How the Typical Retirement Plan works?

Many people have thought of retiring at the age of 65 and enjoying life after working for almost 20 years after they graduate and find their first job. But due to the high living standards of Singapore, is our dream retirement plan achievable?

I am always fascinated about finance from young and would always like to know about how the typical retirement plan works. Now that i am enrolled in SIM and have learnt to calculate some financial stuff using the calculator, i wish to present a classical example to show everyone.

Retirement Plan - Retire (stop working) at age 65 and life expectancy of 80 years old

Let's assume that you are now retired (65 yrs) and predict you will live to 80 yrs old. 
You only are living an average lifestyle with a car and house already paid for. 
And the expenses are all that you are paying for yourself w/o your spouse or sharing with him/her.
Utilities                $100
Mobile Phone      $50
Meals                  $500
Car Maintenance $800
Medication          $200
Daily Necessities $250
Others                 $200
Total (monthly)    $2,100
To be conservative, we set a yearly allowance of $10k for any major illness or unexpected circumstances (don't say its not possible, planning is to plan for any surprises that may come out).
Yearly Expenses $10,000 + (12 * $2,100) = $35,200

Lump sum of Cash needed at age 65 for comfortable planned retirement to the age of 80 years old:
15years * $35,200 = $528,000
Have you ever thought of saving up to this massive amount of $528,000 by the time you reach 65 years old?!

I know what you wish to say... CPF or (401K in U.S.) is  there to help me when the time goes. You may say i am skeptical, but CPF has always make people complacent and not done enough for their future. They use CPF savings to pay for their houses, make investments and pay for education and much more. Furthermore, i haven't included inflation into the calculation.
My concept is simple. Do your own investing. I will make it simple for you =)
Solution to Typical Retirement Plan

Scenario: You start work at age 25 (after Uni) & retire at 65 (work for 40 years). Earnings of $2k+ lets you save $500/mth. How much interest rate must you obtain every annum to reach $528,000 at 65 years old?
Check it out below...
PMT (monthly investment) = $500
n (no. of compounding periods) = 40 * 12 = 480
FV (Future Value) = $528,000
Interest Rate per annum = 3.5436%

How do you achieve the rate of 3.5436% compounded per year? If you think in the direction of bonds, mutual funds and index funds, you are on the right track to a cosy and wonderful retirement.
Have fun Investing! And rmb... Keep Investing Simple, Stupid (K.I.S.S)!

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