Whats your net worth

Originally Posted by Unregistered

You definitely cant live like a king with RM9k in KL or Penang. Assuming you and your spouse, put aside your kids. Living in a RM1mil teres (market price), RM250 C Class Benz, Each month you have to pay RM4.5k for housing loan (30 years loan) and RM3k for car (9 years loan). And remaining for road side hawker food, RM5.5 for a bowl of noodle and RM1.8 for kopi. Ppl always think that living in Malaysia is cheap.. and not even king, just average living lifestyle..

Retiring with RM9k pm for a retired couple is very comfortable in KL. You can rent a 1 bedder for RM2k pm. If you buy a brand new car, you can get a decent new car (foreign make) for about RM2k pm (9 years loan, 3%). Food, petrol, entertainment, medical, utilities and misc RM4k pm. You can still save RM1k pm.

We are a retired couple, 55 & 56 years old. Passive income $60k pa. We live in a 4 room HDB flat. Our net worth, including flat, is $1.2m. We live a frugal life, no car, simple meals, no debt. Only spend $40k pa. We feel rich even though we seem poor. We pity those who seem rich but poor, they earn $300k pa but spend $400k pa. They have big bungalows, big car, etc and all on loan. They always argue about money and always compare with their elite friends.

Do not gloat. 55, 56 is the starting age for most retirees. In fact the new retirement age is now 62, so you are considered to have retired prematurely. With life expectancy of 85, you have 30 years to go. These are the questions you have to asked yourselves to assess if your money can last the 30 years.

1. Is your passive income of $60k pa stable? Can you expect this same amount every year?
2. Is your passive income source able to keep pace with inflation?
3. Is your $40k expense pa the lowest you are prepared to live with?
4. Are you prepared to downgrade from your 4 rm flat to HDB studio apartment?
5. Do both of you have insurance cover for medical events? Major illness?

If you answer more than one NO to the above, there is a very high chance your money will run out 10 to 15 yrs down the road. Inflation, medical expenses will be the culprit. You can check the numbers out yourselves with the yahoo retirement calculator: Yahoo! Personal Finance Calculators - How Much Will I Need To Save For Retirement?

Although it is tailored for use in US, you can use your own numbers and it will give you a good gauge on how inflation can diminish your $60k passive income and if you cannot afford to lower your $40k yearly expense, it will also show how much that expense will grow again due to inflation.

So do not gloat. Do your sums properly first.

I belong to the group you mentioned whose household income is >$300k pa. Although our combined household income is $460k pa, we don't stay in big bungalows and we don't drive big conti cars. We spend $100k pa and save / invest the rest. We live in a condo with 2 cars. If we want to maintain our $100k pa lifestyle throughout our retirement years, we have to continue working till 65. Inflation and medical expenses are our biggest worry.

Originally Posted by Unregistered

We are a retired couple, 55 & 56 years old. Passive income $60k pa. We live in a 4 room HDB flat. Our net worth, including flat, is $1.2m. We live a frugal life, no car, simple meals, no debt. Only spend $40k pa. We feel rich even though we seem poor. We pity those who seem rich but poor, they earn $300k pa but spend $400k pa. They have big bungalows, big car, etc and all on loan. They always argue about money and always compare with their elite friends.

I am not gloating, just stating facts.

Our $60k pa income is stable. We have our 4 room flat which we could sell and we could downgrade to a HDB studio for the elderly. This is one option. Another option is for us to retire in 3rd world countries such as Thailand or Malaysia. We will rent out our HDB flat and earn $3k pm rental or $36k pa. So, with the $60k passive income we have now, we will get $96k pa passive income or RM244k pa, that is more than enough to retire very comfortably in Malaysia. If we retire in Thailand, we will be super rich there. You need to think outside the box.

Btw, don't gloat over your $400k pa income, you and ypur wife may just get retrenched tomorrow and earn zero. Be humble.

Originally Posted by Unregistered

Do not gloat. 55, 56 is the starting age for most retirees. In fact the new retirement age is now 62, so you are considered to have retired prematurely. With life expectancy of 85, you have 30 years to go. These are the questions you have to asked yourselves to assess if your money can last the 30 years.

1. Is your passive income of $60k pa stable? Can you expect this same amount every year?
2. Is your passive income source able to keep pace with inflation?
3. Is your $40k expense pa the lowest you are prepared to live with?
4. Are you prepared to downgrade from your 4 rm flat to HDB studio apartment?
5. Do both of you have insurance cover for medical events? Major illness?

