We’ve all witnessed the classic chicken rice at Ananas Cafe go from S$2 years back to S$3.20 now and the rising number of million-dollar HDB flats. Then there’s the upcoming 1% hike in GST starting in 2024. As an individual in my late 20s, this makes me feel a little worried about my future because retirement seems out of reach with the increasing cost of living in Singapore.
How much is enough to retire?
I know thinking about retirement when I’m not even 30 sounds ridiculous. After all, I’ve just entered the working world. However, I think that these are healthy thoughts to have, and they are essential to future-proofing myself.
According to Singlife’s Financial Freedom Index (FFI) report, 70% of Singaporeans do not feel confident about retirement, and the average Singaporean would need S$566,640 in savings to feel financially free. It would take 27.3 years to accumulate this amount if you were to save S$1,733 per month. However, is this amount truly enough since every individual has their own definition of financial freedom? I asked six Singaporeans at different stages of life to share their opinions.
Is the road to financial freedom weighing Singaporeans down?
Felicia Teo, aged 25, married with a child, founder of a jewellery business
- What’s your ideal retirement?
Taking on projects and participating in activities I’m interested in without having to worry about finances. I would still work, but more for passion than income.
- How much do you think you’ll need for retirement? And by when?
A fully paid house and perhaps S$100k to S$200k. Honestly, I haven’t thought much about that. I hope to be able to retire in my 60s.
- What does financial freedom sound like to you?
Having peace of mind that I can afford the things I need and occasionally splurge on pretty things in life.
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Ernest Poh, aged 29, single, product manager in the fintech industry
- What’s your ideal retirement?
Having enough money for my daily expenses as well as that of my family, and being able to travel or engage in other activities to keep myself occupied during retirement.
- How much do you think you’ll need for retirement? And by when?
It depends on how big my family is and how old I am when I retire. If I were to have two children and retire past 50, I think about S$1 million. If it’s any time earlier than age 50, maybe S$2 million.
- What does financial freedom sound like to you?
Spending freely without having to worry about expenses.
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Kenneth Kum, aged 34, married, game designer
- What’s your ideal retirement?
A life where I can spend my days doing the things I like instead of working.
- How much do you think you’ll need for retirement? And by when?
I'm guessing at least S$700k. I'm aiming to retire by the age of 60 to 65.
- What does financial freedom sound like to you?
Having enough to spend on my necessities and hobbies without having to work.
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Wenny Yeo, aged 36, single, freelance writer
- What’s your ideal retirement?
No outstanding debts, including housing loan, and being able to save and spend my money as I like.
- How much do you think you’ll need for retirement? And by when?
Around six times of my current annual salary, but it really depends on how long I live. I hope to retire at around 65 to 70 years old.
- What does financial freedom sound like to you?
Financial freedom would mean not having any debts. It equates to having the ability to retire anytime I want, but I don’t see myself retiring.
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Zuhailah Ibrahim, aged 47, married with 3 children, owner of a home-based catering business
- What’s your ideal retirement?
To be healthy and strong to do what I love that is hiking, travelling and volunteering work.
- How much do you think you’ll need for retirement? And by when?
Around five times of my current annual income to live a simple but comfortable life – this is if I don’t have debts to pay off. I hope to retire by the age of 65.
- What does financial freedom sound like to you?
Financial freedom is having sufficient financial savings that can last right through my senior years, a passive income, and no debts.
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Meow Eng, aged 59, married with two children, secretary
- What’s your ideal retirement?
Living life at a leisurely pace – I’ll work a few hours for a few days every week, travel whenever I wish, exercise frequently, try new things, learn new skills and make new friends.
- How much do you think you’ll need for retirement? And by when?
Maybe S$1 million (accumulated from savings + CPF + insurance payouts). Maybe past the age of 65.
- What does financial freedom sound like to you?
Awesome! I assume that’s why everyone is working so hard towards it from the moment they join the workforce.
Bonus! I asked my interviewees and colleagues to choose an anthem to best represent their idea of financial freedom. Check out the Spotify playlist to see the full list of songs. Listen and manifest for all things to come trululu.
What would your financial freedom anthem be?
You and I by Ingrid Michaelson
“It’s about being rich, living in France and buying things for everyone. That’s my dream!”
- Felicia
Money by Lisa
“The lyrics ‘I came here to drop some money, dropping all my money’ feels like something I can do when I’m free from all financial responsibilities.”
- Ernest
Familiar Taste of Poison by Halestorm
“It reminds me of my love-hate relationship with work life in general and one that I can only be free of via financial freedom.”
- Kenneth
I Want to Break Free by Queen
“I want to break free from all my debts, and the control of money over my life!”
- Wenny Yeo
Money, Money, Money by ABBA
“I dream about all the things I could do with all the money in the world, just like the lyrics ‘all the things I could do if I had a little money’. It honestly sounds like what I envision financial freedom to be like.”
- Zuhailah Ibrahim
一百万 (Yi Bai Wan) by Huang Yi Fei
“The lyric goes in Chinese ‘若是我有一百万 一百万 我有一百万 一世人就轻松’ which translates to if I’ve a million dollars, life would be a breeze. The song is exactly how I envision retirement life to be... a breeze.”
- Meow Eng
Financial freedom looks different for everyone, and there’s no cookie-cutter recipe for it. Aside from listening to these financial freedom anthems for some inspiration, here are some good habits you can inculcate to get started on this journey.
- Understand where your money is going
- Live debt-free
- Invest in yourself
- Start a budgeting habit you’re comfortable with
Having a tracking system of your expenses will help you to understand where and how you are spending your money. It gives you an overview of where your money is going, and how you can adjust your spending accordingly. While somewhat tedious, it’ll help you to stretch your dollar.
There are debts that are unavoidable such as housing loans and student loans, but there are also some debts that can be entirely avoided. You might have heard of Buy Now Pay Later (BNPL) or Preferred Payment Plan which can help you to maximise your credit card rewards, but this could potentially snowball your existing debt if you can’t manage your finances well. Hence, if you find yourself struggling to keep up with smaller purchase payments, it’s best to make one-time payment purchases instead.
By investing in yourself, I don’t mean #girlmathing your way through life. As the saying goes “health is wealth”. Taking proper care of your physical and mental well-being is important as it directly impacts your financial health. We all know that healthcare is not the cheapest, and maintaining a healthy lifestyle can help prevent illnesses and costly medical bills.
There are many ways to budget, but the most shared method is the 50-30-20 rule for allocating your income towards your needs, wants and savings. I personally don’t find it effective since I have fewer financial responsibilities and spending 50% of my income on my needs is too much. Instead, I budget with reference to my expenses tracker, so I can decide on a comfortable amount to set aside for my needs, wants and savings.
Saving is a journey, not a race
Do not feel like you’re too old for this, because it’s never too late to start now. These four simple steps won’t help you achieve financial freedom, but they are good habits to get you one step closer on the path to financial freedom.
If you would like more tips, you can read other articles on our blog such as 20 financial habits to bag in your 20s or Grow Me the Money to learn more.
The above information is accurate as at 1 August 2023.
