With the cost of living in Singapore going up, you wonder how much longer you’ll have to work before you can retire. Financial planners say it takes about 40 years to save for retirement. So if you plan to retire at 65, you should have started saving at 25.

But who does? No worries, though. Vasu Menon, president of Wealth Management Singapore, OCBC Bank, says it’s not too late.

You may even be in a better position to make retirement plans if you start later. “Starting later does mean you have to set aside more money, or take on a higher investment risk, or both,” he says.

SimplyHer Nov 2012, Singapore women's magazineHere’s how: 

1. Pay yourself first
Be realistic about how much you can save every month. Alfred Chia, chief executive officer of Singcapital, says: “If you’re 30 and wish to retire at 60, and want to accumulate

$1 million by then, you’d have 30 years to begin saving and investing. Say your investments provide a 5 per cent return per year, you’d need to save $1,196 a month.” If you delay saving until you’re 40, you’d only have 20 years left to save, and would have to put aside $2,422 every month.” Once you’ve worked out what you can save, prioritise paying yourself first. 

2. No amount is too small
If you have many financial commitments, you may worry about how to set aside anything at all. But saving a small amount every month is better than nothing, and can add up to a big sum over the years.

Invest this small amount wisely to make it grow. If you find an investment that gives you a 10 per cent return per annum, you’d only have to save $1,306 a month – if you start when you’re 40. “If you have a long investment time horizon, you can go for investments with higher risks that could potentially provide higher returns,” says Alfred.

3. From just $100 a month
“When it comes to investing, start small but think big,” says Alfred. He recommends this rough plan:

• Start a regular investment programme for as little as $100 a month.

• Include fixed income instruments that give you a consistent annual return, like bonds.

• When you’ve saved a tidy sum, invest in property for a passive rental income.

• Near retirement age, start looking at annuities for a perpetual income in the future.

4. Don’t think about your savings
Remove your emotions from the equation. “Decide what to invest in, do it monthly, then just leave it,” says Vasu. “Don’t keep monitoring your savings because it’s not that exciting. Saving for your retirement is a long-term thing, so look at your prospects over the long term and just review it every six months.”

This is an excerpt of Yes, You Can Retire Early, originally published in SimplyHer November 2012.