Retirement adequacy for late bloomers 101.

I have said many times before that we should start saving money and investing for income as soon as possible.

If time is on our side, the journey to financial freedom is likely to be less demanding.

This led me to say that everyone should start young.

The younger we start saving and investing for our retirement, the easier it is going to be.





Imagine a 25 year old investing S$650 a month.

Let us say his investments give a 5% dividend yield.

Let us say he re-invests the dividends.

How much would he have by age 65?

A cool $1,000,000!





The problem with this narrative is that older readers who have yet to start their journey or have recently started on their journey sometimes get discouraged or even depressed after reading this.

Of course, what I always tell them is that they are just starting later.

Not late but later.





It simply means that they have to work harder.

It is likely to be harder because most older readers have rather hefty financial commitments which include money guzzling pets known as "children".

Ouch!

Alamak!

Who threw a shoe (or two) at me? Who? Who?

All else being equal, having less mileage left in life, they are also unable to take hard knocks financially (although some of them think they can) but that is another topic and if you are interested, you would want to read my latest "e-book".

See:
Survivability and opportunity in times of distress.

There is no point in regretting.

There is no point in feeling depressed.

Set a goal, a realistic goal and, then, it is just a matter of putting one foot in front of the other.

Remember, the journey to financial freedom is not a race.

See:
Journey to financial freedom is not a race!





"What if I never become financially free?"

I have always been encouraging but, for some people starting later, it is a possible scenario despite their best efforts.

To these people, I will say that even if you do not become financially free, if you do the right things, you will become financially more secure!

Cutting out unnecessary expenses (by keeping needs simple and wants few) and having some passive income will make anyone financially more resilient.

It is quite simple.

However, I still believe that, in Singapore, unless we are severely disadvantaged, all of us can become financially free.






If you are a young person, you have time on your side.

Don't squander it.

If you are an older person and have yet to start on the journey, don't lose heart.

In my reply to someone in his late 50s who has just joined us on H.M.S. Financial Freedom, I said:

1. Recognise that I cannot be too adventurous with my money because I can ill afford massive or total loss of capital.

2. Max out CPF-RA to benefit from a risk free 4% to 6% per annum return and this will provide a guaranteed monthly income in future (earliest from age 65).





3. If I have money to spare, get some investment grade bonds which includes Singapore Savings Bonds.

4. If I still have money to spare, get some relatively stable investments in stocks (like ST Engineering) and REITs (with stronger balance sheets) for higher returns but this should be a smaller percentage of total portfolio.





5. Adjust my lifestyle according to how much I expect to have coming in at retirement instead of working towards something that will pay for my current lifestyle in retirement.

6. Even after adjustments, if there is a big mismatch between expected inflow and expected outflow, postpone retirement by a few years to strengthen personal balance sheet and cash flow.





7. If I have the option and if I really need the cash, rent out spare rooms at home, if any.

You can still be financially free even if you start very late in life.

Yes, bloom later but bloom, you shall.

If AK says so, it must be so!





Related post:
Improving retirement adequacy for my dad.