How Much Retirement Savings Do You Need? Calculate Your Retirement Gap in 6 Steps (With Examples for Ages 30/40/50)

懶得變有錢 (Lazy to be Rich) Introduction

Hey lazy people who want to be lazy but can’t, and those who can’t be lazy but want to be! Today, we’re going to talk about a topic that might seem distant but is actually very urgent: retirement savings. This topic might seem dull, but it’s a reality everyone will face. So, let’s take a look at this issue together. Because you live in Taiwan, if you just want to leave the problem to the Labor Insurance (Labor Insurance) pension or the Labor Pension, you might be very disappointed.

Did You Know Taiwanese People Live a Long Time?

The average life expectancy in Taiwan is almost 80 years! This number makes us proud, but it also worries us. Because living longer means we need more money to support our lives after longevity. The average life expectancy for Taiwanese men is 76.63 years, and for women, it’s 83.28 years. This number is not only higher than the global average, but it also makes Taiwan one of the leading countries in the world in terms of average life expectancy. Does this mean that Taiwan’s medical and social welfare systems are doing well? Or does it mean that we need more financial planning to cope with this long-lived society?

Is There Enough Money? That’s the Question

Living long is certainly a good thing, but have you ever thought about whether you’ll have enough money to live to 80? You may have never thought about this question, or you’re too lazy to think about it. But retirement savings are not just a math problem; they directly affect the quality of your future life. According to data from the Bureau of Labor Insurance, over 60% of retired workers receive less than NT$20,000 per month in old-age annuity. This number is alarming! If you don’t prepare early, you may face a serious financial crisis in the future. If the current average is NT$20,000, how much can you expect in the future?

Everyone Encounters Money Problems

This problem is not just something you and I will face; it affects every Taiwanese person. So, let’s take a look at this issue together. This problem is not just something you and I will face; it affects every Taiwanese person. Whether you’re a civil servant, entrepreneur, student, or homemaker, retirement savings are a topic you can’t avoid. Therefore, this issue is worth discussing and solving together.

How Should Retirement Savings Be Planned?

If your target retirement savings are NT$10 million and you hope to have an annualized return of 8%, how much money do you need to save each month? We did a simple calculation, and the results are as follows:

This table shows that if you start saving at age 30, you need to save NT$5,100 per month; if you start at age 40, you need to save NT$7,800; if you start at age 50, you need to save NT$15,600. This number may make you feel stressed, but it’s a very real problem. If you don’t prepare early, you may face a serious financial crisis in the future.

How Can Retirement Savings Be Spent?

If you can really save NT$10 million for retirement, it’s not entirely insufficient, but you still need to make good use of this large sum of money and do some operations. Assuming you have NT$10 million in retirement savings at age 65, and you invest it with an annualized return of 4%, 3%, 2%, 1%, or 0%, and then withdraw NT$50,000 per month to spend, how long can you spend it? Until what age?

This table shows the number of months that NT$50,000 can support and the age that can be supported under different annualized investment returns. Of course, this is just a hypothetical calculation. And NT$10 million does not take into account inflation and consumer prices at that time. So, of course, you have to save more, right?

After Retirement, Do You Choose to Survive or Live?

Enjoying a Day of Retirement Life

Imagine you’re 70 years old, sitting in your own living room, enjoying retirement life. You watch humans landing on Mars on TV, listen to the news of the last old people on Earth, and swipe through the apple vision pro implanted in your eyeballs in that era, feeling that everything is so beautiful.

The Anxiety Brought by the Message Popping Up

But suddenly, you receive a message push from the bank saying that your savings are running out. Your heart sinks, and you start to feel anxious. You take out a calculator, enter the numbers one by one, and then realize with heartache that your money may not be enough to last until the day you die. Because the average life expectancy has been extended to 98 years old with the advancement of medical and biotechnology.

Facing Financial Reality

You start to worry, start calculating, and finally find that even if you start saving now, your money won’t be enough to last until you’re 98. At this time, you even start to regret not planning well when you were young and not listening to the advice of those financial planners. You mistakenly believed in that book “Don’t Leave Your Money Until You Die.”

Memories and Realization

At this time, you suddenly remember that 30 years ago, you listened to the advice of a financial planner and started saving and investing early. You look back at the investment reports of those years and find that the decisions you made back then were so wise.

Present and Future

Now, you not only have enough money to support your retirement life, but you can also enjoy life and even support your grandchildren to go to college. You finally understand that financial planning is not a distant or dispensable thing; it directly affects the future of you and your family.

Further Reading

懶得 (Lazy to be Rich) Conclusion

懶大

金融科技新創 CEO | 獨立財務顧問

Retirement planning is not an easy task, but it is a problem that everyone must face. Relying on the government’s pension will not lead to a good retirement life, because you don’t know when it will go bankrupt. It’s better to save more money yourself.

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