Money Talks Podcast: What if you can't save enough for retirement?
Ironically, the best time to start saving for your retirement is when you get your first paycheck, says our guest.
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Financial analysts will tell you that you need at least S$600,000 (US$444,000) in cash when you retire. But for most people with heavy financial needs in their adult years, what's a reasonable plan?
Andrea Heng asks OCBC's group wealth management head, Tan Siew Lee.
Here's an excerpt from the conversation:Â
Andrea Heng, host:
Do you think millennials are structurally more at a disadvantage to kick-start (their) retirement savings, considering (the) cost of living, stagnant wages perhaps, (and) the fact that we're a sandwich generation?Â
Tan Siew Lee, head of wealth management at OCBC:
I do not think so ... as millennials, in terms of job prospects, I think it's better than where our parents came from when it comes to job prospects. The average wage is reasonable, I would say.
Retirement planning does not have to take a back seat. You just need to start. You can start very small, even with (putting) S$100 a month into a monthly investment plan. That will work as well, because … (of) the power of compounding (interest).
Andrea:
What do Singaporeans typically tend to get wrong when it comes to planning for their retirement savings and how can we unlearn some of these mistakes?Â
Siew Lee:
It's about priority. I won't say it's wrong, it's just that they prioritise one (thing) over the other … If your income or situation permits, you should do all things at the same time.
Of course, you still need to set aside six months of your income as emergency cash. After that, you just need to spread out.
Andrea:
Is there like a ballpark figure that you can give me … for someone who has no idea how to start (saving for retirement), how much would I need (for my retirement) in numbers?Â
Siew Lee:
If I look at it in our Financial Wellness Index for 2024, we had three lifestyles.
The first basic retirement lifestyle will be like owning and living in (an) HDB property, commutes by public transport – that one is about S$2,725 a month, to be exact.
Retirement lifestyle B will be: Owns and lives in (an) HDB property, commutes via taxi or your own mid-range car, employs (a) part-time domestic helper. That's about S$3,430.
Retirement lifestyle C will be: Owns a high-end car, lives in a private property, employs a full-time domestic helper. That's about S$6,150.
