Retiring by the age of 50 may seem like an impossible feat, but it is achievable with the right financial planning and strategies.
In Singapore, where the cost of living is relatively high, it is crucial to start early and make smart investment decisions to ensure that you have enough funds to support your retirement years.
Here are some real-life examples of how you can earn enough money to retire by the time you’re 50 years old in Singapore.
- Maximize Your CPF Contributions
One of the most significant sources of retirement income for Singaporeans is the Central Provident Fund (CPF). As an employee, you and your employer contribute a portion of your monthly salary to your CPF account, which earns a guaranteed interest rate.
To maximize your CPF contributions, you can consider making voluntary contributions on top of the mandatory ones. The more you contribute, the more you’ll have in your CPF account when you retire.
For instance, Person A earns a monthly salary of S$5,000. He makes additional voluntary contributions of S$1,000 per month to his CPF account. Assuming an annual interest rate of 4%, his CPF account balance would grow to S$582,435 by the time he reaches 50 years old. This amount can provide him with a steady stream of income during his retirement years.
- Invest in Stocks and Bonds
Investing in stocks and bonds can help you grow your wealth over the long term. However, it’s crucial to understand the risks involved and to diversify your portfolio to minimize these risks. A sound investment strategy can help you earn enough money to retire comfortably.
For example, Person B invests S$2,000 per month in a diversified portfolio of stocks and bonds. Assuming an average annual return of 7%, his investment portfolio would grow to S$1,191,591 by the time he reaches 50 years old. He could then use the returns from his investments to supplement his retirement income.
- Start a Side Business
Starting a side business can be a great way to earn additional income that can help you save for retirement. With the right business idea and execution, you can generate a steady stream of income that can supplement your retirement savings.
For instance, Person C started a home-based baking business in her spare time. She earns an average of S$3,000 per month from her business. Assuming that she saves S$1,500 per month from her earnings, she would have accumulated S$540,000 by the time she reaches 50 years old. This amount, combined with her CPF savings and other investments, would provide her with a comfortable retirement.
- Consider Real Estate Investments
Investing in real estate can provide you with a steady stream of rental income and the potential for capital appreciation over the long term. However, it’s crucial to do your due diligence and choose the right property to invest in.
For example, Person D purchased a rental property for S$1.2 million. He earns a rental income of S$3,000 per month from the property, which he uses to pay off the mortgage and save for retirement. Assuming that the property value appreciates at an average rate of 3% per year, the property would be worth S$1.77 million by the time he reaches 50 years old. He could then sell the property and use the proceeds to fund his retirement.
Retiring by the age of 50 is achievable with the right financial planning and strategies. By maximizing your CPF contributions, investing in stocks and bonds, starting a side business, and considering real estate investments, you can earn enough to enjoy retirement before you hit retirement age.