How Much To Retire In Singapore?? | Could It Be $1.6m? Achieve Financial Independence In 15y
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- เผยแพร่เมื่อ 4 มิ.ย. 2024
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There are many ways to view this magic number for retirement. Some believe it's $2m while some have shared that any pot able to support $2,000/m for spending is already sufficient. If you are planning to achieve financial independence in 15years time, this calculation works.
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0:00 Introduction
0:52 How $1.6m could be needed
$6,426/m is needed for a family with children. Could that mean that around $3,200/m is needed per person now. In 15y time with inflation at 3.5%pa, this figure needed could be $5,361/m.
2:56 4% withdrawal rule with decumulation factored in.
It factors in inflation. $64,000/y may be needed.
There is deflation in retirement spending habits. Also to factor in CPF LIFE payouts.
5:25 What if you decumulate your retirement pot more aggressively from age55-70?
Consumption of 10% of portfolio for retirement illustrated.
8:00 What if 8% is consumed from your retirement pot from age55-70
Explaining deferring CPF LIFE from age65-70.
10:05 What if $1.6m for couple?
There will be 2 CPF LIFE payouts for a couple.
11:10 What if the investment pot only delivers only 4%
Take a guess is that enough to sustain the pot?
#retirement #retirementplanning #fire #financialindependence
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About Josh Tan:
Josh holds a degree in Accounting from NTU. In 2016, he co-founded the financial education website TheAstuteParent to provide detailed insurance plan analysis and financial planning tips.
As a ChFC Charterholder, Josh has agreed to be bounded by the ChFC®/S Code of Ethics. This includes, among others, acting in a professional manner when it comes to conducting due diligence on primary and secondary sources of investment-related data, and articulating his investment opinions based on his research and beliefs. Based on his research and analysis, he highlighted his beliefs and opinions, and illustrated the concept of time value of money, as of the time of the video.
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Hi josh, thanks for this insightful video and thought invoking scenarios! Can I check what is assumption used for the returns of your portfolio based on the 60-40 equity to bond ratio?
you said it Josh ! I too believe in accelerating decumilation rate between 55 to 70 when a person who is relatively healthy can go and pursue many things on the bucketlist.
Thanks Josh...appreciate your effort in getting this info out. Insightful for people like me already closely into this phase of life...not into retirement but gradually moving into it....😊
Glad it was helpful! Cya around
Very very good commentary especially about creating memories. Its a good reminder for myself..how much is enough? in fact, it's never enough and we cant bring it all to the grave. Whats the point of having millions when on my death bed, there is no memories.
good comment. yes
Good concept, the only flaw is the 4% rule is applicable mainly for US equities+bond investments (actual returns higher to offset inflation) which the study is based on. Nevertheless I personally use 4% as a rough guide and over time working down to 3% to be conservative. All the best to everyone striving to FIRE comfortably.
Fully agree with you that the chase for money should not be at the sake of experience - money is the currency for this lifetime not when we move on; legacy planning is important but how much are we going to leave for our descendants if not we will be working for the next generation
Thanks Josh v insightful. When you added in CPF Life depletion in your illustration, what was your assumption for retirement account contribution at age 55 in the retirement account? Basic, enhanced or Full retirement sum? Also If one is already at $1.6m at age 55 in cash or assets, the depletion figures would look far better if one continued to invest for income even as the retirement drawdown commences at 55? Thanks again, liked and subbed.
Thanks Kevin. FRS monthly amounts for someone now at age 40 used in assumption. The 4% rule already assumes your investment portfolio is invested in equities and bonds. And the 4% of original pot size you take to consume every year also inflates over time
Great video! Do the cost include housing already fully paid-up in singapore? A few other comments/questions did ask regarding medical cost and insurance cover. I too feel the need to have these cost considered clearly. Thanks!
Thanks Khoo. Housing shouldnt be included as it is a liability. Investment property if have then yes. Medical cost has been measured before and as it steps up, other expenses like dining expense drops in old age actually (from studies)
Josh, appreciate the video, which is both insightful and thought provoking at the same time. Just wondering if the 1.6m is inclusive of physical assets like properties. Would be great if you can also include that as part of your next sequel to advise on how we can also draw down upon it as part of the plan. Thank you!
