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How much are you earning per annum?

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  #9861 (permalink)  
Old 22-04-2016, 01:29 PM
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I do not think one needs S$100k a year for a couple to retire...that is like over S$8k a month! Esp if retiring in overseas countries but even in Sg, one should not need so much...and also the calculation is based on drawdown amount but how about passive income sources where the capital is preserved or appreciating like stocks dividends, FD's interest and property rental? I can retire at about 40 now in Malaysia with 4% FD interest and property rental passive and that is with about S$1.5mil...

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  #9862 (permalink)  
Old 22-04-2016, 02:00 PM
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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 View Post
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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  #9863 (permalink)  
Old 22-04-2016, 02:36 PM
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Using your examples here, not many can retire.

You don't need $100k pa in the first place.

You just need $50k pa in today's dollars to retire. If you invest in a 4% dividend yield stock, you just need $1.25m worth of stocks. Inflation will be taken care of by the rising dividends in line with inflation.

I suggest you learn about investments and please don't advise people if you're not qualified. Thank you.


Quote:
Originally Posted by Unregistered View Post
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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  #9864 (permalink)  
Old 22-04-2016, 02:58 PM
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Thats not the way to interpret what he wrote. He used the example of $100k annual expenses for ease of computation.

But if you do happen to spend $100k pa, then you could use his estimation to know how much you would need to retire and for how many years. If you spend less or higher you can then scale up or down.

I can assure from my own experience that if you have $1m right now, you will not be investing that $1m fully to derive $40k pa (or 4% returns). Why?

You will need to have a home, say maybe a cheap 2 rm HDB, that would suck up $250k. Then you would set aside $50k as emergency fund maybe in FD earning 1% or lower. Leaving you with $700k, and you would want to spread the risk a bit by diversifying your investment with some safer but lower return investment. End up you will not be getting 4% returns from your $1m.

So think through carefully. Dont rush blindly into retirement and get caught with money running out before you turn 65!


Quote:
Originally Posted by Unregistered View Post
Using your examples here, not many can retire.

You don't need $100k pa in the first place.

You just need $50k pa in today's dollars to retire. If you invest in a 4% dividend yield stock, you just need $1.25m worth of stocks. Inflation will be taken care of by the rising dividends in line with inflation.

I suggest you learn about investments and please don't advise people if you're not qualified. Thank you.
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  #9865 (permalink)  
Old 22-04-2016, 05:39 PM
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Quote:
Originally Posted by Lost View Post
Couple, 42yo

4 kids 5-12 yr olds

Annual 400k +
Cpf 400k
HDB 350k paid
Cars x2 paid
Cash 900k

What's next?
Your earliest possible retirement age is whe your youngest finishes his/her degree course at 21 (earliest) i.e. 58.

Retirement, for people with children is rarely determined by $ but more determined by the age of the youngest child..
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  #9866 (permalink)  
Old 23-04-2016, 09:57 AM
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My spouse and I plan to retire in 5 years time when we hit 55. By then our children should be working, married and living in their own BTO flats.

We estimate we will need $48k pa ($4k pm) as a retired couple. Our three-bedroom condo, located in an upper middle class district, is now paid up and we will be spending just on food, utilities, medical and travel. We have comprehensive medical insurance plans to give us peace of mind. We are also debt free.

When we retire, we will not own a car as our condo is near an MRT station, so traveling is not a problem. We do not need to employ a helper as we enjoy our privacy as a couple, anyway there is not much housework to do for just two persons.

Our passive income will reach $60k pa when we retire. We will get at least 4% pa investment return from an investment portfolio of $1.5m (excluding our condo). This is a conservative return, can be more. This income will be from age 55 to 64. When we reach 65, our passive income will jump because of CPF Life which will give us an additional $40k pa. So, from age 65 until we die, our passive income will be $100k pa. We will save a lot since our expenses will be much lesser than $100k pa, even with inflation taken into consideration.

During retirement, we will keep ourselves busy by volunteering at charities, reading, swimming, working out in the gym, travelling during non peak seasons, socialising with fellow young retirees, watching the latest movies, etc.
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  #9867 (permalink)  
Old 23-04-2016, 03:31 PM
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Good plan. If you have the means, like what you have, then retire as soon as you can to enjoy life after working so hard for many years. We never know when we will die. We can die in our 50s too.

Many people cannot let go because of their ego and high earnings. Greed overcome them. Even though they have millions, they still want to earn more and more. Then suddenly they die with no chance to enjoy their retirement. All their millions will just go to their children, who then retire in their 30s. They will buy $1m sports cars, $10m bungalows, etc. and spend all the fortune away.


Quote:
Originally Posted by Unregistered View Post
My spouse and I plan to retire in 5 years time when we hit 55. By then our children should be working, married and living in their own BTO flats.

