Post by oldman on Oct 20, 2013 4:43:03 GMT 7
When I told my wife 5 years ago that I wanted to retire early, she looked at me and thought I was crazy. She too was worried as I am a workaholic. Once I stopped working, she knew that my energy will not disappear overnight. There are so many tales of retirees arguing with each other over very small matters as they now see each other every minute of the day as opposed to the time when at least one of them is out working.
I remember reassuring her that I will not interfere with the running of the house and that I will find places to dissipate my energy. After studying and working for over 40 years, there are lots of things that I have told myself that I wanted to do when I retired. Now, I have the time to run through that list and even add more items every now and then. Hence, there are lots of things to do. It is like trying to compress 40 years of like-to-do things into the next few years and then finding even more new things to do!
To retire is to be free.... to be able to do the things that one has always dreamt of doing but never finding the time when one was working for a living.
For me, I wanted to catch up with old friends from my childhood days as these were the times when friendship was pure..... no ulterior motives and no business objectives. True enough, it was simply marvelous meeting up with my old classmates, recognising familiar faces and sharing our experiences of life. After all, life is about memories and what better way of remembering the past than to meet up with people from the past whom you have not seen for over 30 years.
I also spend a lot of time with the new technologies as I enjoy tinkering with these. I usually buy these through the internet and I look forward to receiving packages from the mail-man every now and then. I would then add these technologies into my already complex home network and managing all these takes up even more time!
Of course, my primary intention of early retirement is to spend as much time as I can with the family. My family is still relatively young and it is wonderful to be able to spend time with the kids in their formative years as I feel that the best education one can offer our kids is our time. Time spent in nurturing them is simply irreplaceable... especially when they are still young. This is why I will structure my time around them..... sending them to school, picking them up, having all meals with them and of course, playing with them. Through this direct interaction, they can understand me better and understand my perspectives of money & life and hopefully, these indirect teachings will rub into their future lives.
Next to spending time with the family, the bulk of my time is spent on my investments. I am always on the lookout for new investment ideas as well as keeping track of my current investments. I have to stay on top of local, regional and global developments as these can affect the sentiments of the stock market.
Every morning, I will religiously wake up at 5am. No alarm clock is needed as my brain will automatically wake me up at this time. I will then plan my day and before I know it, it is already time to go to bed.
There is so much to do when one retires. But the difference is that I am now doing the things that I enjoy doing and not the things that I have to do, to make a living. If I knew retirement is so much fun, I should have planned my retirement much earlier!
But in order to retire comfortably, one has to plan ahead.
To start with, I think $5,000 a month for the next 25 years will be comfortable. $1,000 a month will go towards household expenses and goods. Another $1,000 will go towards the cost of maintaining a car. A further $1,000 should be set aside for life & health insurance as well as hospitalisation costs. The rest goes towards living expenses, incidental & unexpected costs. I am also working on the assumption that your house and car have been fully paid up. Also, if you still have young children, you will certainly need to increase this monthly budget.
$5,000 a month translates to $60,000 a year. If one retires at the age of 60 and live till a ripe age of 85, one needs to set aside 25 years of living which works out to be $1.5 mil. I am not considering the effect of inflation over the 25 years as I have balanced this with an assumption of zero interest rates on your capital.
I am also not interested in annuity plans as I am always fearful of banks or financial institutions collapsing and with it, the annihilation of my entire retirement fund. One of my steadfast principles with money is that I trust no one with my money. I feel more comfortable putting my money in several bank accounts. Also, I like the flexibility of managing my own money rather than the thought of passing my money to a financial institution that will then treat me like a little child and give me a certain amount of money every month and denying me the privilege of drawing less or more of my own money, especially in emergencies.
Ideally, one should also have investments which do not form part of this $1.5 mil retirement fund. By having an investment fund which is separate from this retirement fund, you will be able to invest without having to worry about the erosion of your retirement fund in the event your investments turn sour. This way, one is comfortable regardless of the performance of one's investment fund and one is then able to invest more freely and wisely.
