“Can my wife & I retire at 50 with $2-3 million?”

JUST ASK: “Can my wife & I retire at 50 with $2-3 million?”
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Written by Leong Chan Teik
Friday, 05 February 2010 14:00
In this weekly series titled JUST ASK, we invite readers to send in questions on stock investing, and personal finance. We will ask an expert (or experts) to provide answers. Below is a question from a reader which is answered by Leong Sze Hian, President of the Society of Financial Service Professionals, and Musicwhiz, a popular blogger on financial and investment topics.


How much to save for $2-3 m by age 50?

Reader: I am a graduate in my mid-30s, and earn about $5,000 a month. My wife is of the same age, a graduate and also earning the same income.

We don’t have children and we live in a HDB flat, don’t own a car, and are conservative in our lifestyle.

We hardly invest in stocks, and accumulate savings in the bank’s fixed deposit accounts.

We hope to retire at 50 on savings of $2-3 million. We believe we can based on some back-of-the-envelope calculations that we have done.

We don’t plan to stop working completely after 50, but will work two or three days a week.

Is it possble to achieve $2-3 million by 50? Is this enough to last us for the rest of our lives?


Leong Sze Hian

Dear Reader: Let’s assume that you are:

* aged 35,
* want to have $6,000 a month (60% of your combined income now) when you retire at age 50;
* the $6,000 should increase at 2% per annum to adjust for inflation;
* you want this sum until age 88.

Under the above assumptions, the capital you require at age 50 is $1,913,304, assuming your savings can achieve a 6% rate of return a year along the way.

If I assume that you have $300,000 of assets now (CPF + cash), you will need to save $4,027 monthly from now to age 50.

As the assumption is a 6% rate of return, you may have to consider investing your cash and CPF – after setting aside about 6 months of your expenses in cash, and the first $50,000 of your CPF OA/SA that cannot be invested.

If you plan to work for 2 or 3 days a week when you retire, the amount you need to save may be less, as the inflation-adjusted equivalent of $6,000 today is $8,075 in 15 years’ time

About the Author

Leong Sze Hian has served as the president of 4 professional bodies, honorary consul of 2 countries, an alumnus of Harvard University, authored 4 books, quoted over 1500 times in the media , has been a radio talkshow host, a newspaper daily columnist, Wharton Fellow, SEACeM Fellow, columnist for theonlinecitizen and Malaysiakini, executive producer of Ilo Ilo (40 international awards), Hotel Mumbai (associate producer), invited to speak more than 200 times in about 40 countries, CIFA advisory board member, founding advisor to the Financial Planning Associations of 2 countries. He has 3 Masters, 2 Bachelors degrees and 13 professional  qualifications.