Ever had one of those days when you were so tired from work at the end of the day that you could barely even muster the energy to change out of your office clothes? Well, imagine feeling that way when you're 70 years old.
If you neglect preparing for retirement, that could well be you decades from now on.
In fact, because Singapore doesn't have a pension system, that actually means that when you retire is really up to you. Unless you plan to retire entirely on CPF funds, you have a considerable degree of control over how soon you can retire.
So the big question is, if you want to retire earlier, what can you do? Here are three tips:
Buy a less expensive home
If you're one of those Singaporeans who thinks of your first home as an investment and wants to plonk as much money as you can into it, think again.
A recent news report revealed a strong link between retirement comfort and choice of housing-more specifically, those who spend more on their homes tend to have a more difficult time trying to replace their incomes when they retire.
Hence, Singaporeans who have yet to purchase their first homes should consider getting a smaller and cheaper place instead of aiming to purchase the most expensive unit they can afford. This frees up a larger portion of their income for savings, investments and, ultimately, retirement.
Start saving and investing earlier
People often underestimate how important it is to get an early start when saving and investing for retirement.
According to a 2016 survey, as many of a third of working Singaporeans weren't planning for retirement, while a 2014 report revealed that the majority of Singaporeans weren't retirement-ready, with only a quarter of the people surveyed able to say that they were following a financial plan aimed at providing for their retirement.
Another survey conducted in 2016 revealed that 46 per cent of respondents thought they would be forced to work past retirement age, with 44 per cent of the people surveyed not having started saving for retirement. Even more shocking is the fact that 27 per cent of the respondents aged 55 and above hadn't started saving for retirement.
Investing your first $1,000 when you're 25 isn't the same as investing your first $1,000 when you're 55-by the time you're 65, that first $1,000 would have swelled to $7,039.99 if you had invested it at a return of 5 per cent per annum. If you wait till you're 55, however, when you're 65 the money will only be worth $1,628.89 if invested at the same rate of return. Big difference!
Reduce your monthly spending
Despite the fact that Singaporeans constantly complain about the high cost of living, it's clear that many middle class locals have a fair amount of discretionary spending, judging by the number of designer bags and kids toting iPads you see on the streets, and the frequency with which overseas holiday photos pop up on your Facebook feed.
That also means that the average person probably can cut their spending in certain areas. How comfortably or austerely you wish to live is up to you-we're not saying you need to go to extremes and start flushing your toilet with rainwater.
But the next time you feel the urge to splurge on something you don't need, remind yourself that if you were to invest that money instead, you would be bringing forward your future retirement.
When you realise your collection of designer handbags or that car that you bought to increase your attractiveness to the opposite sex are going to cost you several months or even years of work, you might think twice before you whip out your credit card.
Conversely, by leading a more modest lifestyle, you're not necessarily depriving yourself of luxuries. Instead, you're giving yourself the luxury of being able to enjoy more years without having to work-and in Singapore, not having to work could be the biggest luxury of all.
The article first appeared on MoneySmart
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