My Retirement Plan At 35

This is my first post but I have been lurking in this forum for a while. I have been contemplating early retirement for a while now, to get away from the greedy corporate world, and to pursue my own interests. It will be considered unconventional due to my age. Indeed, my friends think I am crazy to exit while in my prime years.

That said, I work solely to achieve financial freedom, and once that is achieved, I do not see the point going through the daily grind until 65 when I will be too old to do the activities I enjoy. About myself:
1. I am thrifty
2. I never go on holidays overseas
3. I plan to remain single
4. I stay with my parents and do not plan to buy property
5. I own a fully paid Toyota
6. I have no debt
7. My monthly expenses is about 2k, including parent allowance
8. I amassed 1 million in cash as of today

I have a modest portfolio consisting of purely government owned or government related dividend blue chips in the stock exchange, telecommunication, defense property, postage and media. The allocation has remained relatively constant over the past 3 years, and is yielding approximately 8% annually. I understand that the principle value of the portfolio will fluctuate, but these companies have historically continued paying dividends even during past crisis.

Now, if increase the size of the portfolio to 1 million with the same allocation, at today’s prices, it will yield about 6%. That translates to a yearly dividend of 60k or 5k per month. Baring unforeseen circumstances, I should be saving 3k per month to act as a buffer for inflation, and setting aside the excess for emergencies.

The problem is my close friends and parents have frowned upon my retirement plan. They keep saying that if it was so easy to retire, no one would be working after 40! In their minds, they cannot contemplate a life without work until at least 60. They also mention that it would be embarrassing for one to be unemployed at 35.

Now, all of these appear to be emotional to me. I do not care for corporate titles and the politics of the workplace. But in terms of finances, I believe that 60k of tax free dividends is enough to sustain a single individual, and support his two aging parents (who also happen to have their own savings). However, being human, I can and will make mistakes, and I am trying to gather opinions or scenarios where my retirement plan is unsound and leave me financially strapped. This is the most balanced forum I know of, and many of you are financially savvy and I have come to respect the opinions here. If you think that there is something I am missing here, I would appreciate hearing from you. Any comments or views are also welcomed. I want to consider every possible scenario before taking the plunge.

Thank you

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Updated: 17 July 12

Thanks to all forummers who offered their views and advice.

After much thought, I have decided to stay in the workforce and bid my time until the next great market crash. Investment opportunities are limited and the yields on blue chips are not attractive at current valuations. The equity markets have rallied quite a bit and going in now does not offer the downside protection that I require. The confirmist mentality amongst my family and friends is also strong, and it seems like most people have submitted to a life of paid employment until 65 and cannot accept other alternatives. So, I will continue going to work, earning a regular income and accumulating cash.

My views on the eight to five worklife routine has not changed - it is paid slavery. Everything from the daily commute on the crowded transport system, lunch hour squeeze and unhealthy sedantary lifestyle of being stuck in a tiny cubicle for 80% of one's waking hours. And at the end of the day, you are just a statistic to the company, to be trimmed down during the next cost cutting exercise. However, having some cash buffer does make the situtation more tolerable. I no longer "need" the job to pay my next bill, it becomes a choice rather than a neccessity. This is a subtle but important difference. It does ease the pressure to perform and score a fat bonus at year end. In fact, I am quite content to be an average performer and leave work earlier everyday.

Now I pray everyday for a repeat of the 2008 Subprime, 1997 Asia financial crisis or a Great Depression. Dirt cheap valuations await the patient investor. It might be next year or it might be 10 years. It doesn't matter - good things come to those who wait. When that happens, one can easily build a portfolio with good yields and potentially significant upside valuation gains. Meanwhile, I will continue waiting and will leave it to Mr Market to decide my retirement date

Are you the Janjansen from CNA?

35 and 1 mil! wow i am just 1/5 of that at 32!

if u are jan jan sen from CNA hats off to you and welcome

Not having something to do on a day-to-day basis can be very boring. People continue working because they wanted to be engaged socially, emotionally, be rewarded financially, etc. In other words, being a part of society keeps you sane and healthy. You're financially sound and you'll have no problems financing your lifestyle so long as you remain thrifty. just make sure you have something to do; whatever it may be.

I don't think I'll ever want to retire, at least from the traditional sense of the word. I share your same views with regard to the corporate workplace which I have since left as well. I'm still working, but somewhere of less prestige and sophistication, yet I'm now enjoying my work and social life much more than before.

