Do you need a million dollars to retire

When I googled for ‘how much money to retire in Singapore’, I came across a Kiasu Parents thread that asks its forum members on what is the amount of money that one needs to retire comfortably in Singapore. Below is the poll result.

84% of the respondents said that they need at least SGD1M and above to retire. I say good luck to them because most of them will never save 1 million dollars in cash unless they sell off their properties and downgrade.

When I read through the thread, I understand where this misperception comes from. I want to use this article to look at all the reasons that was given in that forum for needing such a large amount to retire.

More leisure time equals more money needed

Complete nonsense. A lot of the stuff can be enjoyed for free these days. Let’s look a few of my personal examples

  • Movie watching: get one of those free movie streaming services from China, hook it up to your tv and you have a endless stream of entertainment. Buy some popcorn from the supermarket and make some yourselves. Compared this to paying SGD24 for 2 tickets on a weekend and another SGD5 for the popcorn and drinks. Do the maths and look at the amount of money you can save.
  • Reading books: the library is free. In fact, our library system is one of the best in the world. Take advantage of it and learn to read all the books you want for free.
  • Exercising: no gym membership needed. You can do all the exercising you want in parks or cheap swimming pools.
  • Socialising: lots of free forums on the Web now for you to join and make friends. There is almost a forum for any type of interest that you might have.
  • Start a online business: all I need is a domain name, hosting and myself. Total cost is about SGD50 per year. With $50, I can start to earn some pocket money that will add to my passive income streams. Not to mention the satisfaction of starting a personal project and see some good results. Love it!

Notice I didn’t mention shopping here as a recreational activity. IT IS NOT. Shopping is one of those consumerism thingy that one should avoid at all costs. Spending money for the sake of it leads only to short term happiness. How many of you are stil happy because you bought something a week ago?

Medical expenses

This is why you need medical insurance coverage. That is the only insurance that I need.

Kids Education

I believe there are study loans available when your child goes to university. No reason why we should not let the kids fend for themselves.Before university, cost is very minimal. Of course, parents will say they spend up to SGD500 per month on tuitionĀ  but that is your choice. Do you think it is necessary? As a parent, I will never let my child into this kind of acaedmic rat race. If your child is doing what everybody is doing, it will not help much. Learn to see where the world is going and prepare your child for that, instead of blindly focusing of pusuing acaedmic results.

Challenge your belief

I always believed in this saying.

Do what 90% of the people are not willing to do and enjoy something that the 90% will not enjoy.

That is true for any early retirement plan. Very often, people oppose to my idea of trying so hard to practice fragual living. The most common perception is that I am deriving myself by constantly having to save money. The truth cannot be more further away.

Frugal living forces me to think about what is really meaningful to me. It is not designer shoes nor fanciful cars (I owned both by the way which quanlifies me to do the comparison). Think about it. The moment of pleasure comes when someone praises you or gives you a second look. That is it! In exchange for that few moments of being great, I have to give up the most precisous of all resources (time) to constantly find the money to finance these purchases. That is not real happiness to me.

Real happiness to me is about having the freedom to live my life differently.Things like

  • Talking a stroll in the park when it is a great windy and sunny day
  • Staying home to go through a reading marathoon on all my favourite comics
  • Going to SPCA to take care of pets
  • Spending more time with my mum and dad because they are getting really old

With more time, you suddenly realise there are lots of things that you can do. These things can typically give me a more lasting sense of happiness.

If you shared in my beliefs about what kind of expenses you really need, then you will realise then you don’t need a million dollars to retire. What you need to do to retire early is this:

  • Cut expenses down until you can save at least 50% of what you earn
  • Use the saving to pay off debt first
  • Put all excessive into a retirement fund
  • Invest that fund into something that gives you 4% returns

You will keep on doing this until you get to the point where your passive income per month is more than your monthly expenses. Preferably some emergency fund will be great but definiteily not in the region of 1 million dollars. That is when you can retire.

Being able to retire is not about reaching a certain savings milestone. It is about designing your lifestyle until you reach a point where you can be substained by streams of passive incomes. This can only come from knowing what are important things that you should spend money on and what are distractions that will keep you from enjoying the rest of your life.

How to retire with 1 million dollars in Singapore part 1
How to retire with 1 million dollars in Singapore part 2

One thought on “Do you need a million dollars to retire

  1. I agree with you on that the main aim of being able to retire early is to buy more freedom not money. I’m still far away from my target amount but I am aiming to do that by the time I am 40.

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