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| 'If you fail to plan, you plan to fail.' |
Retirement planning has been one of those things that people tend to put off thinking that time is on their side. Honestly, when I started working a few years ago, I thought and behaved like that as well. Thankfully, the mindset change has occurred pretty quickly and my wife and I are now working hard towards ensuring that our retirement is planned for.
What is more worrying is an article published here that showed most Singaporeans are falling behind on their retirement plans. This has serious consequences such as lower quality of life as well as higher dependence and financial burden on your family members/relatives.
When it came to us looking into planning our retirement, time appeared to be on our side. We are in our late 20s, so we are looking at a time horizon of 30-35 years in the workforce. Our goal was to ensure that we are able to fund our child through university while maintaining a moderate lifestyle after retiring. Various sources of income have been considered such as dividends from our investment portfolio, maturity of our endowment and savings plans and income from CPF in the future. We estimate that our current annual expenses is between 30k-40k. We will examine this more thoroughly at the end of the year to gain better resolution and update our plan accordingly.
Our plan is somewhat taken after the Lean FIRE/FIRE movement, without the Retire Early portion. Having discussed, we both see ourselves working till we are at least in our 50s if our job continue to provide us with a sense of fulfillment. So we are looking towards a portfolio size of 20-25x our annual expenses. On the upper band, we are looking at a minimum portfolio size of ONE MILLION. Honestly, I think this is achievable and will not take the entire 35 years to achieve. But this will be the bare minimum that we will be targeting. Somewhat like a road to ONE MILLION goal. With 1M, the save withdrawal rate of 4% (either through divestment or dividends) will also cover our annual expenses while maintaining the size of the portfolio.
As of now, we are almost done saving with our emergency funds and will look towards bolstering our investment portfolio in the next two years substantially. We consider ourselves fortunate as we are currently staying with our parents and do not have much liabilities to our name.
The takeaway from this post is to plan your future. Because no one else will. And no one owes you a living. If you're married or have a partner, it is important to be on the same page and get their buy-in so that you can embark on this journey together. After setting your goals and laying out the plans to get there, execute with focus and in time, you will reap the rewards.
Share with me your thoughts on retirement planning!
SG FI Dad, out.
Hi,
ReplyDeleteHave you heard of the 1M65 (or now upgraded to 4M65) concept started by Mr Loo Cheng Chuan?
If not, you might want to google it and understand how it works. I find the concept useful and workable for younger working adults. I only got to know the concept when I was past 55 yo. Even then, I found the "mathematics" behind his concept sound.
My wife and I have taken a different path and still find that we are on track to meet the 4M65 goal.
Good luck on your retirement planning.
Hi! Thank you for your comment! Yes I have read about the 1M65 movement/concept. It is an interesting strategy that I believe is achievable. It is also unique in a way to SG! We will definitely be looking at implementing it as part of our strategy of beefing up the CPF portion of our portfolio.
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