What is Retirement ?

(20-02-2013, 09:36 AM)paullow Wrote:

(20-02-2013, 09:26 AM)Musicwhiz Wrote: For myself, I've never felt the need to impress people, so that may explain why I never desire for nice cars, or even a car in the first place.

frankly, how many people spent less than 10% of their annual income on their transport expenditure owning a car if u add all the above costs?

This is interesting. I just bought a fun car lately. Reason? Always drove boring cars and figured its now or never while still relatively young. Like musicwhiz, i more inner scorecard type person so never saw it fit to impress others. But as years go by and social circle expand, i also realize sometimes too inner scorecard also put people off and it is fun to drive a technologically advanced machine. Now i finally know what people mean when they say hugging the curves and quick acceleration. So guys if can afford, try it as it is quite worth the fun and even the COE. The attention is not negative esp since there are so many super cars and sports cars on the road nowadays.

Key thing is can afford. I think 10% of income spent on car expense is very fair. Before i made my retirement money, i spent probably about 7-8% of household income on all transport expenses including annual deprecation of the car values. And it was very comfortable. No stretch. For car loans, what i did was to just take 1 year loan to minimize the interest paid.

However, I think once one has accumulated enough wealth, should use a percentage of net worth or assets. I currently subscribe to allocating not more than 2.5% assets (include liabilities) on depreciating stuff like cars and totally lifestyle assets like watches, jewellery, time shares, club memberships etc.

The 2.5% is arbitrary... i derived it from the fact that i do not put 2.5% of asset in any one investment regardless of how good i think it is. The only exception is property which has too high per unit value to do that.

I have similar guideline as you <10% on income and <2% on asset. Only difference is I cannot afford a fun car like you on this guide.

(20-02-2013, 12:46 PM)greypiggi Wrote: This is interesting. I just bought a fun car lately. Reason? Always drove boring cars and figured its now or never while still relatively young. Like musicwhiz, i more inner scorecard type person so never saw it fit to impress others. But as years go by and social circle expand, i also realize sometimes too inner scorecard also put people off and it is fun to drive a technologically advanced machine. Now i finally know what people mean when they say hugging the curves and quick acceleration. So guys if can afford, try it as it is quite worth the fun and even the COE. The attention is not negative esp since there are so many super cars and sports cars on the road nowadays.

Key thing is can afford. I think 10% of income spent on car expense is very fair. Before i made my retirement money, i spent probably about 7-8% of household income on all transport expenses including annual deprecation of the car values. And it was very comfortable. No stretch. For car loans, what i did was to just take 1 year loan to minimize the interest paid.

However, I think once one has accumulated enough wealth, should use a percentage of net worth or assets. I currently subscribe to allocating not more than 2.5% assets (include liabilities) on depreciating stuff like cars and totally lifestyle assets like watches, jewellery, time shares, club memberships etc.

The 2.5% is arbitrary... i derived it from the fact that i do not put 2.5% of asset in any one investment regardless of how good i think it is. The only exception is property which has too high per unit value to do that.

My personal experience, I find the initial rush from material possessions to be fleeting. I remembered being overjoyed when I got my first set of wheels (second hand), it lasted about one month. After I got accustomed to driving, I upgraded to a brand new and bigger car. Again, I was very happy at first but the feeling faded again in a few weeks, and it eventually became the new normal. A bigger capacity car meant higher road tax, servicing costs, insurance, fuel consumption etc. I was effectively paying more, although I did not actually feel any happier driving a bigger car beyond the first few weeks.

In my opinion, the happiness I felt from acquisiton of material possession is "low quality" happiness. It has very little lasting power, and frequently leaves you financially worst off. I believe it also erodes one's resilience as a person - it becomes that much more difficult to switch back to a simple lifestyle when the situtation demands (unforeseen or otherwise driven by external circumstances beyond control).

Personally, I was the happiest when I was in school, when I had no money and very little possessions. The joys that stood the test of time came from relationships and personal accomplishments. This, I believe, is "high quality" happiness. This is also likely to be the happiness index often referred to, which showed a negative correlation between GDP per capital and general satisfaction level of the population (According to a recent study in the papers, Singaporeans are generally a financially wealthy but emotionally miserable lot).

(20-02-2013, 01:12 PM)Janjansen Wrote: My personal experience, I find the initial rush from material possessions to be fleeting. I remembered being overjoyed when I got my first set of wheels (second hand), it lasted about one month. After I got accustomed to driving, I upgraded to a brand new and bigger car. Again, I was very happy at first but the feeling faded again in a few weeks, and it eventually became the new normal. A bigger capacity car meant higher road tax, servicing costs, insurance, fuel consumption etc. I was effectively paying more, although I did not actually feel any happier driving a bigger car beyond the first few weeks.

