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How much are you earning per annum?

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  #11431 (permalink)  
Old 22-04-2018, 09:21 AM
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Default Drean big, work hard, live simply

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Originally Posted by Unregistered View Post
My humble Household Profile
41yrs M & 37yrs F w/ 2 Children 12yrs M & 9 yrs F
Income 200k per annum
OA 200k/ 101k
SA 174k/ 53k
Cash 100k
Reits 100k

Other commitment

Stay in a 4 bedroom EC 720k outstanding loan. Bought 3 years back at 900k+
Ride is 1 year old executive car. 60k outstanding loan
Education policy for both children 4k per annum till 21yrs.
Own endownment policy 5k per annum till 55yrs

Looking forward to retire at 55years and lead a frugal life. Do you think is possible?
Dream big, work hard and live simply - that has been our life' motto and it served us well.

I married my wife slightly more than 30 years ago. It was important we shared the same values in terms of our beliefs and what we wanted out of our lives - from the get-go.

We treated money as important only to allow us to live a comfortable yet non ostentatious lifestyle. We wanted our children to live and grow up in a good environment and attend good schools with good resources and facilities. We also wanted to see the world and experience different cultures - during our working life as well as in retirement.

So with those goals, we set out to work for our dreams. Working hard and saving diligently enabled us to invest regularly. When promotion came and our salaries increased, we maintained our lifestyle and not succumb to lifestyle inflation.

Giving in to lifestyle inflation is a very common and natural outcome of higher income. We see that in our colleagues, friends and neighbors. They upgraded their cars from Jap cars to expensive continental cars, bought expensive branded watches and bags, dine regularly at high end restaurants etc...

We resisted that kind of lifestyle and stick it out with our comfortable but simple lifestyle. One indulgence we have was to reward ourselves with a car (Jap car) each. My wife and I have our own cars for over 25 years already - starting with used cars. The other indulgence was to travel once or twice a year. One big trip to US/Europe and a shorter trip to neighboring countries.

People upgrade their homes to bigger homes. We bought property for investments - to make money, not to live in nor to show off.

Like you, when we started out, we planned to retire by 55. So we built up our savings, and invest toward achieving that goal. At 55, and upon achieving financial independence (FI), working became optional for us. When work became optional, we saw it with different perspectives. Not competing for promotion/bonuses meant that work became more enjoyable. When you enjoy your work, you tend to do better and end up with better bonuses.

So yes, plan for retirement, work hard and save hard to achieve it. You will likely achieve it sooner than planned. And when you do achieve it, you will find that working is not that bad after all, and you might end up working some more! Just like us.

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  #11432 (permalink)  
Old 22-04-2018, 10:01 AM
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Default Planning for retirement

When you plan for retirement , always plan to achieve a higher retirement lifestyle and longer life expectancy than you what you think is likely the case. In this way, you will "automatically" plan in buffers.

This is best explained using numbers or retirement expenses.

Let's use my plan as example. I tracked my family's monthly and annual expenses and thus I have a good feel of what my retirement expenses would look like.

Currently our annual expense is around $180k a year. Although my children are working, they are living with us and we are still paying for all the household expenses. The $180k also included our substantial income taxes (~ $40k per year).

When we retire, we would not be paying the income tax, so that would immediately lower our expenses by $40k! We would not need 2 cars, so that would further reduce our expenses - say by another $5k. In retirement, we also expect our children to step up and start to pay for the household utilities, food and some other stuff. If they move out to start their own families, it would also mean that we will reduce our household expenses. Either way will result in lower expenses for us to maintain the household.

The net effect is that in retirement, we estimated that our annual household expenses will be $100k or less. This amount will allow us to make 2 trips a year for holidays and still have car.

Our current passive income hovers around $165k. Since we are still working, we reinvested the income. As you can see, there is a buffer of $65k. This buffer can help us offset inflation (say 3% pa) for up to 7 years! While maintaining our $100k per year lifestyle. As we age, we also expect to cut down travelling and thereby reduce our expenses.

Besides buffering against inflation, there is always the medical expenses to consider. With age, we expect to spend more on medical treatment.

So although we planned for around $100k in annual expenses in retirement, in reality, we expect to need less than that. But because we set up to meet this target, we have already managed to achieve $160k passive income - giving us a good margin of safety as well as great peace of mind.

On the other hand, had we set a low target, we would have slacked off earlier (prematurely) and later in retirement, we would end up always worrying about whether the savings would run out instead of enjoying retirement as we are supposed to do!



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  #11433 (permalink)  
Old 22-04-2018, 02:38 PM
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We both plan to retire at 55 as we will be financially independent by then. Our luxurious 3 bedder condo is paid up, our continental luxurious branded car is paid up and we have the ability to maintain our current lifestyle. This is possible because we are high flyers.

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  #11434 (permalink)  
Old 22-04-2018, 04:16 PM
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If you've worked hard all your life from primary school all the way to a high paying job in high finance, you may want to retire from corporate life and pursue your passion. It could be working with the disadvantaged or setting up a social enterprise to help those in need. Don't be selfish like those who amassed wealth for their own benefit only. True success is not measured by how much you own but how much you have helped others. You will not bring your wealth to your grave. Leave behind a better world when you leave this temporary earthly life.
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  #11435 (permalink)  
Old 23-04-2018, 09:41 AM
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Quote:
Originally Posted by Unregistered View Post
First of all, congratulations to you on attaining Financial Independence (FI). Attaining FI means you have options in regards to the kind of life you wish to live, which includes choosing the kind of job to do.

