Don’t Wait To Save For Retirement

If you’re in your 20s or 30s, retirement might seem far away.  Meanwhile, you have a ton of bills to pay every month: rent or mortgage payments, transportation, childcare, trips, utilities, groceries – and none of them can wait Next to these immediate demands, retirement looks a lot less urgent.  You might also think that upon retirement, your MPF and personal savings would somehow take care of it. But you might be wrong about that.

You won’t know whether you’ve actually saved enough until you are about to retire. If you find you’ve fallen short, you’ll be too late to change anything.  That kind of surprise is no fun, especially late in life!  Instead of leaving your future to chance, take control by planning ahead.

Imagine that you get paid in water.  Every time a new paycheck gets piped in, you need to store that water in buckets. Each bucket represents an ongoing expense or a future financial goal.  So you might have buckets for:

  • Housing
  • Transport
  • Tax
  • Household Goods
  • Childcare and/or school fees
  • Annual overseas vacation
  • College fund for children
  • Retirement fund

Notice how this exercise covers future expenses as well as current ones.  In a nutshell, this is precisely the essence of financial planning: realizing that urgent needs are not the same as important needs, and that future expenses are just as crucial as current ones.

First, ensure you’ve listed all the necessary buckets. Start with those essential for current and future survival. Then move on to the discretionary ones – “fun” expenses you could hypothetically live without.

Next, work out how big each bucket should be.  As you divide your earnings into more buckets, the average amount of water in each will grow smaller.  You might need to address this by removing a few buckets. That’s never enjoyable, but with limited resources, you must prioritize your needs. Take a hard, honest look at which buckets matter most to you, and which are nice-to-haves.

This short but effective exercise forces you to reflect on what you can really afford, and what you can’t. If you don’t like the result, take action: Increase your earnings, rework the buckets, or both.

In any case, retirement is a “must-have” bucket. As of 2016, the average human lived to age 84. So if you plan to retire at 65, you could have 20 years or more of living expenses to take care of.  Your MPF balance will help, but it’s unlikely to cover all your needed costs. You also need to consider your quality of life in retirement, along with any health expenses that will likely arise as you age.

Even if you can only put a trickle into the “retirement” bucket today, starting early will help time and interest grow those savings for you. That’s exactly why you can’t afford to wait to start saving for retirement until “later.” The only good time to start putting money away for your future is right now.


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