Retirement readiness, it’s the number one indicator of financial freedom to Singaporeans. According to the Financial Freedom Index (FFI) conducted by Singlife, retiring when Singaporeans choose is super important no matter their age. Millennials like me form a large group of these hopefuls with lofty goals of leaving the workforce before the prescribed age of 63.  

The big question then is how do we plan to reach those goals given that 1 in 2 Singaporeans are still unsure or have never thought about how to reach financial freedom? I share a bit more about my dream retirement in episode two of Don’t be a Dodo (p.s. it has something to do with chickens 🐔) where we talk about what financial freedom means to Singaporeans.

Let’s hear from other millennials on their plans for retirement and how they’re saving for it. Plus, I got a financial adviser representative (FAR), Leon Lee, to weigh in on their plans to see just how feasible they are.

Joannah Yong (30) – Marketing Executive

Ideal retirement age: 40

Dream retirement looks like: Debt-free life with a fully paid home plus S$5,000 in monthly income for vacations and shopping 🛍.

Sum needed to retire: S$2 million

Plan to reach that goal: I plan to diversify my savings into savings either in CPF, equities and bonds. If I manage to acquire a second property, that would be part of the contribution too since I can resell it for a profit. My current challenge though is following through with the plan as my priorities change along the way like splurging on my wedding or house renovations. 

FAR reality check:

Because these goals involve a few big-ticket items, it would be more realistic to extend that ideal retirement age. Although the plans to diversify savings accordingly would begin the journey to accumulating S$2 million, the desire to be debt-free and acquire a second property involves huge capital outlays. These outlays could be otherwise used for creating another income-generating asset that would not involve taking up loans. Although property can be used to generate a decent source of income, alternative assets can be an equally or more stable income source. For instance, dividend funds take away the hassle of tenant hunting, housekeeping and having to pay additional taxes for owning an investment property. Another good alternative is to get an insurance saving plan that gives you monthly income payouts for life.

Angela Low (28) – Freelance Copywriter

Ideal retirement age: Semi-retire at 45, fully retire at 60

Dream retirement looks like: Not needing to worry about money, being able to spend quality time with my friends and family regularly, being healthy and happy, and maybe spending time working with animals 🐱🐶.

Sum needed to retire: S$1 million

Plan to reach that goal: Currently focusing on increasing my earning power while investing in unit trusts as a source of passive income. I also cook meals at home rather than dine out and budget to keep my daily expenses low, but not so low to the point that I sacrifice my mental health.

FAR reality check:

With proper planning, you can certainly achieve a worry-free retirement. Active budgeting and prudent cash flow management allows you to invest your monthly surplus towards a specific goal. What’s crucial is to take inflation into account when looking at our retirement calculation as the cost of living will continue to rise.

This is especially so for someone like Angela, who’s only in her late 20s. Inflation over decades will erode the value that S$1 million can buy today. Just a simple flat inflation calculator would show that $2,500/month today, assuming 4% inflation would be eroded to $735/month in 30 years!

Terance Tan (26) – Management Associate

Ideal retirement age: 55

Dream retirement looks like: Being able to walk into any store and buy things I want without having to worry about the cost, as well as volunteer at welfare organisation. I also want to be able to travel to at least 10 different countries with my wife (hopefully I’ll have one 👰).

Sum needed to retire: S$1-2 million

Plan to reach that goal: Nothing fully planned yet, but as a start I am trying to dollar cost average into index funds, build multiple streams of income, and get a retirement insurance plan to help build a sizeable pool of money for my dream retirement.

FAR reality check:

Not having to worry about the cost of things we want is great. However, what should come first is ensuring you don’t have to worry about expenses for your day-to-day needs. Today’s climate seems to be tilting towards investments being a need instead of a luxury and the dollar cost averaging method of investing is one that helps achieve our goals in the long run through the long-term power of compounding.

With a timeline of close to 30 years in Terance’s case, it certainly is possible to achieve a goal of $1 to 2 million for retirement with a disciplined and consistent approach towards investing for the future.

Cheriah Lim (23) – University Graduate

Ideal age of retirement: Ideally now but since I have no money, I’d say 55

Dream retirement looks like: Making sure my future kids are financially independent, so I have the financial freedom to travel whenever and wherever I want ✈.

Sum needed to retire: Not sure, maybe S$1 million

Plan to reach that goal: I am going to go in hard and invest on them stonks! (Gen Z speak for the stock market) But for real though my main strategy right now is to find a high-paying first job. Then it’s just about saving up however much I can whenever I can. Hustle hard for that bread,   

FAR reality check:

Raising children tends to be the biggest expenditure for most parents but ensuring that you consistently save your surpluses into the right vehicle can ensure that when you become a parent, you’ll be ready to manage the cost of your children’s education. Investing in stocks is one way to go but don’t throw all your eggs into one basket. Diversifying your portfolio  with different assets like stocks, bonds and short-term investments will help to mitigate the risk for the long-term across the decades to come.

Planning the perfect retirement

Everyone has a different version of their dream retirement. The Singlife Financial Freedom Index revealed that the average Singaporean feels like they need S$566,640 in savings to feel financially free. It takes about 27 years to save that amount but after hearing from my interviewees, it’s clear that millennials want to retire with way more.     

Saving such a HUGE amount might seem crazy especially for fresh graduates, but the key here really is consistency. Budget your spends and allocate a fixed sum towards savings every month. If you’re still in doubt, the best thing to do is to speak with a trained financial adviser representative. They’ll be able to answer all your questions and handle all the tricky calculations to ensure you stay on track to realising your retirement dreams.

Be sure to watch the full podcast episode on YouTube here.