“I am only in my 20s, it’s too early to think about retirement. I will plan for it later”
Does the above sound familiar? Look at the diagram below, assuming same rate of returns.
In the above example, both Bill and Chris invest $5000 annually up till retirement at 65. Chris started 10 years earlier, investing $50,000 more than Bill, yet look at the difference at age 65. This difference of $602,070 is the cost of being 10 years late!
The $50k investment between 25 and 35 works out to $602,070 at age 65. Susan, who only invest $50k in the first 10 years, outperforms Bill who invests a total of $150k, yielding $540,741 at age 65. So what makes the difference here? Starting early!
An infographics taken from HSBC Premier (https://www.hsbc.com.sg/1/2/hsbcpremier/passions-never-retire/retirement-by-numbers/dreams-versus-reality)
Dream vs Reality. You dream of giving up work for a life of leisure so that you will be able to do everything you ever wanted to do. However, the reality is that without having a sound financial plan, realising what you want to do could become too costly, without your regular pay check.
It is never too early to start planning for retirement. The day you receive your first pay check is the day you can start your retirement fund. When do you want to start building yours? Do you want to belong to the 81% of Singapore retiree of not realising their dreams? The choice is yours.