My experience is that my investments do very much better if these are not under any time pressure. Investments do take their own time to mature and one should not rush these but let them grow in their own time. If you need money in the next few years, it is better not to put these in investments as you may then be under pressure to sell these investments at the wrong time.
What this means is that if one wants to retire comfortably, one must firstly ensure that he does not have any outstanding loans on his house or car. Then, he needs to set aside at least $1.5 mil as his retirement fund and finally, he needs to set aside another amount for his investment fund. The gains from the investment fund can then pay for the holidays and the larger ticket items. The investment fund is also important to have, just in case, one is blessed with a longer life beyond the projected 25 years of retirement.
Yes, it is not cheap to be able to retire comfortably. A target of at least $3 mil plus a fully paid up house and car is a good target to aim for if you want a comfortable retirement. My point is that one should plan to retire comfortably and not simply to retire just to exist. If the amount seems high, one should then aspire to work even harder or to take more risks when one is younger.
For those who plan to retire in your forties like I did, you must not forget about the premiums for your insurance policies. When you were gainfully employed, the insurance agent would have asked you to set aside 30% of your income on insurance. If you were earning $5K a month, this can amount to $1.5K a month for insurance premiums. Like any obedient working adult, you are likely to trust your insurance agent as he should have undergone the financial training to give you such advice. Well, at least I did. In my case, I landed up putting more than 30% of my income into insurance premiums monthly.
What he failed to highlight to me then was that if I retired early, I still have to pay these premiums. For those who are planning to retire early, do look carefully at your insurance premiums as more than likely, you too will have to continue paying most of these premiums. When you were drawing a salary, these premiums may still be manageable, but when you are retired, these premiums can be quite significant when compared to your planning numbers. This is because most folks will assume that they will only need 70% of their original monthly salary on retirement. But if you continue to pay these insurance premiums, these can account for 43% of your retirement monthly expenses! So, before you plan your retirement, do look very carefully at each and every insurance policy that you have taken.
If you think you can live with much less, do work out your sums and come up with a number that you feel more comfortable with. But do remember that it is better to err on the side of over-provision than under-provision because it is not easy to come out of retirement to try to earn more money in the future as your skills may no longer be relevant then. Sometimes, it may be better to continue working and delay one's retirement plan, in order to build up a more substantial nest egg before one retires.
When we have enough money to retire, we are fortunate to be able to focus on things that we want to do when we are still alive. We really do not need to spend the bulk of our time increasing our wealth because wealth at that time will become more and more meaningless. For me, I prefer to wear my old clothes when I go out as these are the most comfortable attire that I have. I also like eating in the food courts as I simply love hawker food.
Instead of spending time trying to build up more wealth, it makes a lot more sense to me to focus on the things that are much more important. I retired earlier so that I can spend the bulk of my time with my family as I really do not know when I will be asked to leave this world. I know that I will regret it immensely if I did not spend quality time doing the things that really matter to me.
Of course if one is still finding it hard to make a living, earning money to support the family becomes very important. Without sufficient money, life will be a struggle. I have been there and I know. But there comes a time when enough is enough. Every one of us should struggle to build our wealth but when we have enough to retire, we must tell ourselves, enough is enough. Happiness is appreciating what we have. Yearning for more will only make us unhappy.
We must not be obsessed with money right to the end because it is simply not worth it. If we can live forever, sure, it makes sense to accumulate as much wealth as possible. But, we are all mortals and we have to leave this world one day. The sad truth is that we do not know when we will have to leave. If we spend every tomorrow trying to build our wealth, one day that tomorrow will come when we have to say goodbye. We will regret not spending our time more wisely and focus on the things that matter most to us. We are much better off making each day count as if it was our last.
For me, my family will always come first. When I have spare time, I will spend time looking at my investments but this is not because I want to increase my wealth. It is simply that I enjoy investing as this to me, is more fun than fun itself. Whether I make more money is not what drives me. I simply love investing and enjoy the thrill of getting it right... more than its financial rewards.
