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Category: retire
old retirement, not “retire young”
subway^MRT: illustrating fiscal discipline
Trigger: In the subway system, we can see evidence of the fiscal discipline and cost efficiency of U.S. vs SG. Adjusted for ridership, I suspect the budget is no higher in SG, but the quality is much better in terms of frequency, weekend /availability/, cleanliness, probability of delays, customer service, wear-n-tear of equipment,,,
Let’s look beyond the subway. Most Americans, rich or poor, get a lousy deal in terms of public service per tax dollar. U.S. corporations and individuals pay much higher taxes, but governments run deficits every year. Therefore, public debt increases every year to cover the deficit. Without enough data, I can only hypothesize that SG system is more judicious with public spending.
One exception to prove the rule — U.S. social security administration is efficient (according to various sources). Other public service providers are inefficient.
Americans rely on private transport much more than Singapore residents. Similarly, top American employers spend a lot to provide employees the “public” service that’s wanted but missing. In other words, private employers step in to cover the gap between public services and employees’ needs.
— government deficit .. Looking into the numbers, another reason for the excellent service/tax ratio in Singapore is the non-tax income to the SG government. That includes profit from government-linked companies, and sovereign funds.
I guess a less discussed reason is rEstate appreciation, which is stronger in SG. I guess that land sale revenue (to government) has grown over the decades. Also, many local rEstate assets are owned by government-linked companies, and these assets appreciate much faster than in the U.S.
artificial complexities ] US systems #legal
eg: medical insurance is overcomplicated.
eg: personal credit report is not so bad but still overcomplicated
eg: US personal income tax and US medical billing systems are too complicated for most people. That’s why there are fulltime professionals to help folks understand and navigate the artificial complexities.
The poor can’t afford any of these professional help, so they lose out and become poorer.
Therefore, this is a knowledge gap between the rich and poor.
counter eg: usReits are more complex than sReits, not artificially, but due to free-wheeling regulations, giving rise to many variations on the “theme” i.e. the REIT business model.
— eg: trespass and bathtub lawsuit experiences .. I had to ask in legal forums, collect evidence, find out consequences,
Legal systems are complicated in most countries (Singapore is slightly simpler) but in the U.S. there are way too many lawsuits involving ordinary people. I think many immigrants like me are inexperienced and scared of the complexities + consequences.
We are “covid-naive” in a country full of covid hazards.
GDP^GNI, PPP #w1r2
k_PPP
See also
For a host country,
- GNI .. value of everything produced inside the host country + the income its residents (PR? [1]) receive—whether it is earned at home or repatriated from abroad. “Repatriated” usually includes wages and property income
- GDP measures economic output and income based on the location rather than nationality. GNP measures the output of host country’s residents regardless of the location of the actual underlying economic activity
- GNP starts with GDP, adds residents’ investment income [profits, dividends..] from overseas investments, and subtracts foreign residents’ investment income earned within the host country.
GDP measures overall size, in terms of productive output, of a national (or regional) economy, within a physical boundary
GNI measures income earned by the nationals regardless of location. A national may have spent 0 or 1 year in the “nationality country”
Those are the high-level concepts. The actual subtractions/additions are important but sometimes imprecise.
— Corporate income .. is a complicated calculation … not discussed in depth here
Income earned by a MNC in a host country, but repatriated home .. counts as GNP of the home only, but GDP of host country only.
Example: Ireland has received significant foreign investment. Therefore for Ireland, there is a net outflow of income through multinationals. Therefore, Irish GNP is lower than GDP.
I think GNI doesn’t count MNC income. GNI looks at individual shareholders of MNC, specifically their overseas property income.
— GNI has largely displaced the GNP concept . See also https://databank.worldbank.org/metadataglossary/world-development-indicators/series/NY.GNP.MKTP.KD.ZG
I guess the key differences is foreigners’ income locally spent. https://www.thebalance.com/gross-national-income-4020738 shows a concise table. It shows that
- A foreigner’s income is either locally spent or repatriated
- earned-n-spent amount by foreigners (in host country) is counted as GNI not GNP of host country
- remittance amount (back to home country) is counted as GNP/ GNI of the home country, and excluded from GNI/GNP of the employment country
- GNP is nationality-based and doesn’t care about where the income is spent
- GNI is more sophisticated, treating foreigners’ local spent income same as resident’s spent income
— [1] Do permanent residents count as a nationals of the host country? Minor question which doesn’t add real complexity.