Money is just a means to an end. And it seems you already have (enough of) it. At 35 there's still so so much more you could do. Perhaps you'll become a writer, artist, musician, or whatever it is you've always wanted to explore. Go bravely for the things that matter to you. Good luck.

(22-06-2012, 08:03 PM)karlmarx Wrote: Not having something to do on a day-to-day basis can be very boring. People continue working because they wanted to be engaged socially, emotionally, be rewarded financially, etc. In other words, being a part of society keeps you sane and healthy. You're financially sound and you'll have no problems financing your lifestyle so long as you remain thrifty. just make sure you have something to do; whatever it may be.

I don't think I'll ever want to retire, at least from the traditional sense of the word. I share your same views with regard to the corporate workplace which I have since left as well. I'm still working, but somewhere of less prestige and sophistication, yet I'm now enjoying my work and social life much more than before.

Money is just a means to an end. And it seems you already have (enough of) it. At 35 there's still so so much more you could do. Perhaps you'll become a writer, artist, musician, or whatever it is you've always wanted to explore. Go bravely for the things that matter to you. Good luck.

My opinion is exactly as karlmarx commented. I share exactly the same view

There are so much more can be done after retire.

I have always been fascinated by farming, that is why i am CityFarmer

I have also been fascinated by TCM. Probably i will be a TCM after retire.

Hi Janjansen

Based on all the information you have provided, I do think you have a good chance of success financially, and stop depending on work for salary income to sustain your lifestyle.

The challenge, imho, is:-

1) continually grow your capital ahead of inflation, and avoiding catastrophic mistakes
2) keeping your annual withdrawal rate to 4% and below ideally (you are already quite comfortable if you are spending $2k a month now)
3) keeping yourself interested in life
4) maintain a decent social life

People tend to focus on (1) and (2) and think that (3) and (4) will take care of itself. But it could be more difficult that one thinks.

One other thing to be mindful of is that once one is out of employment for a few years, it could be difficult for him or her to get back to work and earning the last drawn income. Therefore, your decision to "retire" will be more or less permanent after a few years. This could be unsettling if you find out in a few years your finances did not go according to your plan (in a bad way).

Good luck.

p/s: 1) do remember to include future healthcare spending in your estimated expenditure.
2) if you change your mind and decide to get married few years into retirement, your estimated expenditure is unlikely to be enough. How certain are you that you will never get married?

(22-06-2012, 06:33 PM)Janjansen Wrote: This is my first post but I have been lurking in this forum for a while. I have been contemplating early retirement for a while now, to get away from the greedy corporate world, and to pursue my own interests. It will be considered unconventional due to my age. Indeed, my friends think I am crazy to exit while in my prime years.

That said, I work solely to achieve financial freedom, and once that is achieved, I do not see the point going through the daily grind until 65 when I will be too old to do the activities I enjoy. About myself:
1. I am thrifty
2. I never go on holidays overseas
3. I plan to remain single
4. I stay with my parents and do not plan to buy property
5. I own a fully paid Toyota
6. I have no debt
7. My monthly expenses is about 2k, including parent allowance
8. I amassed 1 million in cash as of today

I have a modest portfolio consisting of purely government owned or government related dividend blue chips in the stock exchange, telecommunication, defense property, postage and media. The allocation has remained relatively constant over the past 3 years, and is yielding approximately 8% annually. I understand that the principle value of the portfolio will fluctuate, but these companies have historically continued paying dividends even during past crisis.

Now, if increase the size of the portfolio to 1 million with the same allocation, at today’s prices, it will yield about 6%. That translates to a yearly dividend of 60k or 5k per month. Baring unforeseen circumstances, I should be saving 3k per month to act as a buffer for inflation, and setting aside the excess for emergencies.

The problem is my close friends and parents have frowned upon my retirement plan. They keep saying that if it was so easy to retire, no one would be working after 40! In their minds, they cannot contemplate a life without work until at least 60. They also mention that it would be embarrassing for one to be unemployed at 35.

Now, all of these appear to be emotional to me. I do not care for corporate titles and the politics of the workplace. But in terms of finances, I believe that 60k of tax free dividends is enough to sustain a single individual, and support his two aging parents (who also happen to have their own savings). However, being human, I can and will make mistakes, and I am trying to gather opinions or scenarios where my retirement plan is unsound and leave me financially strapped. This is the most balanced forum I know of, and many of you are financially savvy and I have come to respect the opinions here. If you think that there is something I am missing here, I would appreciate hearing from you. Any comments or views are also welcomed. I want to consider every possible scenario before taking the plunge.