The 1.6m can include investment properties. Any thing that is asset (can bring in income)
@@joshconsultancy means Exclude assets for personal use, e.g. property you are residing.
Very good sharing. A lot of people didn't foresee this in the future but hard truth is 1 million is not a lot in current context especially with high inflation
Thank you Ralf. I do believe the high inflation this few years may subside after also. We need not factor in a super big long term %
I agreed with your ideas to a certain extend but I would also like to left some investments and fund to my future child. Because job market is getting more and more unstable and pay is getting more and more suppressed.
That is the inflation provision I was talking about
Thanks Josh. Very informative as usual. I'm curious how the curve looks like if it gets pulled in by 10~15years? E.g. the husband/wife manage to accumulate a portofolio of $1.6m by the age of 40 to 45, and choose to retire immediately and start the withdrawal process. Will they run into the risk that the portofio will be significantly depletely by the age of 50 to 60?
Or a safer approach is once they accumulate $1.6m at age of 40 to 45, switch from a full-time employment to part-time employment/semi-retirement to just earn enough to cover daily expenses? In that case maybe they don't need to touch the investment portfolio and can still wait for it to grow. Finally at the age of 55 can stop the part-time employment and start to deplete the investment portofio?
Will be interesting to plot the curve covering these 3 stages: full employment (wealth accumulation) -> semi retirement (wealth preservation) -> full retirement (wealth depletion).
Thanks Nick. I imagine if retire at 40-45, the aggressive 10% or 8% of portfolio consumption in the first 10years may be too scary an approach. Why? There is a lot of life behind unlike at age55. And theres also still some distance to CPF LIfe payout too. Would very much think semi-retirement concept can reduce risk for such early retirement.
Hey Josh, thanks for the video. Is your 1.6M derived only from cash and invested cash such as in equities/bonds? How about cpf OA and special savings? Those will form part of future cpf life payout is it?
I simulated the CPF portion into the decumulation plan, you saw it?
You included cpf in the form of cpf life payouts but is it part of the 1.6m?
@@shaw3088 nope. Cpf oa was not part of the $1.6m. This $1.6m is only invested in equities and bonds. So I guess it’s cpfis. Or just withdraw all the oa at 55 and invest. What I can’t figure out is the assumed annual returns on this $1.6m. It’s not clear to me. If it achieves a return of 3% per year and we withdraw 6400 per month with an annual increase of 2% for inflation, the 1.6 million will deplete in about 23 years. So I guess he is getting a return of maybe 5%? If so, then based on my annual increase of 2% per yeae, the 1.6 million would last for more than 30 years. In fact you will have about 300+ thousand dollars left after 30 years.
Can you help me understand the difference between Bonds & Shares and how best to acquiring them in term of approach? Thanks Josh.
In terms of risk they are different instruments. Bond when you hold it to maturity, unless the issuer defaults, the principal is returned. Astrea bonds are an example.
One quick tip is they dont grow with inflation. Consideration must be made towards retirement planning. Hope it answers =)
1.6M is per person or a couple??... If per pax abit not attainable for most I believe... At least for me hee
Hi Josh. Thank you for this rather interesting video. I think it is well balanced. Having read the hundred comments below, I realise that for some people 1 million is too little and for others 1 million is impossible to achieve. I guess, the real difference is our individual expected retirement lifestyle. If we carry on more or less living the same standard, then our current expenditure would be a good indication of how much we would need to spend in retirement. I use the word need, not want. I guess that amount will have to increase somewhat, to include some wants, in order to have a happy retirement.
No probs. Yes it's true there different people see that amount differently. The part on "need" is also grey. Coz status to some becomes a need and it leads to increase lifestyle costs... Cya around
Hi Josh, 5k Monthly Expenses in 2022.. would be 16k monthly expenses in 2050 with a inflation rate of 4% a year... We absolutely do not want to downgrade our monthly expenses at the age of 60... 60 or 70 is still young, we want to spend...
