Business Times reported result of a survey that 2 out of 5 Singapore Employees want to retire at the age of 55 which is 7 years earlier than the retirement age set by the government.
Interestingly, when the interviewees were asked what factors would motivate them to stay on in the workforce, the results are ranked as follows:
- Workplace offered a more realised schedule
- Friendlier atmosphere
- Fewer work hours
What surprised me is that none of the respondent mentioned about the ability to retire instead? Is either the respondent did not think of it or the survey left this line out, as in who will think about retirement when you are still in your 20s and 30s, right?
However, I am going to say out the hard truth, if you really want to retire early, you will need to start planning for your retirement as early as possible! More likely you will continue to be working at old age if you have not saved enough during your younger days, even if the working environment is harsh and stressful.
But not to be despair. It is always good to have an end in mind so that you can plan to succeed, rather than leave it to fate. To be able to retire early, you will need to have the financial power to continue supporting yourself and your dependants when you stop working. This has to come with effort and determination in following the recipe to success. The ‘ingredients’ are but not limited to the following:
- To understand yourself
In the process of understanding yourself, you will need to create your monthly statement of income and expense so to understand your own cash-flow as a gauge of your lifestyle needs and wants.
- To have solid financial saving and investment plans
Once you know yourself, you will need to save and investment to meet the lifestyle that you desired. Based on how much you spend, you can roughly calculate how much you will need when you retire. Also, remember to account for inflation to get the true value that you need to accumulate. It can help by having a profitable investment portfolio in which it can provide you with capital growth or passive income through dividend distribution.
- To have adequate protection plans in place
We need to have adequate insurance plans as part of our risk management in financial planning. Crisis does happens, and when it strike, it will disrupt any plan you have in place. Therefore, I would recommend you to be prepared for it rather than to regret not doing so earlier.
Above are the three points that I deemed to be the more important criteria you should have if you want to have an early or a comfortable retirement. Try to work on them and have the answer to the following questions:
1. How much do you need for your retirement at age 55?
2. How much do you have now?
3. How much do you need to save/invest each year to fill up the gap (retirement sum – current sum)?
4. What’s the rate of return, return of investment that you are looking at?