Retirement planning isn’t just about saving a certain amount of money—it’s about understanding the lifestyle you want and how much it will cost.
Whether you dream of a simple, frugal retirement or one filled with frequent holidays, planning early can help you achieve your desired lifestyle.
In this article, we explore how much is required to fund three different retiree lifestyles:
- The Frugal Retiree – A simple lifestyle with one budget holiday a year
- The Moderate Retiree – A balanced lifestyle with 2 to 3 mid-range holidays annually
- The Luxury Retiree – A lifestyle filled with 4 to 5 luxurious holidays each year
Assumptions Used in Calculations:
- Retirement Age: 65 years
- Retirement Duration: 20 years (until age 85)
- Annual Inflation Rate: 3%
- Withdrawal Rate (Safe Withdrawal Rate): 4%
- Life Expectancy Data: According to Singapore’s Department of Statistics, the life expectancy at age 65 is approximately 20.7 years, justifying the 20-year retirement planning horizon.
1. The Frugal Retiree (One Budget Holiday a Year)
Lifestyle:
- Basic living with essential expenses covered
- Prefers home-cooked meals with limited dining out
- Participates in free or low-cost recreational activities
- Takes one budget-friendly regional holiday each year
Estimated Annual Expenses: SGD 27,600
How much do you need?
Based on the assumptions and calculations using the present value of annuity formula, you will need approximately SGD 690,000 at retirement to sustain this lifestyle for 20 years.
2. The Moderate Retiree (2 to 3 Mid-Range Holidays a Year)
Lifestyle:
- Comfortable living with occasional dining out and hobbies
- Participates in moderate leisure activities
- Takes 2 to 3 holidays annually, including regional and one long-haul trip
Estimated Annual Expenses: SGD 42,000
How much do you need?
To fund this lifestyle for 20 years, you will need approximately SGD 1,050,000 at retirement.
3. The Luxury Retiree (4 to 5 Luxurious Holidays a Year)
Lifestyle:
- High-quality living with frequent dining out, premium healthcare, and leisure activities
- Travels extensively with 4 to 5 high-end holidays annually
- Engages in luxury hobbies and enjoys premium services
Estimated Annual Expenses: SGD 63,600
How much do you need?
To sustain this lifestyle for 20 years, you will require approximately SGD 1,590,000 at retirement.
Factors That Can Affect Your Retirement Needs:
- Inflation: Rising costs can erode purchasing power; consider investing in assets that beat inflation.
- Healthcare Costs: With age, healthcare expenses typically increase. Plan for premium healthcare options if desired.
- Longevity: While this article assumes a 20-year retirement period, living beyond age 85 may require additional savings.
- Investment Returns: Higher returns can reduce the amount you need to save, but ensure your investment strategy matches your risk tolerance.
- Lifestyle Changes: Your desired lifestyle may evolve; review your plan regularly.
Government Resources and Recommendations:
- MoneySENSE (Singapore): Recommends saving for a retirement period lasting at least 20 to 30 years. (moneysense.gov.sg)
- Central Provident Fund (CPF): CPF LIFE provides lifelong monthly payouts to support retirement needs. (cpf.gov.sg)
Final Thoughts
Your retirement lifestyle will determine how much you need to save. Start planning early, review your expenses, and adjust your investment strategy to reach your target retirement fund. Whether you aim for a simple, moderate, or luxurious retirement, understanding the numbers is the first step to achieving your goals.
Note: The figures provided are based on assumptions and average estimates. Individual needs may vary. Consult a financial advisor for a tailored plan.
