What You Should Be Doing in Your 30s and 40s to Retire Comfortably in Singapore

What You Should Be Doing in Your 30s and 40s to Retire Comfortably in Singapore

For most of us, our 20s is spent laying the financial foundation for our lives. 

You would have started to work and as such, be receiving a stable income. With proper wealth planning, most of your money would be saved for your ability to afford a BTO, to start a family and maybe even have leftover savings to buy your dream car.


But as you enter your 30s and 40s, it becomes important for you to do your own financial assessment and start planning for your retirement.


So early? There’s still like 30 years before I can dream of retiring!”


Yes, while it might sound like Kiasu to start planning for retirement at 30, we actually need quite a lot of money to retire.

How Much You Actually Need to Retire

In Singapore, the official retirement age is 62. According to the Populations Trend 2019 Report by Singstat, the average Singaporean lives till the age of 83.

That's 21 years that you have to save for. Even if you only spent $1,500 a month, you would need to save a whopping $378,000 per person to retire. This doesn’t even take into account any inflation and unforeseen expenditure (e.g. medical bills) yet.

And with all the other necessities (e.g. children’s university expenses) and lifestyle that you might want to have, wealth planning is really essential if you want to retire comfortably.


Your 30s: The Period for Wealth Accumulation

When you are between 30-40 years old, you are at the age where you can work the hardest.

Your career might be taking off and here is when you can start to grow your financial assets.

You might want to give yourself a little treat for all that hard work and spend of these income on a well deserved holiday or even a family vehicle to get around easily.

Or you might upgrade your HDB and get a bigger flat so that your family has more space, saving the rest for retirement. However, take note that if you also have investment aspirations on this property, I would not recommend this mode of upgrading as there are better options.

This is a good time to start preparing for retirement.A good way to do that is to upgrade to a private property (condo or landed) as they consistently outperform public housing. In the last 10 years. In the last 10 years, private properties rose as high as 93% (while HDBs only rose by an average of 37%).

Since you are planning for retirement, getting the right private property for you might actually be a good way to have your money work hard and prepare for your retirement.


Your 40s: The Period for Wealth Growth:

After deciding and upgrading your property, this period is for you to work on your mortgage. 

Every month, a portion of your money will go towards reducing that mortgage.

But if you think about it, it’s not so much of paying for a roof but saving your money into an appreciating asset.

If you have more capital, you can choose to invest in a private property with more upside, allowing you to get higher returns. Don't believe us? Let’s show you with some math:

When there is a 10 percent appreciation for properties, a $500,000 HDB will only appreciate to $550,000.

On the other hand, if you have more capital and is able to buy a private property worth $1 million dollars, applying the same 10%, you will be making $100,000.

Furthermore, like we mentioned, HDBs and private properties don’t appreciate at the same rate. You will probably be earning more than 10 percent.

And if you fall within the group who started wealth planning later, don’t worry, it’s not too late. You can start right now by watching this free property masterclass to learn more and make a better decision.


Your 50s: The Period to Preserve Your Wealth and Prepare for Retirement

After spending 20 to 30 years building your wealth, your 50s are the best time to start winding down.

Afterall, most (if not all) of your mortgage loans will have been paid for and with good wealth planning, you will be on your way to a comfortable retirement.

One important thing to note is that if you sell your HDB after 55, you might be facing negative HBD cash sales. Some money you get from the sale might also be locked into your CPF to meet your minimum sum.

That’s why it's important you do your financial assessment before you make the decision to sell your HDB.


Your 60s and After: The Period to Enjoy the Fruits of Your Labour

When you are here, you should have paid off all your loans. It’s time to consider cashing out on your property.

Your private property would have accrued many years of appreciation and you can consider selling it and downgrading to a HDB flat.

With all the proceeds, you should have enough cash savings to retire comfortably and enjoy the rest of your life.


Assuming that you need a minimum of $378,000 per person to retire, starting early and investing in a private property in your 30s will help you retire early and comfortably.

But if that time has already passed, it is still not too late.

Like they say, “The best time to plant a tree was 20 years ago. The second best time is now.”.

No matter your situation, there are still steps you can take to ensure your retirement.

If you're unsure about what you should do, why not get a complimentary consultation with a seasoned investor here and start your wealth planning for tomorrow today.

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