Thank you

(22-06-2012, 09:15 PM)CityFarmer Wrote:

(22-06-2012, 08:03 PM)karlmarx Wrote: Not having something to do on a day-to-day basis can be very boring. People continue working because they wanted to be engaged socially, emotionally, be rewarded financially, etc. In other words, being a part of society keeps you sane and healthy. You're financially sound and you'll have no problems financing your lifestyle so long as you remain thrifty. just make sure you have something to do; whatever it may be.

I don't think I'll ever want to retire, at least from the traditional sense of the word. I share your same views with regard to the corporate workplace which I have since left as well. I'm still working, but somewhere of less prestige and sophistication, yet I'm now enjoying my work and social life much more than before.

Money is just a means to an end. And it seems you already have (enough of) it. At 35 there's still so so much more you could do. Perhaps you'll become a writer, artist, musician, or whatever it is you've always wanted to explore. Go bravely for the things that matter to you. Good luck.

My opinion is exactly as karlmarx commented. I share exactly the same view

There are so much more can be done after retire.

I have always been fascinated by farming, that is why i am CityFarmer

I have also been fascinated by TCM. Probably i will be a TCM after retire.

Yes, I am passionate about long distance running and volunteering at animal shelters, both of which doesn't generate income. I plan to do a lot more of those once I free myself from the 8-5 daily grind. But since they are non-income generating and do not have value in the commercial world, I just want to be certain that my capital and dividend returns are sufficient to see me through this life. In particular, I am worried that there might be financial risks I have not considered.

p/s To the other posters above, any similarities in my username to other forumers is purely coincidental.

A few things to consider.
1)Are you and your parents covered insurance medically enough?
2)What if u meet your true love and get married with kids a few yrs later?
3)U going to reinvest your dividend? 6-8% div may not be enough 30yrs later.

A lot of unexpected things happen along when u least expected.No one can plan for everything.If u really wanna retire or u really hate your job, why not just do part time relax a bit then consider where u want to proceed.
I too have a mil now but e difference is I have a family with kids.The expense is like double of yours excluding ad hoc expenses like traveling and watches.

If u can amass 1milo now, why not make it 3 milos to be safe? safety factor of 3 should be sufficient!
More $ is helpful, especially for elderly parents... and who knows! a nice gal might come along and u will fall in love!

and love is definately more rewarding/fufilling than RETIREMENT!

of cos love also comes with it's PRICE...marriage, family, kids...which are PRICELESS in positive ways!

The list goes on...

Maybe slow down ur pace of life by 50% or convert to part-time job? and see how it goes?

(22-06-2012, 09:49 PM)WolfT Wrote: A few things to consider.
1)Are you and your parents covered insurance medically enough?
2)What if u meet your true love and get married with kids a few yrs later?
3)U going to reinvest your dividend? 6-8% div may not be enough 30yrs later.

A lot of unexpected things happen along when u least expected.No one can plan for everything.If u really wanna retire or u really hate your job, why not just do part time relax a bit then consider where u want to proceed.
I too have a mil now but e difference is I have a family with kids.The expense is like double of yours excluding ad hoc expenses like traveling and watches.

Hi WolfT
1) We have the basic critical illness coverage. At the risk of sounding cheesy, the best medical insurance my family has is that we eat right and exercise regularly. My parents are pushing 70 and they can climb a flight of stairs quicker than an overweight person half their age.

2) Fair point. Affairs of the heart are often unpredictable, and marriage can be expensive. However, I will never have kids for two reasons. Firstly, due to my world view that this planet is overpopulated and the human race is depleting resources faster than the planet can regenerate itself, it is against my principle to bring additional life into the world. Secondly, I do not like babies, don't find them cute at all, in fact, somewhat repelled by them. It is just my individual personality.

3) I am going to reinvest the excess 3k per month. My hope is that in the initial 10-20 years, I would not have to draw down from my principal. Even now, I am thinking about bringing down my 2k expense per month further. My season parking is already 250 per month, and that will go when I stop working. I might even get rid of the car which in any case, is a depreciating asset. There will be a significant reduction in commuting costs. Food costs will also go down compared to the prices I pay in the CBD. My hobbies which will occupy most of my time, thankfully, do not costs much money.

Finally, I am also thinking about moving out of this overpriced country. 1mil in Singapore will not even buy you a house, but it can take you very far in Thailand and Philippines. I particularly enjoy my business trips to Bangkok, the Thai are a very friendly bunch of people, and the costs of living is significantly lower, even in the city center. This will probably be in the longer term, as I will continue to remain in Singapore to take care of my parents.