When I kickstarted my retirement planning project this year, I asked myself two question. When should I retire and how much do I need to retire.
80 is the new 60 when it comes to retirement ?
The Singapore paper highlighted that more are living beyond 100 years old and that the average livespan of a lady has increased to 84.5 years old !!! I remembered receiving quite a number of sms from friends that day exclaiming that they really don’t want to live THAT long. How ironic, our ancestors spend all their life seeking longevity while our generation prays hard that they don’t live that long.
Another disturbing trend observed in US is that 80 seemed to be the new 60 when it comes to retirement since the 2008 financial crisis.
How much do I spend yearly ?
I always thought that I spend approximately SGD 3K per month. SGD 1.5K for parents allowance and another SGD 1.5K for my expenses. Thus, having a decent SGD 5K per month should be a sufficient retirement income for me. This would leave me with approximately SGD 2K per month for emergency and investments. Having already achieved SGD 41K per year in passive income leaves me into thinking that I should be able to achieve SGD 60K easily by the age of 40 or maximum 42. Thus, I could safely retire by 42?
How much do I REALLY spend yearly ?
Since my target retirement age 42 is just 3 years away, I thought I better make sure that I REALLY only spend approximately SGD 3K per month. I downloaded iXpenseIt from the iTunes Appstore and started keeping track of my daily expenses. I told myself to spend freely like what I have always been doing as I wanted to know how much I really need to live freely even during retirement.
To my horror, my spending every month far exceeded what I thought I really spent.
Need vs Want
Another interesting discovery is that a lot my expenditures are WANTS not NEEDS. Thus, if I can reduce my WANTS, I may not really NEED that much to retire. The largest percentage of my expenditure (i.e. Misc) goes to Parents Allowances and Taxes, followed by Personal, Food and Transportation. Even when I eat out every day for every meal, I only need approx. SGD 6K per year ! As for transportation, if I could just cut down on the number of taxis/cab I take. I probably only need SGD 1K per year ! Finally, I REALLY need to find a new hairdresser !
How much do I REALLY need to retire ?
With such discovery, I have decided that I may need at least SGD 10K per month before I feel really safe to retire. Considering I have only managed to grow my passive income by approximately SGD 10K per year. I would probably need to work at least 8 more years before I could retire. Sigh, that means 47 years old ….
My Retirement Planning Project 2013 Series