 $              52,605.18
 $                2,719,733.33
51
 $              54,183.34
 $                2,745,516.50
52
 $              55,808.84
 $                2,770,398.89
53
 $              57,483.10
 $                2,794,303.26
54
 $              59,207.60
 $                2,817,148.54
55
 $              60,983.82
 $                2,838,849.65
56
 $              62,813.34
 $                2,859,317.41
57
 $              64,697.74
 $                2,878,458.26
58
 $              66,638.67
 $                2,896,174.17
59
 $              68,637.83
 $                2,912,362.43
60
 $              70,696.97
 $                2,926,915.43
61
 $              72,817.87
 $                2,939,720.49
62
 $              75,002.41
 $                2,950,659.62
63
 $              77,252.48
 $                2,959,609.35
64
 $              79,570.06
 $                2,966,440.47
65
 $              81,957.16
 $                2,971,017.81
66
 $              84,415.87
 $                2,973,200.00
67
 $              86,948.35
 $                2,972,839.20
68
 $              89,556.80
 $                2,969,780.87
69
 $              92,243.50
 $                2,963,863.48
70
 $              95,010.81
 $                2,954,918.25
71
 $              97,861.13
 $                2,942,768.83
72
 $            100,796.97
 $                2,927,231.02
73
 $            103,820.88
 $                2,908,112.45
74
 $            106,935.50
 $                2,885,212.26
75
 $            110,143.57
 $                2,858,320.75
76
 $            113,447.88
 $                2,827,219.06
77
 $            116,851.31
 $                2,791,678.78
78
 $            120,356.85
 $                2,751,461.59
79
 $            123,967.56
 $                2,706,318.85
80
 $            127,686.58
 $                2,655,991.24
81
 $            131,517.18
 $                2,600,208.28
82
 $            135,462.70
 $                2,538,687.95
83
 $            139,526.58
 $                2,471,136.21
84
 $            143,712.37
 $                2,397,246.55
85
 $            148,023.75
 $                2,316,699.49
86
 $            152,464.46
 $                2,229,162.09
87
 $            157,038.39
 $                2,134,287.41
88
 $            161,749.54
 $                2,031,714.00
89
 $            166,602.03
 $                1,921,065.33
90
 $            171,600.09
 $                1,801,949.19
91
 $            176,748.09
 $                1,673,957.13
92
 $            182,050.54
 $                1,536,663.80
93
 $            187,512.05
 $                1,389,626.30
94
 $            193,137.41
 $                1,232,383.55
95
 $            198,931.54
 $                1,064,455.57
96
 $            204,899.48
 $                   885,342.77
97
 $            211,046.47
 $                   694,525.20
98
 $            217,377.86
 $                   491,461.76
99
 $            223,899.20
 $                   275,589.44
100
 $            230,616.17
 $                      46,322.46


Retirement fund = $3,400,000; Interest per annum on fund = 2%
Age
Amount Required
Amount left
45
 $              45,377.69
 $                3,421,714.75
46
 $              46,739.02
 $                3,442,475.25
47
 $              48,141.19
 $                3,462,220.73
48
 $              49,585.43
 $                3,480,888.01
49
 $              51,072.99
 $                3,498,411.32
50
 $              52,605.18
 $                3,514,722.26
51
 $              54,183.34
 $                3,529,749.70
52
 $              55,808.84
 $                3,543,419.68
53
 $              57,483.10
 $                3,555,655.31
54
 $              59,207.60
 $                3,566,376.67
55
 $              60,983.82
 $                3,575,500.71
56
 $              62,813.34
 $                3,582,941.11
57
 $              64,697.74
 $                3,588,608.24
58
 $              66,638.67
 $                3,592,408.97
59
 $              68,637.83
 $                3,594,246.56
60
 $              70,696.97
 $                3,594,020.58
61
 $              72,817.87
 $                3,591,626.76
62
 $              75,002.41
 $                3,586,956.84
63
 $              77,252.48
 $                3,579,898.45
64
 $              79,570.06
 $                3,570,334.96
65
 $              81,957.16
 $                3,558,145.35
66
 $              84,415.87
 $                3,543,204.07
67
 $              86,948.35
 $                3,525,380.83
68
 $              89,556.80
 $                3,504,540.51
69
 $              92,243.50
 $                3,480,542.95
70
 $              95,010.81
 $                3,453,242.78
71
 $              97,861.13
 $                3,422,489.28
72
 $            100,796.97
 $                3,388,126.16
73
 $            103,820.88
 $                3,349,991.39
74
 $            106,935.50
 $                3,307,917.00
75
 $            110,143.57
 $                3,261,728.91
76
 $            113,447.88
 $                3,211,246.65
77
 $            116,851.31
 $                3,156,283.25
78
 $            120,356.85
 $                3,096,644.92
79
 $            123,967.56
 $                3,032,130.91
80
 $            127,686.58
 $                2,962,533.22
81
 $            131,517.18
 $                2,887,636.36
82
 $            135,462.70
 $                2,807,217.13
83
 $            139,526.58
 $                2,721,044.37
84
 $            143,712.37
 $                2,628,878.63
85
 $            148,023.75
 $                2,530,471.99
86
 $            152,464.46
 $                2,425,567.68
87
 $            157,038.39
 $                2,313,899.87
88
 $            161,749.54
 $                2,195,193.34
89
 $            166,602.03
 $                2,069,163.13
90
 $            171,600.09
 $                1,935,514.30
91
 $            176,748.09
 $                1,793,941.54
92
 $            182,050.54
 $                1,644,128.82
93
 $            187,512.05
 $                1,485,749.10
94
 $            193,137.41
 $                1,318,463.92
95
 $            198,931.54
 $                1,141,923.04
96
 $            204,899.48
 $                   955,764.02
97
 $            211,046.47
 $                   759,611.91
98
 $            217,377.86
 $                   553,078.73
99
 $            223,899.20
 $                   335,763.12
100
 $            230,616.17
 $                   107,249.89

To be on the conservative side, I am looking at having a retirement fund of $3,400,000 (when I'm 45), and all of which must be earning at least 2% interest. That's a very large amount of money to accumulate over 14 years, without forgetting that I still need to fully pay for a house + renovation before 45.

I'm not even 10% near the fund amount! To reach that amount, I will need $250,000 per year. For your information, I earn only a fraction of $250,000. Seems tough arh?

Time to think of ways to achieve this hard goal by 45 years old.

Any suggestions?


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