What you have shown and calculated is the expense for the years when retired. However, if these scenario cases actually have the "networth" as described below, then their "actual" net expenses will be lower cos their networth will have earned them interest , dividends etc.
Eg, Joe case of above S$9m will already give Joe 90k interest if he saved at bank deposit rate of 1 % which is easily obtained.
If he saved 1.5% , he will have more than enough "networth" to pass an inheritance of >S$6m to kids at 85 years old.
So for 100k pa retirement lifestyle, one doesnt really need so much money to retire if the plan is not leave a huge inheritance.
More like S$6 m , $3m , $2m (as per your case below) will be sufficient.
Quote:
Originally Posted by Unregistered
Haha, every now and then we will have posters rooting for retirement when they accumulate a little bit of money. Retirement is fun only when we are financially sound and have things to occupy our minds/time.
Lets look at the 3 cases of people at different ages considering retirement and see how much they would need (with and without inflation); Assuming all 3 cases expect to live till 85, annual expenses of $100k, and an annual inflation rate of 3%.
Case 1: Young upstart Joe and Wife both aged 40 and retiring at age 40.
Years expected in retirement : 45 yrs (till 85)
Total amount required to sustain their 45 years in retirement: 45 x $100k = $4.5m
With 3% inflation per year, total amount required for 45 years: >$9m
Case 2; Middle ager Mr Tan and Wife both retiring at 55.
Years in retirement : 30 yrs
Total amount required in retirement : $30 x $100k = $3m
With 3% inflation per year, amount required = $5.5m
Case 3: Workaholic couple Mr Lim and wife both retiring at 65.
Years in retirement :20 yrs
Amount required to sustain retirement : 20 x $100K = $2m
With 3% inflation per year, amount needed : $3.15m
The earlier you want to retire, the more money you need.
Be sure your savings is sufficient to sustain your retirement and make your savings work hard for you.
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