Planning for Retirement – Cost of Living in Singapore

I used to think that I have to retire at the age of 55 but the government has raised the retirement age to 62 and subsequently to 65. To be precise, under the Retirement and Re-employment Act (RRA), which took effective since 1 January 2012, the statutory minimum retirement age is 62 but employers are now required to offer re-employment to eligible employees who turn 62, up to the age of 65.

For various reasons, I still plan to retire at 55. It is thus useful to estimate how much I need to maintain my existing standards of living, excluding the luxury of owning a car. My existing car will need to be scrapped in May 2015 and I do not plan to buy another car because owning a car is expensive. As a rough estimate, the cost of owning a low-end mid-sized sedan car (for example, Toyota Altis and Nissan Latio) is $2,000 per month, inclusive of depreciation charges.

Based on the Household Expenditure Survey (HES) report 2012/2013 released by the Singapore Department of Statistics, the average monthly household expenditure for a family of 4 is $1,355 per household member per month in 2012/2013. The average annual increase between 2007/2008 and 2012/2013 was 4.9%. Based on this average annual rate of increase, the average expenditure per household member will be $1,564 in 2015 and $1,894 in 2019, which works out to be $6,256 per household per month in 2015 and $7,576 per household per month in 2019.

Kyith Ng has posted a blog article entitled A review of my past year’s expenses at http://www.investmentmoats.com/budgeting/a-review-of-my-past-years-expenses/. From what he wrote, “I spent roughly $24k this year. This includes family expenses for 3.5 people, as well as mortgage, conservancy under Family Contribution. Those in total took up $1k per month. The family expenses tend to be shared between me and my brother, since he covers a fair share of that. The rest of the spending is all by me.” I took it that he spent $1k per month for personal expenses and the per-capital family expense is $1000/3.5 = $286 per month. He appears to have some medical problem; hence, his medical expenses are high. His monthly expenditure works out to be about $1,286 per month, which is lower than the national average. From the information he provided, he is a rather thrifty person; hence, it is not surprising that his expenditure is below the national average.

The above information suggests that the actual inflation rate is about 4.9% for a household of 4. For planning purpose, it would be very safe to use the estimated expenditure of $2,000 per household member per month. My financial burden will be lighten when the children start working from year 2019 onward and can support themselves.

Singapore is indeed a very expensive city to live in!