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How much do I need at Retirement? 
 
How much do I need at retirement?
  • Do you know that your Retirement Fund Benefit is probably the largest asset you will ever own? 
  • Do you know that very few people think about whether they will have enough money for their retirement until too close to retirement? 
  • Do you know that sound management of your retirement Fund assets is crucial because as a member of a defined contribution Fund you carry the risks and opportunities of investment? 
Retirement Expenses
 
You need to think about your expenses once you retire. It is very likely that you will need less money after you retire because:

• Your house may be paid for in full by the time you retire.
• Your children may no longer be financially dependent on you.
• You may have to pay less tax - once you are over age 65; the amount of tax you pay reduces.
• Your travelling costs may reduce, as you will not need to go to work each day.

On the other hand some of your expenses may go up. In particular, your medical expenses usually increase when you get older.

As a rough guideline only, you should be able to have a reasonable retirement if your income is some 70% to 80% of your total salary just before retirement.

Retirement Age
If you want to retire young, you will need to build up more retirement savings, simply because you (and your partner) are going to have to live off these savings for longer.

Let's say you want to retire with an income equal to 70% to 80% of your total salary just before retirement. The following table gives you some idea of the number of months' salary you need to provide for such an income depending on the age at which you retire.

Single Person CPI Linked
Chosen retirement age
Number of month's salary required *
Multiple of annual salary required
55
163
13.6
58
151
12.6
60
143
11.9
63
131
10.9
65
123
10.3

* The above amount of money provides for your retirement income to increase each year in line with inflation. It does not provide for any pension to be paid to your spouse after your death.


Married Person CPI Linked
Chosen retirement ageNumber of month's salary required *Multiple of annual salary required
55
200
16.6
58
189
15.6
60
180
15.0
63
167
13.9
65
159
13.2
 * The above amount of money provides for your retirement income to increase each year in line with inflation. It also provides for a pension of 75% of your income to your spouse on your death.


If you want to retire at age 55 and you need an income of some 70% to 80% of your salary at this time, you will need to have built up retirement savings that are about 133 times your monthly salary (i.e. 11 times your annual Cost of Employment (CoE).
 
On the other hand if you plan to retire at age 65 (i.e. work 10 years longer), you will need to have built up about 110 times your monthly salary (i.e. 9.2 times your annual CoE). So you have got 10 years longer to save for your retirement and you need less retirement savings. This clearly shows how difficult it is to retire early and have a reasonable pension!
 
There is mounting evidence that people may live much longer in future. In this case you would need even more money than shown above for your retirement!

We encourage you to make use of the Retirement Calculator if you want to know whether you are on track to have enough money when you retire.