Last week, I came across an article published in The Business Times on 12 February 2025 and the headline caught my attention:

“Retirees should build a nest egg of at least S$550,000 for ‘conservative’ needs, but Gen Zs, millennials could fall behind: DBS.”

This number concerns me.

Is $550,000 Really Enough? Let’s Be Honest.

Does S$550,000 sound like enough for 20+ years of retirement? Maybe if you are living extremely frugally, but for most people, it is unrealistic. 

Here’s why:

1. People Are Living Longer
   Many Singaporeans are living well into their 90s. If you retire at 65, you need your savings to last at least 25 to 30 years. Running out of money in your 80s? That is a scary scenario.
   
   
2. Inflation, The Stealthy Wealth Killer
   Think about how much groceries, healthcare, and housing have gone up in the last decade. Now, imagine that happening over the next 30 years. What feels like enough today might not even cover the basics in the future. Hence, we must factor in inflation and we can safely assume 3% p.a. in our calculations.
   
   And to give you some perspective:
   
   Inflation: 3% p.a.
   Period: 20 years
   Present Value: $5,000 in today’s dollars 
   Future Value: $9,031 in 20 years’ time
   
   This means that if you expect your retirement expenses to be $5,000 per month in today’s dollars, after factoring inflation, you will need $9,031 per month in 20 years’ time. See how the numbers have ballooned? A quick mental calculation will tell you that $550,000 is simply not enough!
   
   
3. A Bare-Minimum Lifestyle? Not Realistic
   This estimate assumes just covering conservative needs. But what about travel, hobbies, or quality healthcare? Do you want to just get by or spend your golden years on your own terms?

Young Investors: You Have Time, Use It Wisely

Younger investors are not putting enough money to work harder for them.

• Those aged 25 to 44 are only investing 15-17% of their salaries, compared to 30% (age 45 to 54) and 49% (age 55 to 64). That means our younger generations are missing out on compounding growth – the most powerful wealth-building tool out there.

   

• Too many are playing it too safe. A surprising 44% of those 35 to 44 and 37% of those 25 to 34 have their investments parked in Treasury Bills and Singapore Savings Bonds. While these are stable, they won’t help your money grow fast enough to outpace inflation.

So, What Should You Do?

You need not panic but neither should you ignore these facts. You can begin by taking small steps today to strengthen and build a resilient retirement plan. 

Here’s where to start:

✅ Increase Your Investment Contributions – investing only 15-17% of your salary is not sufficient for long-term security. Aim higher when possible. Even small increases add up over time. 

✅ Diversify Your Portfolio – Consider a mix of unit trusts, stocks, ETFs, and real estate. These assets provide much stronger long-term growth potential compared to just fixed-income options. Having said that, fixed-income instruments serve as the safety net or cushion in your investment portfolio.  

✅ Think Long-Term – People tend to overestimate what they can accomplish in a day but underestimate the progress they can make over a decade. Compounding growth is the most powerful force in building wealth – it turns small, consistent investments into massive financial gains over time.

The Bottom Line: Plan Now, Thank Yourself Later

The earlier you start, the better off you will be. 

Wealth building is a team sport. Work with a Certified Financial Planner who can guide you through the complexities of planning (calculations, projections, assumptions, scenarios) and help design a retirement plan that is tailored to your unique goals and lifestyle.

Start now, invest wisely, and build a future where you won’t have to stress about money!