Theory and real life can be and usually are a world apart.
Theory says if your NW is $5m and you invest it for 5% return, you will get $250k a year to live on happily.
Real life: NW is $5m
Primary home : $1.5M (may appreciate in value over time but not giving cash flow yearly)
CPF : as eg. MA = $104k (couple), SA = $350k (couple), OA = $500k (couple)
Assuming below 55 yo, total held up in
CPF = ~ $1m
Emergency cash :$100k
Stocks : $1.4m (spread over various stocks from high risk-high return and low risk-low returns)
Average ROI from stocks ~ 5% or $70k dividends pa.
Investment property at $1m
Rental income : $30k pa nett.
Total cash flow per year = $100k
If the above sounds realistic, it is because it is.
We are above 55 and upon reaching 55, our yearly
CPF interests are available for withdrawal.
In our case, our NW is well above $6M and our passive income is only $150k pa for use (including
CPF interest). If you really want $250k passive income, before you reach 55, the $5m should be investible net worth (not including your home and not including money in your
CPF). In short, you need a total NW of no less than $6.5M to $7M!
Now you know why we are not retiring yet.