Sure. If your income can build a bigger amount go for it. I'm working at actionable numbers for everyone. You seen this? $18,000/m For Retirement If You Are In 30s??? | How Much To Retire In Singapore? th-cam.com/video/TjTnupT_S6M/w-d-xo.html
How about the increased medical expenses during old age?
Yes it does. But there are choices such as downgrade to private shield plan. Also there are subsidies for elderly that actually bring down the medical cost (if we go government treatment)
wouldn't older age require higher medical expenses or did I miss something?
Fully agreed, thats why beyond money and finances, maintaining an active lifestyle to keep your health in check is perhaps the best way to keep medical expenses low. We can only factor that much amount of expenses in such hypothetical scenarios as we can never know hows the future going to be like.
Medical expense will go up. But the rest like food expense may actually deflate
Hi Josh,
The 4% rule may be somewhat flawed. Assuming that one couple retires with 2 million (dividend portfolio) and their spending do not exceed 80,000 a year how could they deplete their retirement savings???? Of course you may add inflation but their retirement portfolio would probably even grow bigger with capital gains. (I am assuming they live off 4% dividend payouts from their portfolio). Yes you did mention mix of 40% bonds and 60% stocks, but then a reasonable mix of ETF they would easily generate investable returns of 6% over the long term. So if they were to spend within 4%, their portfolio would grow by 2% annually living them a bigger pot down the road.
Hi Gary, the scenario above, first year withdraw $80k. By year 10 withdrawal is about $112k. By year 30 a far bigger withdrawal amount.... Withdrawal during equity downturns also impacts the depletion rate of the portfolio in big ways. It's not just using 6% > 4% hence won't deplete. 4% rule test if it can last 30years at least through multiple bears. Hope it answers. You may like this too - New Way To Plan How Much You Need For Early Retirement | Not 4 Percent Rule! th-cam.com/video/y_yTaENRlZI/w-d-xo.html
Hi Josh,
Ok regardless you can make the number work (or not) depending on the assumptions. Regardless, I believe that if one choose to leave a legacy and yet still able to retire comfortably (with inflation built in) as long as they leave a 2% gap between returns (6%) and spending (4%). Yes returns are never a straight line but the 6% should be a relatively conservative number based on historical S&P 500 numbers. Personally I think it is a hard sell to typical Asian families to run down the retirement nest egg although what you are saying makes sense. ‘Ang Moh’ would not think twice and say yeah that would work but to find an Asian especially Chinese to agree....you would be really pushing it....
You need a good health and mind to retire comfortably.
You have omitted the likely scenario that at the late stage, the person will be wheel chair bound, or bedridden. There will be assistant required (maid at $1k / mth, lots of different pills $0.5k/mth - renal related, physiotherapy sessions with transports cost, food, basic expenses, tube feeding food), minimally $3k/mth to get by. If in stable state and lasting several years, that a few hundred k. If caregiver, (whose career is likely to be affected) can't cope , the decision may be to sent the person to an elderly home, that will be even more expensive. My view is last stage is going to be financially draining for the caregiver. One must allocate for this instead of planning to use up financial resources totally. It is alright to leave a sizable sum for the caregiver child ..( Guessing not every child contribute equally ).
That can be fixed with long term care insurance
With 1.6mil buying into corporate bonds yield abt 4 plus % isn't it a better solution for parents with kids who wants to leave a legacy to children.
It may not be inflation proof. If inflation rate matches or exceeds 4% p.a. in future, the real return will become 0% p.a. or negative.
@@kenneth.lim3390 true, but at least we can keep bulk of the 1.6mil for our children
The corporate bond will mature and there is reinvestment risk. But more crucially, if the corporate bond has debt issues, there is risk to the retiree
@@joshconsultancy I prefer to collect multiple streams of passive income from property rental, mutual funds, cpf SA account 4% interest and Cpf life upon 65.
Actually if you have half a million and a fully paid HDB...
You can rent out the HDB and go live in jb or Bali or Thailand and you can retire quite comfortable...
But of cos u can't do that if you have kids...
