When should you retire when you can afford to?
Let's think.
Based on stats, if you're a man, you will die by 80 years old.
At what age will most of us has limited mobility? I think from age 75 onwards, which means you will not be able to travel the world much by 75.
So, if you retire at 65, you only have 10 years to enjoy your life, care free, travelling around the world. 10 years of enjoyment after 65 years of hard work from the day you're born, go to school, raise a family, work. Not so good.
If I can afford to retire earlier, I should, maybe at 55 years old. So I have a full 20 years to enjoy while I'm still healthy and mobile. In fact, most of us can retire at 55 if we plan our lives properly.
First, study hard, get a good job, marry and get kids early. So, by the time we are 55, our kids would be working. Not impossible. If we're 30 when our kid is born, by the time we are 55, our kid will be 25. Most likely, they will start working and earning income when they are 25. For girls, they will start working earlier.
So, if you buy a 4 room cheap
HDB BTO flat when you got married, by the time you're 55, your mortgage will be paid off. So no more worries on housing. Your children are working and earning, so they can support themselves. You just need to have passive income for you and wife. Let's say you need $3k pm or $36k pa for you and wife. So if your investments give you say $40k pa in passive income, then you and wife can retire. When you reach 65, you get an extra $43k pa from your
CPF Life.
How do you get $40k pa in passive income? Your investments need to give you 4% return per annum for a $1m portfolio.
How you get a $1m portfolio? You save $35k every year over 30 years. If you invest early and you're good at investing, you don't need so much capital because your investments will grow over time. Actually not difficult to save $3k pm or $36k pa. If you don't own a car you save $2k pm or $24k pa. If you don't employ a maid, you save $1k pm or $12k pa. So, if you don't earn so much, then don't own a car and don't employ a maid. You can save $36k pa and in 30 years, you will save $1m.
So, everyone can afford to retire at 55 if they don't spend so much. If you and wife are not high earners, don't aspire to buy a car and don't upgrade to a condo. If you're not a high earner but spend on expensive things like car, condo, luxury things, etc, then you must be prepared to work until you're in your 60s. But nowadays, you may not even have a job at 60. So better prepare yourself to work only until 55. If you still have a job at 55, you're lucky.