Is $1 million enough to retire on?

Is $1 million enough to retire on?

WHO wants to be a millionaire? One million dollars is getting short shrift these days.

"$1 Million In Retirement May Not Be Enough", a Forbes article in 2011 warned readers. A personal finance columnist for finance website The Motley Fool penned an article in 2012 asking if the idea that "a million dollars is enough" today's "retirement myth".

Evening tabloids here have also picked up on the idea and cited calculations by financial planners to show how, hard as it might be to earn $1 million, that sum might not do.

Even Chinese Nobel literature prize laureate Mo Yan, after receiving his $8 million Swedish krona (S$1.5 million) cash award, said he wanted to buy a big house in Beijing but "people reminded me not to buy too big a house" as the money can only buy a 120 square metre property there - which is about the size of an older HDB five-room flat.

Singapore reportedly has the world's highest proportion of millionaire households. A Boston Consulting Group survey published in June 2012 estimated that there are 188,000 households with US$1 million (S$1.22 million) of private disposable wealth excluding businesses, property and luxury goods. That is more than one in six households here.

Yet with the price of a condominium in Singapore at around $1 million and up, and an overseas university education costing up to half a million dollars, people can be forgiven for thinking that even $1 million in the bank will not be enough for them to live on.

This, despite how $1 million in the bank is not an easy sum to amass by most standards. Many Singaporeans in their 50s and 60s are still paying off their HDB mortgages and might not even have $100,000 in retirement savings.

One million dollars, meanwhile, can be spent relatively quickly. A simple multiplication calculation will show that if one spends $4,000 a month, or around $50,000 a year, $1 million dollars will only last around 20 years if there is no inflation.

That is hardly encouraging. Even if this $4,000-a-month spender wins $1 million at the lottery, quitting work the very next day is likely not an advisable thing to do, financially speaking.

Are Singaporeans doomed to work until they drop, even with one million dollars in the bank?

Let us get back to reality here - reality being defined by the average Singaporean family living in a HDB flat, which more than 80 per cent of families here do.

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