How Long Can $1mio last?

[NightWind]

Hi all this is an old topic which i am trying to approach from a slightly different angle. How long can SGD1mio last a household based on the following assumptions;

 

1) Household consists of husband and wife with a teenager in local Uni (final year)

2) The teenager son/daughter cannot be depended on for any income source and is infact a current liability untill he/she is financially independent.

3) Both husband and wife have reached mandatory retirement age

4) All houselhold loans and liabilities have been paid off. The house, car etc have all been paid off

5) The household has no other source of income other than their cash savings of SGD1mio

6) Assume null balance in CPF. No value is given to money that you cant see smell or touch.

7) Everyone is in normal health with no big health issues for now.

8) The household has a japanese sedan (Toyota) 1.6l which has 5years COE left

9) The family intends to retire and live here in Singapore

 

Based on the above, if they want to maintain their current lifestyle can they retire now and live on SGD1mio cash? How long will this last them?

 

We had this talk with some colleagues over lunch and the estimates were quite surprising.

[Sturtles]

You may have missed one major input, which is your daily/weekly/monthly expenses

 

If you cook at home, and sometimes have hawker food outside

 

Assuming the below

 

Daily -

1 meal - 8 dollars x 3

Transport - 5 dollars a day to travel - round to $30 per day

 

Weekly -

Restaurant gathering with friends, family - $100

 

Monthly -

Household expenses - 300 dollars

 

Minimum - 1 pax = $30 x 30 + 4 * 100 + 300 = $1600

 

For 2 pax will be $3200 expenses per month

 

PA. : $3200 x 12 = $38400 - rounding to $40000

 

$1,000,000 can last this retired couple approx 25 years.

 

Excluding car ( not a necessity for an able bodied retiree), and unexpected spending e.g.. renovation etc.

 

The largest surprise could come in the form of health-care cost. Make sure you are adequately covered

 

 

 

 

 

[NightWind]

Thanks bro you are right. But i also wanted the household to manage these daily expenses. There will also be some variables we cannot factor in or provide for with certainty like inflation, life-span of the couple, new COE, medical expenses etc.

 

But 25 years seems too good to be true.

 

I suppose they can also reverse mortgage their flat? When they run out of money in 20years?

 

 

[Sturtles]

Thanks bro you are right. But i also wanted the household to manage these daily expenses. There will also be some variables we cannot factor in or provide for with certainty like inflation, life-span of the couple, new COE, medical expenses etc.

 

But 25 years seems too good to be true.

 

I suppose they can also reverse mortgage their flat? When they run out of money in 20years?

 

 

 

 

House and rental seems like an appropriate hedge for inflation.

 

So if the tap runs dry after 20 years, you can rent out the remaining rooms for a fixed income, if the dependents have left to build their own nest.

 

Worst case is to lease back, or downsize to get immediate cash should there be a need to.

 

Never be without a house ownership in your old age, where you are no longer economically active, and most vulnerable.

 

Too many negative examples of such cases, to the extent of waiting for their grandchildren to get a place of their own so they can move in, as the old folks can't get along with their in-laws..... how long can one wait?

[Ktglfc]

There will never be enough, if you never plan and execute your expenses strictly.

 

To a poor man, this amount is huge, as it satisfy his basic needs.

To Others, it is so-so, as there are already other commitments.

 

Again, we need to define the wants and needs in life.

 

Anyway, be contented :)

[Latio2005A]

You may have missed one major input, which is your daily/weekly/monthly expenses

 

If you cook at home, and sometimes have hawker food outside

 

Assuming the below

 

Daily -

1 meal - 8 dollars x 3

Transport - 5 dollars a day to travel - round to $30 per day

 

Weekly -

Restaurant gathering with friends, family - $100

 

Monthly -

Household expenses - 300 dollars

 

Minimum - 1 pax = $30 x 30 + 4 * 100 + 300 = $1600

 

For 2 pax will be $3200 expenses per month

 

PA. : $3200 x 12 = $38400 - rounding to $40000

 

$1,000,000 can last this retired couple approx 25 years.

 

Excluding car ( not a necessity for an able bodied retiree), and unexpected spending e.g.. renovation etc.

 

The largest surprise could come in the form of health-care cost. Make sure you are adequately covered

 

 

 

 

 

This is one way of looking at $1million drawdown without any income generated from the balance resting amount of the $1million. Hence $40,000 a year, max 25 years.

 

Another way of looking at the $1million is through some prudent investments generating some income. If one is savvy enough, the seed money ($1 million) may last forever and the the monthly drawdown comes from the seed money.

 

There are many ways of looking at this issue, depending on amongst otters, a persons investment acumen, risk appetite, and so forth.

 

The concept of inflation/times value of money must be understood though.

Edited October 11, 2014 by Latio2005A

[Heartlander]

Hi all this is an old topic which i am trying to approach from a slightly different angle. How long can SGD1mio last a household based on the following assumptions;

 

1) Household consists of husband and wife with a teenager in local Uni (final year)

2) The teenager son/daughter cannot be depended on for any income source and is infact a current liability untill he/she is financially independent.

3) Both husband and wife have reached mandatory retirement age

4) All houselhold loans and liabilities have been paid off. The house, car etc have all been paid off

5) The household has no other source of income other than their cash savings of SGD1mio

6) Assume null balance in CPF. No value is given to money that you cant see smell or touch.

7) Everyone is in normal health with no big health issues for now.

8) The household has a japanese sedan (Toyota) 1.6l which has 5years COE left

9) The family intends to retire and live here in Singapore

 

Based on the above, if they want to maintain their current lifestyle can they retire now and live on SGD1mio cash? How long will this last them?

