Before we start talking about how to make our money earn money for ourselves, we must first ask ourselves, how much money do we need in a lifetime? For those of us who lived our lives running on treadmills (this blogger included) like rodents running in their spinning wheels, and have never given two seconds to think about it, the answer will be quite astonishing.
It will be around S$1,000,000 to S$3,000,000 for most Singaporeans. (Don't fall off your chair!)
Oh, btw, we haven't factor in inflation. Once we put that in, it should cross the million dollar mark. In fact, probably by a huge margin.
Ok, we got the cost, now let's work on the income. For an average Singaporean, with a monthly pay of S$3k, and assuming that they work 40 years, in one lifetime, they can earn S$1,440,000. So there is a buffer of S$440,000, this will be needed to pay for insurance, children's education, parents' allowance and hospital bills, car loans, restaurant dinners, presents, medical fees, annual tours, gym fees (so that we can continue to run on treadmills obviously) and all the other indulgence in life. Of course, the biggest killer is inflation, over such long time frame, even if we just put in 2-3% inflation, the total cost would increase by 20-40%. Which means that a significant population of Singaporeans will not earn enough to support themselves in old age.
How did we get to the S$3 million number? Well assuming a more luxurious life (i.e. living in a condo and running on condo treadmills) will give you the S$3mn lifetime spending. Btw (ie by the way) an average condo now cost $1.5m in Singapore.
So that is the sad truth. We would need to be a millionaire just to scrape by this existence (well strictly speaking the comparison is wrong but anyways) and we will probably never have enough money to fulfill the 5C dream or any other dream that is worth dreaming unless we get a few important things right plus a lot of luck.
So while we are at this retiring/financially free topic, I have to say that retiring is a bad option bcos we might just die or we lose income too early and risk running out of money before we die. But what is much less understood is that the whole concept of "financial freedom" is a gimmick that does not necessarily help us fulfill what we want in life. I have also discussed this in this post: "More on Financial Freedom".