When Should You Start Saving For Retirement?

July 9, 2012

in Saving money

By Lau (guest contributor)

Retirement carries a different meaning for people at different ages. For the young adult starting work in their twenties, retirement is something that probably does not carry much meaning. It is something their parents are transiting into and has nothing to do with them. First and foremost on their minds will be landing that dream career, falling in love, getting married, purchasing all the “wants” with their first year paycheck, etc.

The next stage is when we hit our thirties, life has moved on for most from singlehood to setting up a family unit. The focus will be to stop job hopping, stabilize a career to support the mortgage and plan for the first child. Even those who are single usually start taking care of their parents who have started making retirement plans.

When we hit our forties, those with children start fussing over primary school entry or the dreaded PSLE. Parents who are planning for their child’s future tertiary education would also start buying endowments for them. For those who are single, they will probably start worrying about taking care of their parents and themselves in the future.

Finally, when we are in our fifties, life seems to have passed by in a flash and retirement is on the horizon. A quick check on the retirement plan, which is usually the CPF balance, shows it has been all been used for servicing the mortgage and the children’s education. By now, most would have been jolted awake and awareness to plan for retirement begins. This is a common scenario and it will be too late as less than ten years is left to build that retirement nest egg.

So when should you start planning for your retirement?

The clichéd answer most commission-based financial planners would say is “as soon as possible, start young for a longer time horizon.” They will tell you to start this ILP or 20 year endowment plan, start saving for the long term when you are still young in your twenties and thirties. However, this is not practical as when one is young, the demand for funds is more immediate. First, a liquid emergency savings fund needs to be established, wedding banquet costs and the honeymoon paid for, and money needs to be saved for the downpayment/COV for a residential property/renovation/furnishings, etc.

My opinion is planning with retirement in mind should begin as soon as possible but practical action will probably begin around 40 years old.

What I mean by planning is that the retirement age must be taken into consideration early, i.e. when taking up that home mortgage, lifestyle expectations with spouse, family commitments, age to have children, investment strategies, etc. However, actual savings towards the retirement goal will probably start at about 40, to have about 20 years to save and grow those funds.


By guest contributor Lau, a consultant and CPF IMSavvy blogger who founded Living Healthy, Staying Wealthy.

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