We must always remember that money is simply a tool to give us a better life. Once we have accumulated enough money, it should be put in its proper place. Money should no longer drive our lives as it did when we were younger. If we do have excess, we owe it to society to enrich the lives of those who need it more than us. Then, life will become a lot more meaningful.
I remember reassuring her that I will not interfere with the running of the house and that I will find places to dissipate my energy. After studying and working for over 40 years, there are lots of things that I have told myself that I wanted to do when I retired. Now, I have the time to run through that list and even add more items every now and then. Hence, there are lots of things to do. It is like trying to compress 40 years of like-to-do things into the next few years and then finding even more new things to do!
To retire is to be free.... to be able to do the things that one has always dreamt of doing but never finding the time when one was working for a living.
For me, I wanted to catch up with old friends from my childhood days as these were the times when friendship was pure..... no ulterior motives and no business objectives. True enough, it was simply marvelous meeting up with my old classmates, recognising familiar faces and sharing our experiences of life. After all, life is about memories and what better way of remembering the past than to meet up with people from the past whom you have not seen for over 30 years.
I also spend a lot of time with the new technologies as I enjoy tinkering with these. I usually buy these through the internet and I look forward to receiving packages from the mail-man every now and then. I would then add these technologies into my already complex home network and managing all these takes up even more time!
Of course, my primary intention of early retirement is to spend as much time as I can with the family. My family is still relatively young and it is wonderful to be able to spend time with the kids in their formative years as I feel that the best education one can offer our kids is our time. Time spent in nurturing them is simply irreplaceable... especially when they are still young. This is why I will structure my time around them..... sending them to school, picking them up, having all meals with them and of course, playing with them. Through this direct interaction, they can understand me better and understand my perspectives of money & life and hopefully, these indirect teachings will rub into their future lives.
Next to spending time with the family, the bulk of my time is spent on my investments. I am always on the lookout for new investment ideas as well as keeping track of my current investments. I have to stay on top of local, regional and global developments as these can affect the sentiments of the stock market.
Every morning, I will religiously wake up at 5am. No alarm clock is needed as my brain will automatically wake me up at this time. I will then plan my day and before I know it, it is already time to go to bed.
There is so much to do when one retires. But the difference is that I am now doing the things that I enjoy doing and not the things that I have to do, to make a living. If I knew retirement is so much fun, I should have planned my retirement much earlier!
But in order to retire comfortably, one has to plan ahead.
To start with, I think $5,000 a month for the next 25 years will be comfortable. $1,000 a month will go towards household expenses and goods. Another $1,000 will go towards the cost of maintaining a car. A further $1,000 should be set aside for life & health insurance as well as hospitalisation costs. The rest goes towards living expenses, incidental & unexpected costs. I am also working on the assumption that your house and car have been fully paid up. Also, if you still have young children, you will certainly need to increase this monthly budget.
$5,000 a month translates to $60,000 a year. If one retires at the age of 60 and live till a ripe age of 85, one needs to set aside 25 years of living which works out to be $1.5 mil. I am not considering the effect of inflation over the 25 years as I have balanced this with an assumption of zero interest rates on your capital.
I am also not interested in annuity plans as I am always fearful of banks or financial institutions collapsing and with it, the annihilation of my entire retirement fund. One of my steadfast principles with money is that I trust no one with my money. I feel more comfortable putting my money in several bank accounts. Also, I like the flexibility of managing my own money rather than the thought of passing my money to a financial institution that will then treat me like a little child and give me a certain amount of money every month and denying me the privilege of drawing less or more of my own money, especially in emergencies.
Ideally, one should also have investments which do not form part of this $1.5 mil retirement fund. By having an investment fund which is separate from this retirement fund, you will be able to invest without having to worry about the erosion of your retirement fund in the event your investments turn sour. This way, one is comfortable regardless of the performance of one's investment fund and one is then able to invest more freely and wisely.
My experience is that my investments do very much better if these are not under any time pressure. Investments do take their own time to mature and one should not rush these but let them grow in their own time. If you need money in the next few years, it is better not to put these in investments as you may then be under pressure to sell these investments at the wrong time.