 

We had this talk with some colleagues over lunch and the estimates were quite surprising.

TS trying to get you to voluntarily divulge your annual income. TS very clever.

[Solar]

Hi all this is an old topic which i am trying to approach from a slightly different angle. How long can SGD1mio last a household based on the following assumptions;

 

1) Household consists of husband and wife with a teenager in local Uni (final year)

2) The teenager son/daughter cannot be depended on for any income source and is infact a current liability untill he/she is financially independent.

3) Both husband and wife have reached mandatory retirement age

4) All houselhold loans and liabilities have been paid off. The house, car etc have all been paid off

5) The household has no other source of income other than their cash savings of SGD1mio

6) Assume null balance in CPF. No value is given to money that you cant see smell or touch.

7) Everyone is in normal health with no big health issues for now.

8) The household has a japanese sedan (Toyota) 1.6l which has 5years COE left

9) The family intends to retire and live here in Singapore

 

Based on the above, if they want to maintain their current lifestyle can they retire now and live on SGD1mio cash? How long will this last them?

 

We had this talk with some colleagues over lunch and the estimates were quite surprising.

 

i suppose u mean 1 mio last the lifetime of the couple. which also mean 500k each.

i think you missed out health insurance.. without it, once the couple grows old and get sick (inevitable), the medical care and stuffs, plus with other daily expenses u list above, the 1 mio will probably be wiped out very quickly.

 

one thing about the cpf... at least, use the medisave in there to buy some insurance.. when the need comes, any payout amount will be good.

i think u can work it out such that the interest earned there can sustain some medi or eldershield without forking out cash.

TS trying to get you to voluntarily divulge your annual income. TS very clever.

 

those earning 200k annual will see this 1 mio lasting them only 5 yrs.. 100k, 10yrs, and 50k, 20 yrs

heng i diam diam on that..

 

anyway, it depends on one's lifestyle lah..100k can last only 3 months for some, but 3 years for others.

[Solar]

This is one way of looking at $1million drawdown without any income generated from the balance resting amount of the $1million. Hence $40,000 a year, max 25 years.

 

Another way of looking at the $1million is through some prudent investments generating some income. If one is savvy enough, the seed money ($1 million) may last forever and the the monthly drawdown comes from the seed money.

 

There are many ways of looking at this issue, depending on amongst otters, a persons investment acumen, risk appetite, and so forth.

 

The concept of inflation/times value of money must be understood though.

 

cpf medisave is paying 4%. much better than banks savings rate, and better than many stock and some property returns..and capital guaranteed.

if they don't believe in some anti-gov rants about xxx makan cpf money...this is a good place to maintain some insurance against large med bills, while keeping their 1 mio intact if the need really arises.

 

disclaimer.. i'm no insurance seller.. just a generic suggestion.. see your friendly neighborhood agent for further discussion.

[NightWind]

Aiya bro i just wana seek the views of the bros here. I m not young n this looms on my mind all the time.

 

Fer me as i dont have $1mio in cash i will need to retire in kl or elsewhere.

 

 

TS trying to get you to voluntarily divulge your annual income. TS very clever.

[NightWind]

Its not just the couple, in my hypothetical model, they also need to look after the son in uni. In the old days or elsewhere, the son or daughter can later look after the old folks when they retire.

 

This wont happen here in singapore. Infact i see many young newly weds still needing help from parents to buy their flat or car.

 

 

 

i suppose u mean 1 mio last the lifetime of the couple. which also mean 500k each.

i think you missed out health insurance.. without it, once the couple grows old and get sick (inevitable), the medical care and stuffs, plus with other daily expenses u list above, the 1 mio will probably be wiped out very quickly.

 

one thing about the cpf... at least, use the medisave in there to buy some insurance.. when the need comes, any payout amount will be good.

i think u can work it out such that the interest earned there can sustain some medi or eldershield without forking out cash.

 

 

those earning 200k annual will see this 1 mio lasting them only 5 yrs.. 100k, 10yrs, and 50k, 20 yrs

heng i diam diam on that..

 

anyway, it depends on one's lifestyle lah..100k can last only 3 months for some, but 3 years for others.

[Thaiyotakamli]

If go geyland everyday, that will be 3k monthly.

 

That should be able to last u for 27 years

[frenchfly]

1 day, go buy new s class merc and 4 expensive watches

[Throttle2]

$1mil for retirement?

Very sad .....

Nowadays need at least $3mil

$5mil would be alright.

 

But for myself, about $200k, can retire already.

Very simple and frugal

Edited October 11, 2014 by Throttle2

[Thaiyotakamli]

1 day, go buy new s class merc and 4 expensive watches

Err still got change le

 

4 AP cost 160k and new S class cost 400k

$1mil for retirement?

Very sad .....

Nowadays need at least $3mil

$5mil would be alright.

 

But for myself, about $200k, can retire already.

Very simple and frugal

U mean 200k passive income?

[frenchfly]

I think some watches start from 150,000 so buy 4 should be enough or get 1 that cost 200,000 then can only get 2

Edited October 11, 2014 by frenchfly

[Throttle2]

Err still got change le

 

4 AP cost 160k and new S class cost 400k

 

U mean 200k passive income?

You want to hear the truth?

[Thaiyotakamli]

You want to hear the truth?

Thats the truth

I think some watches start from 150,000 so buy 4 should be enough or get 1 that cost 200,000 then can only get 2

Those who bought 150k watches wont buy 500k car, most of them buy ferrari liao lol