Let’s hope our generation avoids these classic retirement mistakes 

WARNING: Sponsored content by the Association of Banks in Singapore.

Here’s something that we know millennials don’t exactly want to hear – that the youngest of us today isn’t 18, or 21 even. They’re 27.

Not only does that mean planking or the mannequin challenge has been uncool for a long time, it also means that most of our generation are entering what is typically the peak career stage in the next five years.

Let’s talk about the good news first. 

For starters, with more of us in senior roles, we will finally be earning money that our broke selves in 2012 could only have imagined. 

Maybe you can even legitimately afford to go on that trip to Tomorrowland without feeling too guilty, if COVID ever goes away.

Now, the bad news. 

You only have a limited time before the zoomers catch up and give us a run for our money – in the same way we made some peeps obsolete, the same will happen to us, and the good times will not last forever.

Make no mistake: For millennials, starting retirement planning in 2021 is no longer considered ‘early.’ 

That said, if you’re late to the party, don’t worry. It’s not game over, yet.  

What you’ll need to do though, is avoid the pitfalls that many people fall into when starting their financial journey. And plan for the future long before retrenchment or wage stagnation even has the chance to knock on your door. 

And that’s what we’re here for. Here are six mistakes that in our opinion, hold people back the most. 

In the words of everyone’s favourite 23-year-old 10-year-old

You gotta avoid them all!

Underestimating the effects of inflation

One popular variant of personal finance articles goes like this: 

Save x amount of money for x years and they will have one million dollars at retirement.

What they don’t mention though, is that a million dollars isn’t what it used to be, and will be worth even less in 40 years when you account for inflation. 

Adjusting for inflation, a million bucks in 2061 will be worth approximately $450,000 today.

For some perspective, based on the 4% rule, for $450,000 to last you 30 years, you’d need to keep your spending to about $1,500 a month. Not exactly the high life – in Singapore, you’d need at least $1,379 for a basic standard of living. 

Here’s a table with a nifty guide on how much you’ll need. Keep in mind that this excludes medical costs and your parent’s/kid’s needs. So you might wanna bump them up even more. 

How much you spend today Amount you need in 40 years (2061), assuming 2% inflation
$1,700 $1,130,000
$2,000 $1,300,000
$2,500 $1,600,000
$3,000 $2,000,000 
$3,500 $2,300,000 


Completely misunderstanding CPF

For some reason, CPF is a widely misunderstood product, and there are two extreme ways it manifests.

The first is people thinking CPF will be able to provide them with a luxurious retirement.

Someone needs to say this, but your CPF will only provide you with a ‘basic to decent’ standard of living in Singapore. 

If you’re expecting to blow today’s equivalent of $5,000 per month during retirement, it’s sure to disappoint – the highest CPF Life Plan currently pays out $2,180 monthly.  

What this means is that if you want to have a retirement that involves frequent vacations and fine dining, you will need to do your own planning in addition to CPF. 

On the other extreme, we have people thinking that ‘CPF is not their money’ so they don’t make the most out of it  

Look, we get that it’s annoying to not be able to withdraw a large sum of money for decades. But it’s no excuse to spend the money poorly, because CPF is indeed still your money and is part of your net worth (just not as liquid as you’d like it to be.)

Some smaller mistakes you might wanna avoid here are: 

  • Paying for your home entirely with your CPF, then leaving little or no savings for your own retirement
  • Leaving the money in your Ordinary Account to grow at 2.5% when it could be doing 4% in your Special Account

Waiting till your 40s to start financial planning 

We all have that one friend who’s like ‘aiya next time I earn more I will plan.’ 

But here are three facts:

Being financially responsible is a habit. 

Being financially irresponsible is a habit. 

Old habits die hard. 

Once you’re past a certain age, it will take drastic action to change one’s financial course. In addition, your investments (if any) have quite a short runway to compound.


If you invest $1,000 per month when you’re 30, you get $1,227,087 when you’re 60 at 7% p.a.

If you invest $1,000 per month when you’re 40, you get $523,965 when you’re 60 at 7% p.a.

That’s more than double the results, fyi. Do the math here.

On top of that, increased commitments and reduced job security make both earning and saving difficult. 

Our take? Spread the pain of prudence evenly throughout the decades, because hustling and saving intensely as a 40-year-old is rough on both the mind and body. 

Thinking your children will save you 

Money-wise, children are at best a speculative investment. Much like doge-coin. Or sneakers. 

You either win big, or lose big. 

If sole financial freedom is your goal: instead of having kids so that ‘someone can look after you in the future’, your money is best put into the stock market, or even your CPF Special Account, where it compounds at 4% p.a.

As we’ve said before, overburdening your children with your financial needs can lead to resentment, poor relationships and in extreme cases, abandonment. We’re not joking.

But you probably already know this. The Sandwich Generation is very real.

So sure, some of our parents might have raised us to be their retirement plan – it doesn’t mean we need to continue the cycle. 

Letting your parents handle your money 

I’ve heard this story more than once before: Your dad tells you that he’s really good with money and will invest it for you. 

