Planning for retirement

At this stage of my life, this is the start of my 4th 15-year arc and I have to plan for retirement. Below is a very interesting video from Mr Loo which should help many people with their retirement planning.:

He mentioned the Four Levers of Retirement Income and I breakdown my own thoughts and strategies below:

i) CPF Life (estimated to be S$1.1k when I reach 65)

Having a few properties, I will opt for Basic Retirement Sum (BRS). I rather invest that S$100k myself or spend it. The breakeven point for CPF life between FRS and BRS is around 80yo. I rather invest or spend that money in my 50s and 60s.

ii) Investments (Target $500k with 4.5-5% annual return of $22-$25k/year or around S$2k/mth)

Consistent investment is important and is essential to match inflation. I've been investing around $10k/yr in unit trusts + equities + REITS a year in recent years, but from this year I hope to invest $50k/year. 

The reason why i've not been investing more in previous years? I've been investing in 3-4 holidays with the family. I think at that stage of my life, as well as the age of my kid, it was the best way to spend my money. Investing that money will definitely earn me so much more in the long term but I'm never going to get that travel experience with my kid when he's 100% with us. 

With a bit of self-discipline, I hope to hit my target of S$500k invested in the next 3-4 years. If not I should hit it when I reach 55 when I get that S$100k from CPF.

iii) Property Rental (est S$1k-2k/mth based on 50% of returns based on ownership share of property + assuming still servicing mortgage of S$3k/mth)

Right now I'm servicing mortgages on 2 properties housing my families. There will come a time the family will become smaller and a unit will be available for rental and income will come in. But even without that I look at it as paying cheap rental considering the interest repayment component of the mortgages come up to under S$2k a month. 

I think in Singapore property is a great way to fight inflation but since ABSD and other measures were introduced, the barrier to having a 2nd property for investment is becoming a distant dream.

The target is to pay off at least 1 of the unit in the next 4-5 years and that will be for self-stay while the other unit will be rented out and the rental will cover the mortgage repayment + some income.

iv) Part-time Work (S$1k/mth)

I think part-time work is great not just for the income but also necessary to stimulate our brain. I've heard too many stories of people dropping dead once they retire. Stopping work altogether after 20-30years is like a Ferrari racing at 200kmh and then stopping to 0kmh in 20metres. Even if the car does not hit a wall, the inertia would have caused serious damage to the internal organs of the driver. 

Just targeting 20 hours of part-time work a month = 4-5 hours a week is really do-able for me. Hopefully I am healthy enough to do the things I like when I retire. 

Summary

As long as I can clear the mortgage on 1 of the properties and hit S$500k on my investments, I think I can effectively retire in 4-5 years' time. I will have around S$5k of income and more when I reach 65 and CPF Life kicks in.

But that does not mean I have to retire. If I'm healthy and my job continues to be interesting I will propose to work in a reduced capacity, lower salary and less hours a week. 

In the meanwhile I'll continue to look for other sources of recurring income~