So to marry or not, to have kid or not,
That will depend on your personal preference and value system .
Just my 2 cents...
sure. The calculation is for living in SG. Sg has safety and good medical for old age i guess? =P
@@joshconsultancy
Agree with you :)
Getting out of Singapore.. To place like Thailand.. Even 1 million is good to retire.. The government there don't anyhow take your money
Don’t know how to take your money, yet.
If you require sudden medical care?
great information. Subscribe!
But medical costs might increase at retirement…. Should we include that cost in?
Government no money.. Anyhow increase medical cost to cover the black hole..
Yes but others like food expense deflates. Even for medical, you may choose to downgrade private medical insurance. There are also gov subsidies. The 70% factor is accurate dun worry
Now I have more knowledge about personal finance. I just subscribed to your channel. Big ups to everyone working effortlessly trying to earn a living while building wealth. I’m 44 and my wife 50 we are both retired with over $3 million in net worth and no debts. Currently living smart and frugal with our money. Saving and investing lifestyle in the financial market made it possible for us this early even till now we earn monthly through passive income.
Thanks to FIRE movement.
Welcome in Abha. Question, what career were you in. What was the journey like building up the assets?
@@joshconsultancy he ls 44 and his wife 50
What if financial crisis at age 65 portfolio drops 70%?
Portfolio on 4% withdrawal rule is 60% equities and 40% bonds. And Equities if diversified properly will not drop 70%
Hi Josh how about 500k with a 6 percent return = 2.5k per month? Do I think this is realistic?
Assuming House fully paid + no car
Thank you Josh for these videos
If the 6% is from reit it is possible. Concerns are like during COVID, reits had to suspend dividends
Hi Josh after finishing ur video I think the answer is there and also on a case by case. Really appreciate your sharings man ❤️❤️👍
Medical expense will kill… pls do a video on the necessary insurance plan
If 1.6 mil fir future 15 yrs, meaning if in today is $500k over , if i have that amt now , am i 60s, meaning i can decumulate now ?
Not to0 sure how to clarify but maybe firstly In 15y 500k does not inflate to 1.6m w a usual inflation rate.
@@joshconsultancy what is yr estimate today $ for future 15th yr $1.6 mil,thk
I already have 1.6m. But my accountant said the current FI number is $3m per person.
"current" is it based on your expense calculation?
Yeah your accountant isnt wrong, buddy. But again it depends on your lifestyle.
In today's money, how much would you budget a month for aged care?
So many people these days with dementia and long term illnesses that need a lot of care
Will deplete savings and CPF rather quickly
Use long term care insurance (careshield supplement plans) to plan it or at least defray some cost
@@joshconsultancy google says 8k a month for high level care.
been to too many facilities, it's is just to depressing in cattle class
That figure is the super high end one maybe? Im still in a care giving family situation. Nursing homes are around $3k.
@@joshconsultancy yes, when it comes to care, the higher level of care the better, by better skilled staff.
been to facilities, packed like sardines. Residents wait hours to change diapers, get bathed, get fed (rather un tasty food)
or fall down at night (break a few bones) and wait till next day for rescue in the morning
Or, given the wrong meds
Since we spent a lifetime accumulating, its OK to spend a bit more for this
using a inflation rate of 3.5%... having 1.6million in year 2050 equates to having 600k in year 2022... this is as good as telling people to retire with 600k
which is unrealistic
Firstly, the equation is 15year time 2037 not 2050 to start retirement. Secondly, factors such as CPF are also added into the equation. I worry you've an unrealistic amount you feel is needed when retirement can be simple
Sir --how many in Singapore can save a million S$
Come to age 70
talk is very easy
How many is not the question. There will always be a segment who fall behind. The question is how much at least to provide that number calculated as average monthly expense
Inflation for SG is at 5% for 2022. CPF cannot keep up already.
It may be this few years high inflation only
Retirement metrics must be calculated using 6-7% inflation to keep pace globally. Or else it will be too late when we realise our CPF cannot keep up.
6-7% inflation is more likely then not these few years only imo
Hi 👋. How much must we earn to live comfortably in a freehold in Singapore.
