How much is enough?
Every rule of thumb about retirement starts from someone else's life. A year of your own ledger is a better place to begin: what you spend now, which of it stops when the paycheck does, and what still has to be paid every year until the age you plan to.
The question with too many answers
Ask how much you need to retire and you will hear a number. Seventy per cent of your salary. A million. Ten times what you earn. Each comes with a confident voice and a table, and none of them has ever seen your life.
A rule of thumb starts from someone else's average — or from your income, which tells you what you could spend, not what you do. Two households on the same salary can need very different retirements: one rents and eats out, the other owns its flat and cooks.
The rest of this chapter answers the question the other way round. Not “what do people like me need?” but “what do we spend, and what will still be there when the paycheck stops?” If you have kept a ledger for a year, you already hold most of the answer.
Start from what you actually spend
Take a couple, both 52. Their ledger shows a year of spending that averages S$5,000 a month. Not their budget — what actually left their accounts, with moves between their own accounts left out (Chapter 6).
| What it is | At retirement | A month |
|---|---|---|
| Home, food, utilities, phone | Carries on | S$3,300 |
| Getting to work | Stops | S$300 |
| Health | Rises from 75 | S$250 |
| Home loan | Ends at 59 | S$900 |
| Insurance premium | Ends at 56 | S$250 |
That table is the whole method in miniature. Most of life carries on. Some spending exists only because you go to work. Some ends on a date that is already written down — the last loan repayment, the last premium. And one thing grows: health.
Change only what retirement changes
Carry those lines forward and the monthly need stops being one number. It becomes a line that steps down when a debt ends, steps down again on the day you retire, creeps up later in life, and drops when one of you is left to carry on alone:
On the day this couple retires, their need is about S$3,550 a month in today's money — not S$5,000, and not seventy per cent of anything. Every step on the line has a reason you can point at, which is what makes it trustworthy: if one is wrong, you know which one to fix.
Count every bill once
A year of spending is a good start with two blind spots, and both are about bills that repeat.
A bill that hasn't shown up yet
A yearly car tax paid in a month just outside the window. A new insurance policy started last week. The last 12 months never saw them, but retirement will. A recurring bill counts at its expected amount, whether its payments are in the window or not.
A bill counted twice
The same premium sits in your spending and in your list of recurring bills. Add the two and you pay it twice in your plan. So the payments already in your spending are taken out first, and the bill is counted once.
This is where a ledger that knows your recurring bills earns its keep. A spreadsheet sees a number; a ledger knows that the S$250 on the 3rd of every month is the same promise, and when it stops.
From a monthly need to one number
A line is useful, but a plan needs a target. So take each year from the day you retire to the age you plan to, and ask: how much of that year's need do pensions and other income not cover? That gap comes out of savings. Add up every year's gap, in today's money, and you have the savings you need on the day you retire.
| Year | Need | Pensions and income | From savings |
|---|---|---|---|
| Age 66 | S$42,600 | S$24,000 | S$18,600 |
| Age 70 | S$42,600 | S$24,000 | S$18,600 |
| Age 90 | S$31,200 | S$37,200 | +S$6,000 spare |
One subtlety matters a great deal. The spare S$6,000 at 90 — by then their home pays them a monthly income too, and one person spends less than two — arrives twenty years too late to pay for the shortfall at 66. Money in the future cannot settle a bill in the past. So the target is worked backwards from the last year: a later surplus can cover a later gap, never an earlier one. Skip that step and a plan can look fully paid for while running dry in its first decade.
“Enough” is not a number someone else picked. It is your own spending, carried forward honestly.
Start from what you really spend. Change only what retirement changes. Count every bill once. Then ask which years your pensions don't cover — in order.
Your journey so far
Who pays you when the paycheck stops?
The need is one side. The other is everything that pays for it: pensions for life, pots you built, income that carries on — and the traps of tax, inflation and counting the same money twice.
Your ledger already knows most of the answer.