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How much do you need for a comfortable retirement?

Pandu W. Soeprapto
Pandu W. Soeprapto

Banker, part-time teacher, and at-any-other-time writer

Jakarta  /  Thu, January 11, 2018  /  11:40 am
How much do you need for a comfortable retirement?

My own definition of a comfortable retirement is being debt-free, enabling my older self to be involved in a  broad range of leisure activities and  being able to purchases goods as well as the occasional domestic or international travel.  (Shutterstock/File)

According to the dictionary, the definition of retirement is an act of leaving one’s job, career, or occupation permanently, and reasons for retirement can be as diverse as the people themselves.

However, the most common reason for retirement is age. Obviously, people are unable to resist old age.

Age as the most common reason for retirement can be related to productivity. One of the many ways a company can keep being productive is by maintaining the quality of its workforce. That is why, to manage the quality of its workforce, in many companies there are limits on how long an employee is allowed to work. For example, my company sets the maximum age for employment at 55 years old -- other companies may have a different policy. Thus, sooner or later retirement is something that we all have to face.

In relation to retirement, undoubtedly, a comfortable retirement is everyone’s dream. Now, what is a comfortable retirement? This is actually a difficult question because everyone has different retirement goals and there is no right-or-wrong definition.

Nevertheless, my own definition of a comfortable retirement is being debt-free, enabling my older self to be involved in a  broad range of leisure activities and  being able to purchases goods as well as the occasional domestic or international travel. 

You have been working eight hours a day -- more in some cases -- for who knows how many years. Some people even stay longer at where they work than at home, away from family. Basically, you are tired and deserve to rest well, and based on my opinion, retirement should be a time to relax and enjoy the fruits of your labor.

Yet, no one can earnestly enjoy it if you still owe money along with the anxiousness that entails, especially mortgages that usually take up to 30 percent of your income or credit card that has a high interest rate. That is why it’s important to make sure that you have settled all debts before retirement.

So, how much do we need to have a comfortable retirement? Once again, this is also a difficult question to answer due to different standards that each person has. In spite of that, for me, comfortable retirement can be achieved if during retirement we still have 100 percent of our last income or salary. Therefore, if you earn, for example, Rp 30 million (US$2,100)a month before retirement, then that is the amount that you should also have after you retire.

Another related question is, how much assets we ought to have to generate that amount of money? Do this simple calculation:

First, determine your expected rate of return from your assets. Well, rate of return varies depending on the assets and for the purpose of being conservative use the rate for a time deposit. Why? Because, in my opinion, time deposits can be considered a risk-free investment and the rate of return can be fixed to a certain degree. When this article was being written, the interest rate of time deposits guaranteed by the Deposit Insurance Corporation (LPS) is 5.75 percent for the rupiah currency.

Second, find out the value of assets that will be needed for retirement using this simple calculation:

(Assets x Rate of Return) / 12 = Earning per month

Since we already know the value for rate of return and earnings per month, the updated calculation is as follows:

(Assets x 5.75 percent) / 12 = Rp 30 million per month

Afterward, let’s tweak the calculation a bit to gain the result.

(12 x Rp 30 million per month ) / 5.75 percent = Assets

Assets = Rp 6.3 billion

From the calculation above, value of assets that you ought to have for retirement if you want to have a earning of Rp 30 million a month is, at least, Rp 6.3 billion

Please take note that the calculation above is not absolute, it is for reference only. because I did not include various variables such as time value of money, inflation, tax, transaction costs, etc.

Furthermore, from what I have read, people tend to live longer due to advancements in health service and technology. As a result, retirement can last 20 years or even more.

In addition, during retirement, there might be unexpected events that could adversely affect our condition. As such, careful retirement planning is essential in order to have a comfortable retirement and the plan should be flexible to accommodate changes that happen along the way.

The most important question, when should we start planning for retirement?

Now.  (dev/kes)


Pandu W. Soeprapto earned his bachelor's at Bandung Institute of Technology and master's from Monash University. He is an assistant vice president of corporate banking and has handled many financing projects in various sectors. He has a passion for teaching and loves to write about people and finance at

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Disclaimer: The opinions expressed in this article are those of the author and do not reflect the official stance of The Jakarta Post.