Earning the first million is already challenging, but the goal of a "happy retirement" nowadays has shifted to 10, 20, or even 30 million baht, leading many to wonder why social media talks about tens of millions as if it’s easy.
Certainly, such goals are not easy, but they are not impossible. What transforms tens of thousands or hundreds of thousands into tens of millions is the “power of time and discipline” through practical financial planning.
The figures of 20–30 million baht don’t appear randomly; they reflect actual expenses after retirement.
Imagine retiring at age 60 and living another 25–30 years. How much money would you need to prepare?
For example, if monthly expenses are 30,000 baht or 360,000 baht annually, and you need to maintain this for 25 years, you’d require about 9 million baht.
If you have family responsibilities or higher expenses, the amount can easily rise to 20–30 million baht.
This is likely why the popular calculation formula is known as the “Rule of 25.” It starts by multiplying annual post-retirement expenses by 25 and investing this lump sum in assets with moderate risk.
The key principle is to limit withdrawals to about 4% of the total per year. For example,
- If expenses are 20,000 baht/month, prepare about 6 million baht, which allows withdrawing approximately 240,000 baht/year.
- If expenses are 30,000 baht/month, prepare about 9 million baht, allowing withdrawals of about 360,000 baht/year.
- If expenses are 70,000 baht/month, prepare about 21 million baht, permitting withdrawals near 840,000 baht/year.
Having understood expenses, the next key question is how to accumulate this amount before retirement.
If you start planning at age 30 and aim to retire at 60, you have about 30 full years to save. “Time” is the most crucial factor for compound interest growth. The earlier you start, the faster your money grows. Assuming investment in assets yielding an average 5–7% annual return (higher returns mean less savings needed), here’s an approximate monthly investment needed.
Goal: 20 million baht
Goal: 30 million baht
However, higher returns often come with higher risk assets, which may experience short-term volatility or price drops. Before investing, consider whether you can tolerate losses of 10%, 20%, or more. If investing causes sleepless nights fearing market fluctuations, it indicates limited risk tolerance.
With targets of 10, 20, or 30 million baht, good planning and consistent investing make achieving them possible. But the question is, if you want to save tens of thousands baht monthly, what income level allows this without strain? Monthly funds must also cover living expenses, emergencies, and possibly insurance to reduce risks.
Therefore, this depends on each individual’s willingness to save a certain percentage monthly. Financial planners typically recommend saving 20-30% of income.
If these targets seem unrealistic, you can adjust them downward to more achievable levels without undue hardship (no need to pinch pennies excessively). Alternatively, if you can increase income through other means, you can adapt your plan accordingly.
The reason investing is necessary is that saving alone with low interest rates (below 2%) won’t keep up with inflation, which erodes future money value.
To achieve 5–7% returns and reach your goal, you need to "dare to invest" in riskier assets like stocks or mutual funds. Especially at age 30, you might focus on 50–70% allocation in stocks or risky assets for long-term growth, balanced with bonds and cash to manage risk, gradually shifting to safer portfolios approaching retirement.
Source: Thai Financial Planners Association, SET, SCB.
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