I would only recommend going into retirement if you have health issues and need rest to recuperate/recover, or if you have a hobby to retire to. And certainly do not retire for some foolish reasons like avoiding the peak hour traffic each day!

As you are only in your 40s, and not happy with your current job scope, you could explore taking on a different role with lower responsibility and correspondingly lower remuneration while staying in the same company to enjoy your accumulated benefits.

If not possible to stay in the same company, go out and explore doing something you have passion in and still bring in some "pocket" money. As long as you are paid, your CPF will continue to grow! The CPF is an important pillar for anyone in their retirement years.
Thanks for the suggestions.
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  #11436 (permalink)  
Old 24-04-2018, 03:28 PM
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There are many successful bankers in this forum who can retire in their early 40s and enjoy a life of luxury. Travel the world and enjoy life. They deserve it as they have worked very hard since young. They must have done well in school and at work.

We are however just average. We are not like these highly successful people. But we can still retire soon, not in our 40s but in our late 50s, maybe at 57. A lot later than these bankers but not too late. Some people can only retire in their 60s. Those who are uneducated and poor may need to work as cleaners in their 70s and 80s.

When we retire, we will spend part of our savings and passive income from stocks. We also are lucky to have CPF Life which will give us passive income when we reach 65. We don't need much when we retire. Maybe just $3k every month as we will have no debt and no car when we retire. We can use public transport to go places.
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  #11437 (permalink)  
Old 28-04-2018, 01:27 PM
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How much we need during retirement will depend on our lifestyle. If we have paid up HDB flat and debt free, we don't need much. We just need money for food, paying bills and insurance.

For a retired couple, they may need to spend on
Food and groceries $1000 pm
Utilities $100 pm
Internet and mobile $100 pm
Medical and insurance $1000 pm
Bus and mrt $100 pm
Holidays and entertainment $100 pm
Miscellaneous $100 pm
Total $2500 pm or $30k pa

So, we don't need much when we retire unless we want to eat at restaurants, go holidays to Europe twice a year, own a big car, go shopping everyday, etc. For this lifestyle you will need $200k pa.
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  #11438 (permalink)  
Old 30-04-2018, 05:05 PM
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Default Comfortable Retirement

I think setting aside $160K a year will afford you a comfortable life in retirement for a couple. You dont need $200K

1. Have a domestic helper to clean and cook for you ($1000 pm including levy)
2. Have a car to move around in privacy and comfort ($500 pm not including depreciation)
3. Attend live concerts ($600 pa or $50 pm - for 2 live concerts a year)
4. Conservancy charges & sinking fund for condo ($330 pm)
5. personal expenses ($1000 pm each) - to meet up with friends, watch movies, to go short trips to M'sia for shopping/massages etc. This personal expenses very important to ensure you have your own life without always having to do things together with your spouse.
6. $1000 pm for courses such as dancing, wine tasting, cooking, flower arrangement etc....
7. $500 pm for gifts (eg wedding, funeral, birthdays etc..)

Plus all the rest below will bring the total monthly expense to around $13K pm.


Quote:
Originally Posted by Unregistered View Post
How much we need during retirement will depend on our lifestyle. If we have paid up HDB flat and debt free, we don't need much. We just need money for food, paying bills and insurance.

For a retired couple, they may need to spend on
Food and groceries $1000 pm
Utilities $100 pm
Internet and mobile $100 pm
Medical and insurance $1000 pm
Bus and mrt $100 pm
Holidays and entertainment $100 pm
Miscellaneous $100 pm
Total $2500 pm or $30k pa

So, we don't need much when we retire unless we want to eat at restaurants, go holidays to Europe twice a year, own a big car, go shopping everyday, etc. For this lifestyle you will need $200k pa.
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  #11439 (permalink)  
Old 12-05-2018, 10:39 AM
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to the top!
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  #11440 (permalink)  
Old 12-05-2018, 10:40 AM
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My wife and I are 31 and 34 respectively, both local graduates.
Been working for the past 8+, close to 9 years now, in private sector.
We're a small family of 3 (with a newborn).

Combined work income on an annual basis is around $340-350k. We expect this to continue to rise as our careers continue to progress.
We have a 5 room flat which was bought when we just graduated. It is worth around $500k now (bought it at around $400k). We're still servicing the bank loan with our CPF. Not paying it off as the money in CPF earns a higher interest than the bank loan interest rate.
Drives a continental SUV, minimum loan still outstanding - took the minimum and shortest possible loan when we bought the car.
We are quite heavily vested in equity (~$500k or so, returning anywhere between 4-8% dividend yields for the past few years and also experiencing capital appreciation).
We typically keep about 2/3 of our annual income as cash and inject the excess into more equity.
We also own an industrial property worth around $1m, getting monthly rental income to offset the bank loan installments, maintenance fees, property tax etc (barely).

Our investment strategy is to have more exposure to equity which is higher risk when we're in our 30s and slowly shift our portfolio towards a less aggressive one (more fixed income/bonds) as we go into our 40s.

How does this compare and for those who have been there and done that, what would be your advice for us moving forward?
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