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How much are you earning per annum?

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  #11151 (permalink)  
Old 27-08-2017, 09:15 AM
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Default Inflation

Today, I would like to focus on inflation. Inflation is like a silent "killer" - that is, killer to your hard earned savings. To the vast majority of us, inflation is that hideous thing, always lurking around, and strikes when we least expect it. High blood pressure has also been described as a silent killer because people who suffer from it don't feel it as the body adjusted to it and eventually the organs (especially the kidneys) fail and the person dies. In this sense, inflation and high blood pressure are alike.

When we are employed, we may not feel the impact of inflation as much, as we see our salary increase each year. Also small increases in prices (of food, transportation, groceries etc) may not make a big dent in our disposable income. So we ride along comfortably with inflation, just like a guy with high blood pressure. The best or "worst" way to see the full impact of inflation is through a longer time horizon - say 10, 20, 30 years.

In 1995, (22 years ago), my wife and I baulked at the condo prices which were selling for $500 psf. Up to that time, the properties we bought and sold were around the $300 to $400 psf range. And not too long ago, we didnt even think twice when we bought our latest investment condo at $1,200 psf. My uni fees were $680 per year in the early 1980s, my children,s uni fees were closer to $8,000 per year. My very first car set me back only $23,000 - a brand new Toyota Corrolla. Now, a new Altis Corrolla costs around $100,000.

What does it all mean to us when we plan for retirement when there is no more salary income?

For those planning to survive on $3,000 a month ($36,000 per year) in today's dollars, you will need at 3% inflation per year : (to maintain the same purchasing power of $36k today)

2017_____2027____2037____2047
$36k_____$48k____$65k____$87.4k

If you need $60k pa ($5k pm) in retirement, the amount you will need over the years just to maintain your current purchasing power, will be:

2017_____2027____2037____2047
$60k_____$81k____$108k____$146k

Those planning to depend solely on CPF Life payout will find themselves short of cash very quickly as the payout amount is fixed throughout your lifetime while inflation is relentless.

In my next post, I will discuss how to deal with inflation. Inflation can be a good thing too!

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  #11152 (permalink)  
Old 27-08-2017, 01:03 PM
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Congratulations on your retirement plan! Very well thought out.


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Originally Posted by Unregistered View Post
48 and 46, middle class married couple with two children. Combined household income $150k pa. Cash savings $30k pa. Lives in a condo, worth $940k. Mortgage left $140k, paying by CPF. Owns a car, paid up. Cash, investments and CPF, combined $1.2m. Total combined net worth $2m.

We hope to retire at age 55. By then our condo will be fully paid up and our children will be working and financially independent. We will also have a good sum of cash savings. Our expenses will be reduced significantly as we no longer need to finance our children's expenses such as food, insurance, tuition fees, transport, etc as they will be financing these themselves. Also no more mortgage loan. Our basic needs of food, medical and utilities can be taken care of by our cash savings, investments and insurance.

At 55, we expect our combined net worth to be:

Condo (paid up) $1m (assumes almost zero price appreciation over the next 7 years due to huge property oversupply)
CPF $600k (most will go to CPF Life)
Cash $400k
Investments $500k
Total $2.5m

From age 55 to 65, the investments ($500k) can generate dividends of $20k pa (4% pa) to cover part of our expenses, any shortfall will be covered by our cash savings. If we spend $4k pm ($48k pa) on average over the 10 years of retirement, we will drawdown $28k pa or $280k (over 10 years) in total from the cash savings.

From age 65 onwards, our expenses will be covered by our CPF Life (ERS - $48k pa) and dividends ($20k pa). Total passive income from age 65 onwards $68k pa ($5.6k pm). We will likely spend lesser than $68k pa and will save the rest.


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  #11153 (permalink)  
Old 27-08-2017, 02:20 PM
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Quote:
Originally Posted by Unregistered View Post
Congratulations on your retirement plan! Very well thought out.
For your case with projected retirement expense of $48k pa in todays dollars, the below shows what you will need in the years going ahead:

At 55 yo (7 years from now)_____at 65 yo (17 yrs later)______at 75 yo (27 yrs later)
$59k pa______________________$79k___________________$10 6k


As you can see, inflation easily outstrips your payout from dividends and CPF Life combined which do not grow with time.

Wait for my installment and I will share with you how you can deal with inflation. Your current plan is on very shaky grounds.

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  #11154 (permalink)  
Old 28-08-2017, 12:13 PM
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Hi guys,

So I have an offer for a contract job which pays me 3000 with a 0.5month completion bonus at the end of my 6 month contract. May I know when I state my salary for my next job, can I include in the bonus and state it as 3250 rather than 3000? I mean would recruiters take into consideration my bonus? Reason is this company offered me lower than my expected salary and I am afraid it will affect my future salary. Could someone offer some advice? Thank you!
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  #11155 (permalink)  
Old 30-08-2017, 09:55 PM
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Interesting thread and chance upon it when looking up for salary benchmark.

38yrs old PR business owner, wife Singaporean works in SGH.
One Son.

Combined HHI 2016 about 100k
Net Worth 2017 about sgd 3.5m

7 properties. 4 paid and 3 on loan.

Not thinking of retirement at the moment.

I see some of you already hitting sgd 6m.This gives me hope and drive to work harder and save more. Hopefully I can make that by 50.
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  #11156 (permalink)  
Old 31-08-2017, 01:35 PM
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Quote:
Originally Posted by Unregistered View Post
Interesting thread and chance upon it when looking up for salary benchmark.

38yrs old PR business owner, wife Singaporean works in SGH.
One Son.

Combined HHI 2016 about 100k
Net Worth 2017 about sgd 3.5m

7 properties. 4 paid and 3 on loan.

Not thinking of retirement at the moment.

I see some of you already hitting sgd 6m.This gives me hope and drive to work harder and save more. Hopefully I can make that by 50.
Some of your properties are inherited or they are located overseas? Most with HHI of 100k will struggle to buy 2 properties in Singapore
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  #11157 (permalink)  
Old 31-08-2017, 05:49 PM
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Quote:
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Some of your properties are inherited or they are located overseas? Most with HHI of 100k will struggle to buy 2 properties in Singapore
2 overseas. 5 in sg.
There were few years I made 500k per year. But last 3-4 years, not so good. Hope the time will come again but I doubt it.
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  #11158 (permalink)  
Old 01-09-2017, 10:41 AM
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Quote:
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2 overseas. 5 in sg.
There were few years I made 500k per year. But last 3-4 years, not so good. Hope the time will come again but I doubt it.
What do you and your wife work as? Real estate agents?
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  #11159 (permalink)  
Old 01-09-2017, 03:49 PM
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Quote:
Originally Posted by Unregistered View Post
Interesting thread and chance upon it when looking up for salary benchmark.

38yrs old PR business owner, wife Singaporean works in SGH.
One Son.

Combined HHI 2016 about 100k
Net Worth 2017 about sgd 3.5m

7 properties. 4 paid and 3 on loan.

Not thinking of retirement at the moment.

I see some of you already hitting sgd 6m.This gives me hope and drive to work harder and save more. Hopefully I can make that by 50.
On a HH income of 100k pa, you would need to work 35 years to accumulate 3.5m of income and that's NOT net worth even..... eh.... totally cannot match...
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  #11160 (permalink)  
Old 01-09-2017, 04:42 PM
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Quote:
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What do you and your wife work as? Real estate agents?
Owner of a small trading and printing company. Wife in health sector.
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