Whoa, whoa, don't swing to extremes. Don't blindly save to achieve that $m as it is more important to lead a meaningful, enriching and enjoyable life. We saved only to ensure that we can live out our twilight years independently financially.
It is about striking a balance. Don't overspend and don't over save.
Now in my mid fifties I have noted that my household expenses have more or less stabilized around $100k to $120k pa when we were in our 40s. Since our household income hit $250k with bonuses when were in our early 40s, we were able to save $100k + yearly. The children's education expense will spike when they get into uni. Overseas uni can set you back $50k or more per year. Luckily my children chose to study locally.
What kind of lifestyle the $100k - $120k pa afford us? We stay in a condo with full facilities, 6 of us including maid. We have a car (Jap car). We eat out at mid range restaurants every weekend. We take a short holiday to M'
sia or Indon'
sia durin June Holidays, and a longer one further away eg Europe, or Japan, Korea etc at year end. We find our lifestyle enjoyable and yet not lavish.
Our savings grew from $100k+ in our early 40s to high $200k+ now, a result of higher income combined with passive income. For eg., our net worth grew by another $1m in 3+ years.
I am thus not surprised with the rising number of millionaires as there are many couples out there with much higher earning power than ourselves.
Quote:
Originally Posted by Unregistered
Actually, It is easy for a graduate couples to be millionaires by the time they retire at 65. The main thing is they do not keep increasing their spendings as their income grow. For instance, they would first be given a big welfare handout by the government when they bought their BTO because BTO flats are so cheap. Let's say they buy it at $300k, this is a lot cheaper than the resale flats. The flats would be worth at least $500k after 5 years MOP. So, their wealth is boosted by $200k just for staying in a flat for 5 years.
The couple should not incur more debt by upgrading. They should just continue to work hard and save. Also don't gamble by buying an investment property because their can lose hundreds of thousands of dollars if they can't afford to hold as they may not be able to rent their property out as there are no more tenants due to the big oversupply coming.
So if the couple in their 40s earn $200k pa, and they don't drive, drink, smoke, they can save $100k a year. So in 20 years, they can save $2m. The $2m can be used to buy 5% dividends yield stocks and give them passive income of $100k pa. On top of that, their CPF Life payout will be $24k pa as a couple and their children may give them another $12k pa as a couple. So in total, they will earn $136k pa of passive income. Since they are old and living in HDB flat, they will enjoy many rebates. |