Is it too late for a salary man with 20-year working-life to start saving for retirement?

Do not wait until the day of retirement that might be too late to start saving in time, particularly the salary man who has been hardly struggling to stretch his salary to the end of the month. How can we start saving for retirement? Please be informed that it is not too late for anyone who has worked for 20 years to make a retirement plan for happy living with enough money for spending.


How much the savings do we need to comfortably cover all retirement expenses?

Assuming that your retirement age is 60 and you expect to live for another 20 years (you will be 80 years of age). The total current expenses amount to 30,000 THB per month and the total monthly expenses in retirement will be 21,000 THB (70% x 30,000) (calculated by 70% of the total current expenses due to the inflation impact in the next 20 years). It means that the total annual expenses will be 252,000 THB. Next, multiply the total annual expenses by the number of years you expect to live in retirement that is 20. The result shows that you need the savings for retirement at the amount of 5,040,000 THB at the age of 60. The calculation formula is shown below. 


Suitable amount of the saving as of the retirement day =     (70% of the total current expenses) x 12 x
the number of years expected to live in retirement

5,040,000 THB                   =                   (70% x 30,000 THB) x 12 months x 20 years

How to save money for achieving the goal?
  • Employees’ Provident Fund                                                                                                                 

Having a provident fund at work is one of the main platforms of indirect savings. Employees and employer voluntarily contribute money to the fund. The highest contribution rate of 15% of the salary is a good choice for employees because the equal rate of contributions made by the employer is like the extra welfare for employees. The more salary are deducted for contributing to the fund, the more contributions gained from the employer. The provident fund contributions are tax deductible. Accumulated contributions paid to the fund are savings for retirement.


  • Invest in the Retirement Mutual Funds and Long-Term Equity Funds                                       

Starting from investing in RMF is a very reasonable decision on savings for retirement due to its requirement for holding the investment units till the age of 55. For anyone who can accept higher risks, investment in the LTF is probably a good choice because of its shorter holding period which allows the investors to sell their fund shares for gaining profits from the short-term investment or to continue the investment (please read up investment terms and conditions carefully before making a decision). Moreover, the highlight is annual tax deduction from investing in RMF and LTF. How much the annual tax deduction can be claimed depends on the tax base of individual taxpayers - the higher tax base, the bigger deductions.


  • Invest in Debentures                                                                                                                       

Investment in debentures, especially the ones issued by the private sector, is very popular. Its security depends on temporarily and specifically established corporations. Without bank and government guarantees, debentures are advantageous for investors to receive higher interest rates, but riskier, than government bonds. There are many types of debentures, for example the fixed-rate debenture, floating-rate debenture, amortizing debenture, convertible debenture, etc. When you decide to invest in debentures, ask yourself about your risk tolerance level. If you are ready to accept high risk for greater returns, investment in secured debentures issued by credible companies is an interesting option.

  • Apply for Savings-Linked Insurance Scheme or Unit Linked Insurance Plan

When it comes to insurance, investment terms which are not probably worthy enough for long-term savings and its slow returns become concerns of many people. However, this is one of saving options for extending life security in retirement age. Various insurance plans are offered with different returns, so individual customers can choose the right one to match their needs. The estimate of post-retirement expenses should be made to have an idea for choosing the insurance plan that offers inclusive coverage and returns in correspondence with future expenses as estimated. Both short-term and long-term plans are available for serving individual customers who have different liquidity ratios. If you have not had any idea of which one suits you best, the long-term plan is suggested because in most cases the longer-term the plan is, the higher accumulated funds it returns and it also provides the privilege of tax deduction for many years.


  • Invest in Real Estate for Lease

In the period of descending interest rates, real estate investment and lease, for example condo, townhome, etc., is quite interesting as its value is expected to rise in the future. However, the increasing number of real estate projects nowadays causes lower returns on its investment for lease and difficulty finding tenants. Therefore, before making a decision, investors should consider the project location which should be next to sky train or subway lines and near public places, such as universities and shopping malls. In such ideal location, investors can find tenants more easily and have the opportunity to gain benefits from increasing prices of properties in the future. Moreover, getting loans for real estate is eligible for tax deduction.


This is an option for the salary man with 20-year working-life to save for retirement. It is not too late to start now. The important thing is to take a good care of your health, otherwise all savings will be gone for the cost of medical care which tends to be growing in the future.