A friend asked me one time how does she know the amount of money she needs upon retirement.
I answered her, I am not an expert but it is really based on assumptions and then we came up with the scenario below.
- I will retire by age of 65
- I will spend 2,000S$ (roughly 66k Php) monthly or 24,000S$ (~ 792k Php) annually
- I will live until the age of 85
- I don’t have any investment and no source of money when I retire
I will need 480,000S$ (estimated 15.84M Php) not taking in consideration inflation. It is just a simple math of multiplying 24,000 by 20. But my first reaction is where to get this amount of money?
So, my friend and I started to think and compute, if I start at the age of 40, I need to save 1,600S$ per month or 19,200S$ per year.
The questions running in my mind are:
- Is saving 1,600 per month or 19,200 per year doable and realistic?
- Is 2,000S$ enough given that based on my current circumstances, I don’t have my own house and I will live in the city?
- Is this money enough given that as we age, we spend more for medicines and hospitalization?
- Will my savings be enough given that life goes on, I will still need to eat and wear clothes, basically ensuring we address our basic needs and as a social being I still want to travel, spend time with the family and meet up with my friends.
- What if I live longer than 85, where will I get the money as I only factored 20 years? Does this mean I need to get a job at the age of 85? As if, someone will employ me hahaha. By that time, I am sure I am super duper slow already.
Good thing I got introduced to investing 4 years ago and I also saw this wealth calculator in FB one time (though this is in pesos). I just want to share this wealth calculator I created in Excel which can serve us a guide and compass for us investors.