We estimate we will need $48k pa ($4k pm) as a retired couple. Our three-bedroom condo, located in an upper middle class district, is now paid up and we will be spending just on food, utilities, medical and travel. We have comprehensive medical insurance plans to give us peace of mind. We are also debt free.

When we retire, we will not own a car as our condo is near an MRT station, so traveling is not a problem. We do not need to employ a helper as we enjoy our privacy as a couple, anyway there is not much housework to do for just two persons.

Our passive income will reach $60k pa when we retire. We will get at least 4% pa investment return from an investment portfolio of $1.5m (excluding our condo). This is a conservative return, can be more. This income will be from age 55 to 64. When we reach 65, our passive income will jump because of CPF Life which will give us an additional $40k pa. So, from age 65 until we die, our passive income will be $100k pa. We will save a lot since our expenses will be much lesser than $100k pa, even with inflation taken into consideration.

During retirement, we will keep ourselves busy by volunteering at charities, reading, swimming, working out in the gym, travelling during non peak seasons, socialising with fellow young retirees, watching the latest movies, etc.
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  #9868 (permalink)  
Old 23-04-2016, 03:33 PM
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Wow you mean if you had that kind of money that's what your kids would do, sounds like you did a lousy job raising them. HAHA

Quote:
Originally Posted by Unregistered View Post
Good plan. If you have the means, like what you have, then retire as soon as you can to enjoy life after working so hard for many years. We never know when we will die. We can die in our 50s too.

Many people cannot let go because of their ego and high earnings. Greed overcome them. Even though they have millions, they still want to earn more and more. Then suddenly they die with no chance to enjoy their retirement. All their millions will just go to their children, who then retire in their 30s. They will buy $1m sports cars, $10m bungalows, etc. and spend all the fortune away.
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  #9869 (permalink)  
Old 23-04-2016, 05:54 PM
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Thanks for sharing. You're lucky that you can retire at 55. Many of us here who are not high earning, will have to retire later at 65. Anyway, enjoy your retirement! You deserve it!


Quote:
Originally Posted by Unregistered View Post
My spouse and I plan to retire in 5 years time when we hit 55. By then our children should be working, married and living in their own BTO flats.

We estimate we will need $48k pa ($4k pm) as a retired couple. Our three-bedroom condo, located in an upper middle class district, is now paid up and we will be spending just on food, utilities, medical and travel. We have comprehensive medical insurance plans to give us peace of mind. We are also debt free.

When we retire, we will not own a car as our condo is near an MRT station, so traveling is not a problem. We do not need to employ a helper as we enjoy our privacy as a couple, anyway there is not much housework to do for just two persons.

Our passive income will reach $60k pa when we retire. We will get at least 4% pa investment return from an investment portfolio of $1.5m (excluding our condo). This is a conservative return, can be more. This income will be from age 55 to 64. When we reach 65, our passive income will jump because of CPF Life which will give us an additional $40k pa. So, from age 65 until we die, our passive income will be $100k pa. We will save a lot since our expenses will be much lesser than $100k pa, even with inflation taken into consideration.

During retirement, we will keep ourselves busy by volunteering at charities, reading, swimming, working out in the gym, travelling during non peak seasons, socialising with fellow young retirees, watching the latest movies, etc.
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  #9870 (permalink)  
Old 24-04-2016, 10:00 AM
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$200k COE may seem affordable (relatively) to households with $400k pa incomes but such annual incomes are not the norm lah.

Looking at the income tax data below, there could be at most be 100,000 such households assuming the high earners marry each other. If the high earners don't marry each other or if they were single, or their spouse earn much less, then number of households with $400k pa annual income would be only around 55,000.

Anyway, even though my HH income is currently at $530k pa, I will not buy a car if the COE ever exceeds $100k. It does not make economic sense to spend so much on a depreciating asset such as a car with only a 10 year lifespan. Our public transportation is good and comfortable, and there is always the taxi. It is like having your own personal driver!

Having said that, we current have 2 cars, bought during the relatively low COE periods.

Now that Uber and Grab are also competing for COEs, I think COEs prices might not fall or might even rise in spite of more COEs being released.

Assessable Income. / No.of People
(Gross income less deductibles)

$1m and above / 4557
$500k to $1m / 14,757
$400k to $500k / 11,479
$300k to $400k / 24,268
$200k to $300k / 59,346
$150k to $200k / 70,315
$100k to $150k / 158,244
$80k to $100k / 120,538
$70k to $80k / 86,370
$60k to $70k / 115,089
$50k to $60k / 162,440
$40k to $50k / 224,042
$30k to $40k / 288,519
$25k to $30k / 136,256
$20k to $25k / 71,842
Below $20k - no tax.


Quote:
Originally Posted by Unregistered View Post
Even with $200k COE, it is still cheap because it means costing only $20k pa. If families earn $400k pa being the norm, this means only spending 5% of income.
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