F.I.R.E. AK still needs $136K p.a. Growing richer or poorer?

This blog is just a bit longer than the video because I had a bit of problem with the voice recording.
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I have been asked many times before if I was ever bored in my early retirement.

To be quite honest, I find that question boring.

It was never something I was worried about because I was never married to my job.

I had many things I wanted to do but just didn't have the time for them.

So, I tell people that I am as busy now in my early retirement as when I was gainfully employed.

What I did worry about was whether I would have enough funds to retire early?

I was worried if I planned it right as I didn't fancy the possibility of rejoining the workforce.

That was during a time when I didn't know what was LEAN F.I.R.E.

Of course, if you have been following my blogs, you know what I think of that idea.

Having said this, all of us have different circumstances and, to be fair, LEAN F.I.R.E. could work for some people.



However, for people like me who have aged parents and for those who have children, if we want to retire early, it is financially more demanding.

We cannot afford to be too optimistic that things will work out on their own somehow.

There is only so much belt tightening we can do if things do go wrong.

For people who have dependents, early retirement is more demanding as we have to ensure our financial resources are sufficient to support more people.

Although my passive income seems massive to some people, once we take into consideration my expenses, it doesn't leave much room for error.

I don't track or blog about my expenses in detail, but I have blogged about my budget in whole numbers before.

In an earlier blog in 2019, I said I would need around $120,000 in passive income to cover my own expenses, parental support and CPF contribution.

$40,000 per item.

Then, in another blog sometime later, I said that given the higher inflation we were seeing, I would increase by 20% the money for my own expenses and parental support.

That would bring total passive income required yearly to $136,000.

Fortunately, passive income generated by my investment portfolio, excluding interest earned in my CPF account, has been able to cover this.



Of course, regular readers know that I will not be making any voluntary contribution to my CPF account in 2023 and 2024.

This is because money earmarked for this purpose has been used to buy Singapore Savings Bonds when they offered 10-year average yields of more than 3% p.a.

My plan is still to continue saving money in my CPF account or buying Singapore Savings Bonds till I turn 55.

When I turn 55, I could continue with this plan, or I could decide to enjoy life a little more.

I was more inclined towards continuing to save more money in the past, but the COVID-19 pandemic got me thinking.

Life could be cut short quite unexpectedly.



Yes, the COVID-19 pandemic changed the way I look at many things, including investments.

So, there is a high chance that in another few years from now, I would only need $96,000 a year in passive income as I stop earmarking money for CPF contributions.

Just need money to cover my own expenses and parental support.

Of course, we don't live forever.

Although I wish my parents would be around for a long, long time, I am not sure they want to outlive me.

The day I become an orphan, I would only need $48,000 in passive income per year, all else being equal.

When I think of this, melancholy sets in.

It is bittersweet.

OK, I shan't be maudlin about it.

I am just going to talk about finance here.

Well, it seems that, over time, I will become richer than I ever was without having to do anything differently from what I am doing now.

My investment portfolio should still be generating passive income and even if that doesn't grow, over time, my wealth could grow as my expenses shrink.



I don't think I would ever need to draw on my CPF savings.

So, over time, just from compound interest, that should grow too.

Anyway, what is the message here?

Early retirement is definitely financially more demanding for people with dependents.

However, if we are able to achieve this, we are likely to do better financially over time even when we become aged.

Just remember that we cannot be too adventurous, and we should be able to avoid financially catastrophic mistakes which might force us to rejoin the workforce.

Anyway, this is just me talking to myself about my experience and perspective.

If you have made it this far, you could be just as mental as me.

If AK can talk to himself, so can you!

Related posts:
1. How much passive income is enough?
2. Inflation, passive income and my budget.
3. Retirement drawdown strategy.
4. Retirement adequacy for late bloomers.
5. 59% want F.I.R.E.
6. LEAN F.I.R.E.