Question is why define to freehold. For home mortgage, follow the 3-3-5 formula. If $1.5m property, combined income should be $300k
Wah that is expensive is earning both spouse monthly income needs to be 25000.
1.6million in 2022 is something, 1.6million in 2050 or 2060 would be nothing
@ Josh - the figure of $3.2k per pax seems to be from 50% of $6436 which is actually the basic expenses for a household of 4 persons (husband + wife + 2 school going children).
So to divide $6436 by two will result in quite a high figure ie $3.2k
I understand. Without 2 children ya the number can reduce further, agree
One person now require $3200 or even $3500/ mth and this figure will only probably hold till 2024. But it does not mean 2 persons require $6400. But even the payout from FRS for ppl who are 65, now is not enough. And need to supplement by at least more than 70% of the FRS. So all in all, for folks who are 60 now, you will need $3200 now.
Money no enough
$1.6M is unrealistic for most people. The number of HNWI (High Networth Individual) in SG is only about 200,000. They have assets worth $1M or more that can be converted into Cash. That is about 4% of the population. So means 96% cannot meet? Lol.
The calculations are for 15y time. Also there is a scenario explained using $1.6m for a couple
It doesn't matter if it's 15Y time. The average household income is $4.6K, if i remember correctly. How much can a household saved given the high costs of living? And you mentioned monthy expenses of $6K+.
@@hc5431 average household income is NOT $4,6k. $4.6 median income PER PAX. That should answer
@@joshconsultancy so household median is say $9200. This includes CPF. So after deducting CPF, perhaps the couple only takes home $6000? If so, how can the average expenses be $6000. For such an average couple in Singapore, it is likely that their expenses may only be $4000 a month. Or less. If they really want to be able to have $1.6m at 55.
Convert yr sgd to myr. Go retire in M’sia. Profit!
Simple!
Enough or not?
I'm suggesting possibilities as to why its needed for retiring in 15years time
I think i need to do graveyard shift to retire in SG
no no Felix, work backwards to whats attainable and set a long term plan to get it
Is not easy to reach the level of SGD 1.6 million portfolio.
Understand. The 1.6m is in 15y time. If at this moment it's looking quite far, aim for the 1.6m for a couple which is $800k each. That figure needs to be worked at. Cya around WK
@@joshconsultancy Thanks for the tips and cya.
A free hold condo
I spend more during retirement
Go travel the world :)
Inflation 4% + 2% GST in the incoming years.
Inflation could be strong these few years but it may not be forever at this high rate
Need $5 million cash
may not need such a big figure actually dun worry
Depressing to know for someone who is 55 now.
Hi Lee, what are your plans for continued work and how do you plan to approach your retirement?
I feel you. But don’t need to worry too much. If u can manage to top up your CPF retirement sum to the enhanced retirement sum, it is likely that you will be able to get perhaps $2200 per month from the age of 65. This amount is not large, but it will enable us to have a decent life in retirement, Provided the house mortgage has been paid up, and we don’t have to pay rent, and we take public transport i.e. the bus.
I second that. Gotta put off retirement for as long as reasonably possible. 😢
Not enough lah. $1.6mil…. What kind of retirement lifestyle is that?
DY, I understand you can afford but youve got to look from other angles.
@@joshconsultancy Am just saying that it’s gonna be pretty sad scene if one retires at 55 in SG with only $1.6mil. Of course different strokes for different folks but in Singapore, $1.6m is really not much at all , even today. People should be more frugal during their productive years. Make hay when the sun shines. All the best JT
Not enough , not enough, not enough….
Not enough , not enough 😅
If you live in Singapore.. 16 million not enough. Remember gst can go higher and higher.. . So your money don't belong to you.. Belong to pap.
Unfortunately Singapore is still one of the better choice. Not the best but not the worse, healthcare and safety is affordable and of quality.
Was thinking of going to Thailand for retirement but realise when I’m old, I would rather get healthcare in Singapore.
@@TimothyTeoGood healthcare in singapore ?/ more like a scam to me ...