The RETIREMENT thread

[mojito]

Re: Should he retire?.

Your friend needs to be grateful to the PAP for his good fortune. I suggest he volunteer for PA grassroot activites and start a service business based on contacts made in the organization. I guarantee his bid will be looked upon favorably. It is an excellent way of sustaining his lifestyle in semi retirement. Don't be like the losers here who whine about the PAP day in day out.

 

[Leongsam]

Re: Should he retire?.

With 1kk in cash and 400k in CPF (both combined), house fully paid up and children education need, more or less, taken care of. I think he can afford to take a break.

What do forrumers think?.

He can afford to take a break but if he wants to retire for good he has to be prepared to accept a significantly lower standard of living.

$1 million in cash can be converted to assets which yield about 4% to 5% max because at 52, he should no longer opt for higher risk/higher return portfolios. This will provide about $40,000 to $50,000 per annum income before tax.

His $700,000 house yields nothing if he continues to live in it so he'll have to rent it out and rent something a lot smaller in return in order to extract some income from his property asset. If he can get about $30,000 per year from this arrangement, he's done well.

So $50,000 plus $30,000 = $80,000 per annum or $6,700 per month which is a far cry from the $20,000 per month income they are enjoying currently.

However this situation isn't ideal even if he's willing to take a 75% reduction in income because there are no reserves should he suddenly need funds for an unexpected event.

Ideally, $5 million in assets is required for a comfortable retirement so he has some way to go.

 

[lifeafter41]

Re: Should he retire?.

My answer is no, he is not ready financially and more importantly, mentally.

I have asked him about accepting and adjusting to a lower standard of living.
What he told me was that he and the wifey basically start from zero, with no house, assets or even savings to speak of.

While not to the extend of reverting to the poor status, but sustainable and comfortable lifestyle that they have previously walk towards and going back to that is not a problem to them.

However, on the mentally part, you might need to further elaborate.......

 

[lifeafter41]

Re: Should he retire?.

He can afford to take a break but if he wants to retire for good he has to be prepared to accept a significantly lower standard of living.

$1 million in cash can be converted to assets which yield about 4% to 5% max because at 52, he should no longer opt for higher risk/higher return portfolios. This will provide about $40,000 to $50,000 per annum income before tax.

His $700,000 house yields nothing if he continues to live in it so he'll have to rent it out and rent something a lot smaller in return in order to extract some income from his property asset. If he can get about $30,000 per year from this arrangement, he's done well.

So $50,000 plus $30,000 = $80,000 per annum or $6,700 per month which is a far cry from the $20,000 per month income they are enjoying currently.

However this situation isn't ideal even if he's willing to take a 75% reduction in income because there are no reserves should he suddenly need funds for an unexpected event.

Ideally, $5 million in assets is required for a comfortable retirement so he has some way to go.

Much as I appreciate Sam's advice, it is not possible for every Singaporean to be able to attain the ideal case of 5 million in assets to begin with.
With 75% to 80% of the population staying in HDB flats, the majority of Singaporeans, in my opinion, might not be able to even save 200k in cash, what more at 1kk in cash.

Nonetheless, noted on the point of unexpected event, such as medical illness, etc, that could wipe out a substantial portion of one's savings.

 

[50000]

Re: Should he retire?.

2 questions:

1) Does he gamble?
2) Does he have a PRC girlfriend?

If answer to any 1 question is yes, then ........

 

[Leongsam]

Re: Should he retire?.

Much as I appreciate Sam's advice, it is not possible for every Singaporean to be able to attain the ideal case of 5 million in assets to begin with.
With 75% to 80% of the population staying in HDB flats, the majority of Singaporeans, in my opinion, might not be able to even save 200k in cash, what more at 1kk in cash.

Nonetheless, noted on the point of unexpected event, such as medical illness, etc, that could wipe out a substantial portion of one's savings.

You asked a question and I answered it.

I didn't say that he couldn't retire. What I did say is that he has to be prepared to accept that life will not be as comfortable and money will be relatively tight compared with the income that he is used to.

This scenario that you describe is played out in many middle income households across the world. NZ/OZ is no different. Despite the fact that there is a universal pension, middle income households have to face the stark reality that upon reaching retirement age, they'll no longer be able to afford lots of the comforts of life they take for granted while they're earning a steady income.

That is why I have been repeating my mantra "Achieve financial independence at an early and age as possible". During my working life, it was the one goal that I thought about and acted upon every single waking moment. If you plan for it early, you can make it happen. If you put it the back of your mind, by the time you realise that you're reaching the twilight of your productive life, it will be too late.

 

[Seee3]

Re: Should he retire?.

I have asked him about accepting and adjusting to a lower standard of living.
What he told me was that he and the wifey basically start from zero, with no house, assets or even savings to speak of.

While not to the extend of reverting to the poor status, but sustainable and comfortable lifestyle that they have previously walk towards and going back to that is not a problem to them.

However, on the mentally part, you might need to further elaborate.......

