See also ## CRBR estimates
[[invest like Buffett for parents]] is a reasonably useful book with realistic observations and tips, but not in its estimate of retirement nest egg.
On Page 7, author Pauline estimated SGD 1500/M of retirement burn rate for her dad. I see it as a realistic estimate as of 2017, when the book went to print.
Then from there Pauline estimated SGD 360k to last 20Y, while ignoring CPF-life. A Singaporean need not amass SGD 360k before retirement, because about SGD 200k locked [1] into CPF-life would pay out $1500/M for life.
[1] The catch is … horrible liquidity, standard feature of annuities.
Based on the SGD 360k estimate, Pauline then used a longer retirement_phase (reflecting improving female life expectancy) and 3% compound inflation rate over a 25Y “working_phase” to arrive at SGD940k. She used “Singapore high inflation” as a rallying cry for her readers to “amass SGD 1M”, but that’s inconsistent with my personal experience. 3% compound inflation rate is an overestimate. In Singapore, if home price inflation is removed (as per CPI criteria), then I would estimate a 25Y inflation factor of 1.4~1.6, so her father’s $1500/M retirement burn rate would become $2200 or 2500/M over the 25Y “working_phase”.
Pauline reached a shocking conclusion “In fact, all Singaporeans who are 40Y old and below would know that we would need at least SGD 1M in savings in order to retire safely”. Well, 90% of the world population aged below 40 has much less savings than that, so according to her, either SG is extremely expensive or most of the world population are unsafe in their retirement prospect!
— Why I bother to write this blogpost
1. There are many propaganda messages like “SG is the most expensive city”, “SG inflation is horrible”, “You need $1M to retire”… This book is the first serious yet non-academic presentation of the $1M estimate.
2. I like Pauline’s retirement burn rate estimate of SGD 1500/M, consistent with other ## CRBR estimates.
3. 3% compound inflation rate is an overestimate compared to my 30Y personal experience, but to her credit, Pauline’s estimate of “prices doubling over 25Y” is more realistic (closer to my experience) than other propaganda estimates.