In my opinion, the happiness I felt from acquisiton of material possession is "low quality" happiness. It has very little lasting power, and frequently leaves you financially worst off. I believe it also erodes one's resilience as a person - it becomes that much more difficult to switch back to a simple lifestyle when the situtation demands (unforeseen or otherwise driven by external circumstances beyond control).

Personally, I was the happiest when I was in school, when I had no money and very little possessions. The joys that stood the test of time came from relationships and personal accomplishments. This, I believe, is "high quality" happiness. This is also likely to be the happiness index often referred to, which showed a negative correlation between GDP per capital and general satisfaction level of the population (According to a recent study in the papers, Singaporeans are generally a financially wealthy but emotionally miserable lot).

You are right and my personal experience also validates it. Spending on experiences is far superior in terms of impact to happiness. So between going on african safari or buying a slightly better car, i think safari win anytime. And the memories with family will be for life! So choose carefully since we all have limited time and money.

Digging deeper, some things are a little of both. For example, watch collection. If we see it as just for showing we made it... then it is not experiential. But if we end up reading deeply into its construction, visiting the factories in geneva or taking on watch making classes, then it becomes an integrated experience tied to a buy. Notice all the luxury product makers always try to integrate the experience with the product. Because they too are very aware that experiences provide more lasting highs than just a materialistic buy.

A rather morose and worrying cnbc piece regarding the dimmer prospects for retirees in Singapore ………. sorry if the piece is two weeks old but I thought it was worth sharing.

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A Wealthy Nation That Can't Afford to Retire
Published: Wednesday, 20 Feb 2013 | 3:42 AM ET
By: Rajeshni Naidu-Ghelani, Assistant Producer, CNBC

The Southeast Asian city-state of Singapore may boast of the highest percentage of millionaires in the world, but retiring in this wealthy financial hub is becoming even more difficult for the common man. According to a latest study by HSBC, the citizens of this country, which has one of the highest per capita incomes in the world, face the grim prospect of running out of their savings almost halfway through retirement as the high cost of living and increased life expectancy eats into their nest egg.

Singapore has gradually moved up human resources firm Mercer's global rankings of the world's most expensive cities, moving to sixth place in 2012 from eighth in 2011 and eleventh in 2010. "There is cause for concern from the finding that the retirement savings of people in Singapore will run out after nine years, which is about the time they are entering into frail retirement and a stage of their lives when medical costs and other elderly care expenses are expected to rise," Paul Arrowsmith, head of retail banking and wealth management, HSBC Singapore, said in the report released on Wednesday. "People are living longer, through tougher economic times, and expectations about their standard of living in retirement have risen," Arrowsmith added.

More than half of the 1,000 Singaporeans interviewed for the survey said that either they were not adequately prepared or not prepared at all for retirement as they expected to continue working beyond the age of 65 to be able to afford their desired lifestyle. One also needs more money to fund one's retirement in Singapore. According to the study, the annual household income required to lead a "comfortable" retired life in Singapore is the third highest among Asia's major economies, behind Australia and Hong Kong, at $48,773. This figure is 68 % higher than what was needed in 2011, the survey, which has been running for eight years, found.

The rising cost of living in Singapore has 58-year-old Singaporean Janice Tan worried about her retirement. "I think the cost of living is really escalating a lot," Tan told CNBC. "During the Chinese New Year season, when I went to buy the goodies, it really shocked me, because the cost is really going up too fast." Tan and her husband are currently paying for the education of their two children, including a 21-year-old daughter studying in Perth, Australia. While Tan, an administration professional, hopes to retire soon, she says she knows it might be another 10 years before that happens. "As human beings we want more - a more comfortable life. That's where the worries come in on whether you will able to survive," Tan said.

According to the study, of those not saving for retirement, nearly half said they were being held back by the cost of day-to-day living. High costs have become a major cause of discontent among Singapore's residents. This prompted a rare protest over the weekend in which about 3,000 people participated. They were voicing concerns over swelling costs driven by an influx of foreigners. Foreigners, who account for almost 40 percent of Singapore's 5.3 million people, have been blamed for pushing up housing prices and taking up jobs in one of Asia's major business centers.

Retirement Fears
The top three fears about retirement cited by Singaporeans were poor health, financial hardship and not having enough money to provide for good healthcare, according to the study. With retirement savings drying up at a time when Singaporeans are most vulnerable to health problems, funding medical bills could become a big burden, HSBC said. Tan backed that sentiment, saying that medical bills from a motorcycle accident that her husband was involved in last year have been a drain on their finances. "As we get older, I realize it [funding health costs] is a more important thing to sort out," said Tan. But the high cost of living is coming in the way. "I can't imagine how much more the cost of living is going to go up to," she added.
—By CNBC.com's Rajeshni Naidu-Ghelani
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