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This guy has 800K in his CPF. (AK responds to HWZ Forum.)

A reader pointed me to a thread in HWZ Forum which discussed about my CPF savings being more than $800K. He wanted to clarify certain que...

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"When can I quit my full time job?" (Keep your needs simple and wants few.)

Wednesday, January 31, 2018

Reader says...
I am thinking of quitting my job when i am 40 years and do freelance work. 

I am pretty sure my freelance and dividends can cover my living expenses of about $8,000 pa. 

By 40 years old I will have a fully paid flat, about $120,000 stocks and bonds, $200,000 savings, CPF Oa $100,000, sa $70,000 and MA $52,000. 

Do you think i can retire from full time work given my financial status? 

Is my net worth good enough for a 40 years old

AK says...
If you are not a big spender, I think you can 🙂

And $8,000 expenses a year definitely not big spender to me 😀

Especially if your part time job is able to generate $8,000 or more a year. 😉

Reader says...
Do you think my finance is on the low end? 

Should I reach a more secure level?

AK says...
It depends on whether you feel insecure. 

If you do, work for a few more years to build a bigger buffer. 

Peace of mind is priceless.

Reader says...
I dunno what is a comfortable level.

As in how much I should have lol

AK says...
I would say that a comfortable level is when your passive income is able to cover your $8,000 a year expenses.

Then, whatever you earn in your part time job in future is extra money. 

You don't need the earned income then. 

It is just nice to have 😉

If we keep our needs simple and our wants few, we can achieve financial freedom more easily, for sure. 🙂

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CW said...

I'm not someone that spends a lot of money but surely $8k per year spending is very tight? Is that a realistic long term spending to have, given inflation and greater medical needs etc at older age (Not talking about hospitalization but surely may need more trips to doctor for screening etc)? I would say it's more prudent to set aside at least 3x that amount. 24k is only 2k a month, not luxurious but at least realistic.

csky said...

Wow, $8K a year! That would really be quite amazing and probably possible if you do not plan on having kids and do not have to provide for your parents. AK, do you also spend $8K a year, if you do, then you have just motivated me to relook my expenditures again :P.

Maybe it might help if you take a few months and start tracking every single expense you have each month. This will probably give you a good idea of how much you really need / spend. Sometimes you will be surprised at how the small little things can add up to be so much. It's probably best if you can do it over one year, as some expenditure could be seasonal.

I believe what you need as you get older will be how much you are already spending now or probably slightly more due to higher inflation and medical expenses.

AK71 said...

Hi csky,

I have a car and I stay in a condo.

Bad AK! Bad AK!

I definitely need more than $8,000 a year.

However, not everyone needs a lot of money and $8,000 a year is quite believable.

I have a relative in his 60s who is living on less than $8,000 a year and his only big expense is Medishield Life.

Unknown said...

I am 58 and have planned to retire in 2021 when I turn 62. I was hoping that 6K per month (including CPF Annuity) would be sufficient (with a two week annual holiday) for me a wife. However, CW comments that 2K per month per person is just realistic. Therefore, am i being too optimistic that 72K per annum for a couple would be quite generous.

WTK said...

Hi AK,

You can consider selling your car and condo to reduce your expenses. Downgrade to a three room resale flat (if you do not mind such option).


AK71 said...

Hi Ben,

I am quite comfortable now. :)

If I ever downgrade my lifestyle, things must be really bad or, maybe, I have attained Nirvana. ;p

AK71 said...

Reader says...
Am I right to say that CPF Life with ERS won’t be pay high enough for monthly expenses?

AK says...
ERS could be enough for some people.
It depends on what we need and what we want. ;)

WTK said...

Hi all,

The main cruz of retiring early is to have low expenses. One will need to have a mimimalist lifestyle in order to eliminate the possible return to full-time employment after quitting the job. I am not sure whether many of the people will be willing to accept such circumstances. One will need to make the necessary adjustment to retire early. This is applicable for average people.


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