If you answer more than one NO to the above, there is a very high chance your money will run out 10 to 15 yrs down the road. Inflation, medical expenses will be the culprit. You can check the numbers out yourselves with the yahoo retirement calculator: Yahoo! Personal Finance Calculators - How Much Will I Need To Save For Retirement?

Although it is tailored for use in US, you can use your own numbers and it will give you a good gauge on how inflation can diminish your $60k passive income and if you cannot afford to lower your $40k yearly expense, it will also show how much that expense will grow again due to inflation.

So do not gloat. Do your sums properly first.

I belong to the group you mentioned whose household income is >$300k pa. Although our combined household income is $460k pa, we don't stay in big bungalows and we don't drive big conti cars. We spend $100k pa and save / invest the rest. We live in a condo with 2 cars. If we want to maintain our $100k pa lifestyle throughout our retirement years, we have to continue working till 65. Inflation and medical expenses are our biggest worry.

Can share how you achieve the $60k passive income?

Considering your net worth of only $1.2m including your 4 room flat, You must be very good with investment or they are your pension?

The flat would take out about $400k, and CPF minimum sum for you and spouse would take out another $260k, medisave another $80k.

Assuming you all ($1.2m - $400k - $340k = $480k) into your investment vehicle to obtain the $60k pa, you are getting 12% return annually. Fantastic!

Originally Posted by Unregistered

We are a retired couple, 55 & 56 years old. Passive income $60k pa. We live in a 4 room HDB flat. Our net worth, including flat, is $1.2m. We live a frugal life, no car, simple meals, no debt. Only spend $40k pa. We feel rich even though we seem poor. We pity those who seem rich but poor, they earn $300k pa but spend $400k pa. They have big bungalows, big car, etc and all on loan. They always argue about money and always compare with their elite friends.

Originally Posted by Unregistered

Can share how you achieve the $60k passive income?

Considering your net worth of only $1.2m including your 4 room flat, You must be very good with investment or they are your pension?

The flat would take out about $400k, and CPF minimum sum for you and spouse would take out another $260k, medisave another $80k.

Assuming you all ($1.2m - $400k - $340k = $480k) into your investment vehicle to obtain the $60k pa, you are getting 12% return annually. Fantastic!

We bought very cheap stocks during the crisis, gives us very high dividends

You obviously don't know what you are talking about.

The 12% return the previous poster estimated was based on present value. No stocks today give this kind of dividends. Some more you said they were stable returns. What kind of stock you fantasizing?

Originally Posted by Unregistered

We bought very cheap stocks during the crisis, gives us very high dividends

[Jeff]

There are plenty of questionable posts lurking around here. Some of my observations are:

1/ Too high net worth, based on relatively low salary. This is not even assuming that the person's salary is increasing over the years, so his salaries in previous years were much less than current.
2/ Plenty of people saying that they bought property at the bottom.
3/ Saying they bought stocks at the bottom.
4/ Overstating their stock dividends, without saying that whether the stock price went up or down or whether the dividends are one-off
5/ Overstating their property return, without saying what about repairs (plenty of leaking ceilings you know), maintenance, agency fees, property taxes and income taxes

I think most people should try to be honest here, otherwise don't post at all. Then this thread will be more meaningful and useful.

[Jeff]

I am into my 40s, and at this age, I know I am at my peak earning years for the next 10 years till 50 or so.

My biggest fear is inflation. Whatever I own, I need to at least allow my net worth to track inflation. For example, my $1m should be $1.04m next year. This also means the maximum I can use is my return above inflation. If my properties and shares and other investments earn me 5%, then I can only use 1%, else I will be eating into my capital...

Some young people will say it is ok, because in the long run, STI has been moving up 8%p.a. excluding 2% dividends, or REITS pay 6-9% dividends every year. Well, if you think it is ok, then you haven't really experienced the wonderful feeling of shaking in fear each day for months, when your stocks will falling 5-10% per day.

Hi Jeff,

What's your household income and net worth now?
What's your retirement plans?

Originally Posted by Jeff

I am into my 40s, and at this age, I know I am at my peak earning years for the next 10 years till 50 or so.

My biggest fear is inflation. Whatever I own, I need to at least allow my net worth to track inflation. For example, my $1m should be $1.04m next year. This also means the maximum I can use is my return above inflation. If my properties and shares and other investments earn me 5%, then I can only use 1%, else I will be eating into my capital...

Some young people will say it is ok, because in the long run, STI has been moving up 8%p.a. excluding 2% dividends, or REITS pay 6-9% dividends every year. Well, if you think it is ok, then you haven't really experienced the wonderful feeling of shaking in fear each day for months, when your stocks will falling 5-10% per day.