Although highly suspicious, the post on the 55,56 yr old retiree couple however highlighted an interesting case study about how much one can realistically invest their life savings to generate income to fund their retirement.
Lets take a hypothetical couple Mr and Mrs Tan both 55 with a net worth of $1M including their
HDB 4 room flat retiring today. Today
CPF requires them to set aside a minimum sum of $148K per person. Let's say they pledge half of this amount with their property, so that would mean leaving the $148K in
CPF. Medisave require another $40.5K each or $81K total to be put aside for the couple. Assume also that the 4 rm flat is worth $400K. That leaves the couple a sum of ($1M - $148K - $81K - $400K = ) $371K
Assuming the couple puts aside an emergency amount of $50K, leaving $321K for investment.
If invested in equities (say reits) they may get 7% return or $21K pa. A good sum but not enough to fund a comfortable retirement for 2. They could also risk losing part of the $321K in the process.
If they require $40K pa for a very frugal existence, they will have to chip away the savings meaning the emergency cash ($50K) will go first (in 2 years), followed by the equities (the $321K) in another 7 years maybe. Remember the
CPF minimum will go towards their Annuity Life Plans that will only pay out to them at 65 - a good 10 years away. They also cannot touch their medisave amount - only for medical expense.
The prognosis is not encouraging. It seemed a foregone conclusion that Mr and Mrs Tan would have to downgrade from 4 room flat to survive their retirement well into their 80s or they have to postpone retirement till they are 65.
And here we are talking about a couple with $1M Net Worth!
Can somebody help check the numbers!?
Quote:
Originally Posted by Jeff
There are plenty of questionable posts lurking around here. Some of my observations are:
1/ Too high net worth, based on relatively low salary. This is not even assuming that the person's salary is increasing over the years, so his salaries in previous years were much less than current.
2/ Plenty of people saying that they bought property at the bottom.
3/ Saying they bought stocks at the bottom.
4/ Overstating their stock dividends, without saying that whether the stock price went up or down or whether the dividends are one-off
5/ Overstating their property return, without saying what about repairs (plenty of leaking ceilings you know), maintenance, agency fees, property taxes and income taxes
I think most people should try to be honest here, otherwise don't post at all. Then this thread will be more meaningful and useful.
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