What this means is that if one wants to retire comfortably, one must firstly ensure that he does not have any outstanding loans on his house or car. Then, he needs to set aside at least $1.5 mil as his retirement fund and finally, he needs to set aside another amount for his investment fund. The gains from the investment fund can then pay for the holidays and the larger ticket items. The investment fund is also important to have, just in case, one is blessed with a longer life beyond the projected 25 years of retirement.
Yes, it is not cheap to be able to retire comfortably. A target of at least $3 mil plus a fully paid up house and car is a good target to aim for if you want a comfortable retirement. My point is that one should plan to retire comfortably and not simply to retire just to exist. If the amount seems high, one should then aspire to work even harder or to take more risks when one is younger.
For those who plan to retire in your forties like I did, you must not forget about the premiums for your insurance policies. When you were gainfully employed, the insurance agent would have asked you to set aside 30% of your income on insurance. If you were earning $5K a month, this can amount to $1.5K a month for insurance premiums. Like any obedient working adult, you are likely to trust your insurance agent as he should have undergone the financial training to give you such advice. Well, at least I did. In my case, I landed up putting more than 30% of my income into insurance premiums monthly.
What he failed to highlight to me then was that if I retired early, I still have to pay these premiums. For those who are planning to retire early, do look carefully at your insurance premiums as more than likely, you too will have to continue paying most of these premiums. When you were drawing a salary, these premiums may still be manageable, but when you are retired, these premiums can be quite significant when compared to your planning numbers. This is because most folks will assume that they will only need 70% of their original monthly salary on retirement. But if you continue to pay these insurance premiums, these can account for 43% of your retirement monthly expenses! So, before you plan your retirement, do look very carefully at each and every insurance policy that you have taken.
If you think you can live with much less, do work out your sums and come up with a number that you feel more comfortable with. But do remember that it is better to err on the side of over-provision than under-provision because it is not easy to come out of retirement to try to earn more money in the future as your skills may no longer be relevant then. Sometimes, it may be better to continue working and delay one's retirement plan, in order to build up a more substantial nest egg before one retires.
When we have enough money to retire, we are fortunate to be able to focus on things that we want to do when we are still alive. We really do not need to spend the bulk of our time increasing our wealth because wealth at that time will become more and more meaningless. For me, I prefer to wear my old clothes when I go out as these are the most comfortable attire that I have. I also like eating in the food courts as I simply love hawker food.
Instead of spending time trying to build up more wealth, it makes a lot more sense to me to focus on the things that are much more important. I retired earlier so that I can spend the bulk of my time with my family as I really do not know when I will be asked to leave this world. I know that I will regret it immensely if I did not spend quality time doing the things that really matter to me.
Of course if one is still finding it hard to make a living, earning money to support the family becomes very important. Without sufficient money, life will be a struggle. I have been there and I know. But there comes a time when enough is enough. Every one of us should struggle to build our wealth but when we have enough to retire, we must tell ourselves, enough is enough. Happiness is appreciating what we have. Yearning for more will only make us unhappy.
We must not be obsessed with money right to the end because it is simply not worth it. If we can live forever, sure, it makes sense to accumulate as much wealth as possible. But, we are all mortals and we have to leave this world one day. The sad truth is that we do not know when we will have to leave. If we spend every tomorrow trying to build our wealth, one day that tomorrow will come when we have to say goodbye. We will regret not spending our time more wisely and focus on the things that matter most to us. We are much better off making each day count as if it was our last.
For me, my family will always come first. When I have spare time, I will spend time looking at my investments but this is not because I want to increase my wealth. It is simply that I enjoy investing as this to me, is more fun than fun itself. Whether I make more money is not what drives me. I simply love investing and enjoy the thrill of getting it right... more than its financial rewards.
We must always remember that money is simply a tool to give us a better life. Once we have accumulated enough money, it should be put in its proper place. Money should no longer drive our lives as it did when we were younger. If we do have excess, we owe it to society to enrich the lives of those who need it more than us. Then, life will become a lot more meaningful.