Just some points to consider :

1. It is easy to say downgrade life style. However, doing it is different. The hot humid weather at home is enough to kill if one is used to air con environment in the office.

2. Adults can endure the change. Children in their teens will find it hard to adjust as they like to live like their peers.

3. We still need to keep ourself occupied after retirement. He needs to find out what he wants to do.

4. Mental preparation to face insensitive friends, relatives, neighbors, ... who like to ask sensitive stupid questions is essential. Takes a year or 2 for people to stop asking.

We can actually downgrade our life style for about two years while we are still working so that the family can get accustomed to the change. At the same time, we can use this trial period to find oUt exactly how much we need to survive at a level that is still ok to us. With 3 children still studying, their expenses and their education costs can easily wipe out 300 k till they are independent.

 

[Leongsam]

Re: Should he retire?.

While not to the extend of reverting to the poor status, but sustainable and comfortable lifestyle that they have previously walk towards and going back to that is not a problem to them.

I have given you a figure to work on and that is about $6,500 per month. Ask them if they can live on that amount. If they can then they're ready for retirement at their current net worth.

They have to bear in mind too that money depreciates at the rate of about 2% pa in a benign inflation environment so $6,500 will buy significantly less when he reaches 62.

 

[po2wq]

Re: Should he retire?.

... What do forrumers think?.

y retire? ... leave sinkielan betta ...

 

[sochi2014]

Re: Should he retire?.

Up to the individuals lah!

Even the richest men don't want to retire while young Mats already play guitar and relax already.

 

[lifeafter41]

Re: Should he retire?.

You asked a question and I answered it.

I didn't say that he couldn't retire. What I did say is that he has to be prepared to accept that life will not be as comfortable and money will be relatively tight compared with the income that he is used to.

This scenario that you describe is played out in many middle income households across the world. NZ/OZ is no different. Despite the fact that there is a universal pension, middle income households have to face the stark reality that upon reaching retirement age, they'll no longer be able to afford lots of the comforts of life they take for granted while they're earning a steady income.

That is why I have been repeating my mantra "Achieve financial independence at an early and age as possible". During my working life, it was the one goal that I thought about and acted upon every single waking moment. If you plan for it early, you can make it happen. If you put it the back of your mind, by the time you realise that you're reaching the twilight of your productive life, it will be too late.

On the universal pension, is it similiar to the CPF in Singapore?.

 

[lifeafter41]

Re: Should he retire?.

Just some points to consider :

1. It is easy to say downgrade life style. However, doing it is different. The hot humid weather at home is enough to kill if one is used to air con environment in the office.

2. Adults can endure the change. Children in their teens will find it hard to adjust as they like to live like their peers.

3. We still need to keep ourself occupied after retirement. He needs to find out what he wants to do.

4. Mental preparation to face insensitive friends, relatives, neighbors, ... who like to ask sensitive stupid questions is essential. Takes a year or 2 for people to stop asking.

We can actually downgrade our life style for about two years while we are still working so that the family can get accustomed to the change. At the same time, we can use this trial period to find oUt exactly how much we need to survive at a level that is still ok to us. With 3 children still studying, their expenses and their education costs can easily wipe out 300 k till they are independent.

Yes, agreed on point number 3. A sustaining interest is important.
I did ask him about the children's education. While he did mentioned oversea studies is out of the question. Local U is not an issue and am sure he has planned and budgeted for it. Hence this is not included in the sum I have mentioned.

 

[McDonaldsKid]

Re: Should he retire?.

He can retire from his job and then do something less fast paced while also continuing to earn money. Preferably doing something he loves.

 

[McDonaldsKid]

Re: Should he retire?.

When I retire, I will go work for McDonald's.

 

[lifeafter41]

Re: Should he retire?.

When I retire, I will go work for McDonald's.

I don't mind doing that as my first part time job was working in McDonald's outlet located in Liat Towers.
Yes, can still remember those days..........it was fun

 

[JohnTan]

Re: Should he retire?.

If not for PAP's fine leadership, all of these would not have been possible for your friend.

 

[frenchbriefs]

Re: Should he retire?.

earning 20k a month but their savings only 1mm?do they know how to invest?

 

[lifeafter41]

Re: Should he retire?.

earning 20k a month but their savings only 1mm?do they know how to invest?

They reach 20k probably 1 to 1.5 years back when both of them got promoted. Frankly I was quite envious of their situation.

They are very prudent in their spendings and put aside certain savings. Maybe they did not include any insurance they might have.

Nope, they are not savvy investors, if that is what you mean.

I have known of another friend that earns almost 8k every month, single, but have almost 100k in credit card and personal lines credit debt.

 

[soIsee]

Re: Should he retire?.

1 million buckaroos in hand already wants to retire in Sinkland?

I have assets of value sitting on many millions of buckaroos and others giving me returns and I still CANNOT retire.

Maybe in Mudland lah. LoL

 

[palden]

Re: Should he retire?.

5 mil? Can't hit that even when I work till 62.