Next thing you know, he puts your hard-earned salary into a penny stock and your funds go low, low, low, low, low, low.  He might even buy that condo he just prays will go for an en bloc. 

Look, it can be comforting to think that you can still rely on your parents and their wisdom.

But our parents grew up in the era of ever-appreciating HDB flats. Many of them equate the stock market to gambling and have a love affair with fixed deposits. 

If anyone knows what to do moving forward, it’s us, not them.

Confusing high income for wealth

You might not believe this, but there is no law stating that you must ‘upgrade’ to a condo if you earn more than $14,000. 

Lots of people get a pay raise and immediately upgrade their lifestyles, thinking that the good times last forever. 

What do they do? They don’t save, they don’t invest and they get into debt at levels that only the wealthy can afford. 

But here’s the thing: earning $14,000 today doesn’t mean you’ll keep on that streak for the rest of your life. 

Income should not be the only consideration when buying that new house or a car. Net worth is equally, if not more important. 

For that reason, we would not spend more than 10% of our net worth on a car and we’d use PropertySoul’s 3-3-5 rule when buying a house.

Remember people, it’s pretty simple:

Spend within your means = remain at the status quo 

Spend below your means = grow richer 

Spend above your means = go broke

Rich Dad Poor Dad’s
Kiyosaki might have fallen from grace in the past decade, but he was right about one thing:

‘It’s not about how much you make, it’s about how much you keep’. 

Thinking ‘retirement’ has to mean taking it chill 

It’s easy to be skeptical about people who are enthusiastic about retirement, especially at this time of our lives.

One common comment we often get is ‘Why start so early? What if you retire early and have your mind waste away slowly?’ 

What they don’t get is that many of us are not pursuing retirement per se. We are pursuing the choice of being able to retire when we’re 40, 50 or 60. 

There’s a difference.

At the same time, we’d like to also suggest what retirement could be like. You see, it’s true that many people think retirement involves chilling on the beach somewhere. 

But it’s also equally true that many people spend their golden years working on passion projects or meaningful work that don’t necessarily earn a lot of money. 

This could be in the form of activities like wildlife conservation, or uplifting disadvantaged groups via education.

So, how about this?

Start planning today.

Secure your basic retirement needs.

Work and fight for the causes you believe in. 

Because how can you help others, when you can’t even help yourself? 

Stay Woke, Salaryman 

Other retirement mistakes we have written about it before:

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9 replies to “Let’s hope our generation avoids these classic retirement mistakes 

  1. Is 2% still an accurate estimate for future inflation rates? Singapore’s inflation rate for the past 5 years has been consistently below 1%, with some years even going to deflation.

  2. If we can only spend 10% of our networth on a car, does it mean that we need to be millionaires to afford a car in todays price?

    1. Yes, that is what we generally encourage. Of course, you can still do it if you want to, it’s just our own personal guidelines!

      *exceptions apply if you use your car for work, such as a property or insurance agent, make multiple trips per day etc etc

  3. Great article! I’m afraid that while our generation MAY have more access to financial information to properly get started early and reach FI or FIRE it is still probably a small subset. I mean even myself, I was properly financial educated and running a big company and still made plenty of rookie mistakes. I guess only time will tell if our generation can pull it together.

  4. “So sure, some of our parents might have raised us to be their retirement plan –

    As a parent myself, it is sad to have it happen this way and you said “some” meaning not all parents raised their children to be their retirement plan which I agree. It never came into my mind, even once when I was raising my children to consider them as my retirement plan. They were indeed responsibilities that bring so much joy until now that they were all grown up. I’m sure not everyone feels this way, both parents and children.

    I see a lot of financially literate young people today, so afraid of living. I am thinking it is the reslut of what the generation that raised them up do and not do.

    And yes you are right. “it doesn’t mean we need to continue the cycle.”. We all need to learn from each other. The generation before us, the one we have today and the one that will come ahead of us.

    1. This is an interesting phrase. May I ask please, what do you mean by afraid of living? I’m curious to know more about the financially literate young people who are afraid of living (if I understood that correctly) that you mentioned here. Thanks!

      1. These were some of the things I observe from some financially literate fellows I see that made me say that.
        I once encountered a fellow who sounds like doing very well on their finances suffering from neck pain and still can’t figure whether she would spend her emergency fund for a thorough medical check-up, and someone whose growing net worth at his age would be enough to cover his needs for a few more decades and can’t decide whether to buy a house for fear of earthquakes, drug addicts and all kinds of apprehension that a neighborhood might have. Then there’s also this young lad, very well versed on investing but worries so many things about his old folks, from their money behavior to their lifestyle and them getting sick and all sort of apprehensions anyone can think of. Then a lot more were anxious about the thought of raising children and building families
        for financial reasons.
        I understand that all these apprehensions are valid but to get them in the way of living fully at the moment is another thing.

  5. Ohhh, I see. I understand now what you’re saying! Thank you so much for taking the time to explain it to me. (: I appreciate it! Have a good Sunday ahead!

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