However, I believe in theory every individual is counted as the national of one country. If an individual files tax returns in both SG and U.S., then the “systems” would not double-count the income and tax her twice.
retire too late2enjoy golden years@@ #JL.Yuan
A friend wrote “I’ve heard of some examples in which people were unable to enjoy their late lives due to unexpected things.” Here’s my reply to him —
I’m curious what examples you have. There are examples of health conditions or grandchildren responsibilities, but..
1st) I want to address a realistic scenario — my kids get into financial trouble or career low-point including job loss. This kind of thing actually happened in my extended family, before the parents retired.
Q: In that situation, am I lucky or unlucky to be still working full time, as a /septuagenarian/?
A: Depending on the situation, I would say “Lucky to be employed”. One reason to feel unlucky is “OMG my dream of carefree retirement after age 75 is now destroyed. Now I have to work a few more years to help my son/daughter”. Well, in that situation, I do NOT think I would feel that way.
2nd) there is a risk that some government financial reform kicks in, which hurts the late-retirees like my father and me. I am confident that in well-managed systems like U.S. or Singapore, the super-old workers would be given sufficient advance notice/warning so I would have a viable option to reschedule and bring forward my retirement start date. This option would let me mitigate any penalty brought about by the impending reform.
2b) The flip side of this risk — economic or fiscal deterioration leading to inflation or currency devaluation. Black swan or white swan hitting my retirement nest egg. A very real risk to the early retiree. In conrast, the late retirees would worry much less about inflation. Nobody can have a watertight protection providing complete insulation from external shocks.
2c) beside external shocks, there are also missteps that could wipe out large portions of your retirement nest egg.
See career longevity= Bedrock@ %%fledgling ffree
Q: In that situation, am I lucky or unlucky to be still employed full time, as a septuagenarian?3rd) example is an unwanted request to help with grandchildren. My kids actually received help from four grandparents until all four quit due to health.
A: perhaps Unlucky .. “Now I have wasted my opportunity to enjoy peaceful retirement with my wife for the last 5 years. Now I have to help with my grandchildren until I’m too old. So I won’t get any opportunity whatsoever !”
I would balance 1) grandchildren care 2) work 3) leisure. Stressful balancing act? I hope not. My work and the grandchildren are not job duties _imposed_ on me. I think that in reality, grandparents do have the option to say No but I won’t say No for no reason. If my health or my job doesn’t permit, then I would say No. That’s what happened in my family.
4th) reason .. health is the most common “example in which people were unable to enjoy their late lives”. My wife does plan to retire in her 60s and pursue some unknown retirement things. For me, I thought long and hard.
What I enjoy doing in my late life, if I’m healthy, is mostly about work, light-duty but productive work with some job responsibilities, some deliverables, some real users. Stress is inevitable, but after my 60s I would want only light, positive stress. If the unwanted type of stress is too much then I would change job or retire.
Therefore, for me “unable to enjoy late life due to health” == “forced to retire when I still want to work”.
This is NOT a regretful outcome due to poor planning.
Therefore, the “example” of health is not a reason for me to retire earlier. (More like a reason to stay healthy enough to keep working.) Specifically,
- If my health declines in my 70’s during my late-career and I can’t go out and enjoy retirement, I am sure I won’t have major regrets. There’s very little desire in me to leave my work and enjoy a 6M long vacation. I know what I enjoy, but I am even more confident about what I do NOT enjoy, like sightseeing year and year!
- If my health declines during my 60’s, then my late-retirement plan needs adjustment. There’s no “regret” per se since I would end up retiring around standard retirement age.
In conclusion, in my prognosis there are very few examples that would sway me away from my long-standing plan of late retirement. I believe in my plan but I keep an open mind, ready to adjust my plan.
— rmSelf ^ xpSelf.. This letter I sent to a friend was all about the rmSelf making judgements for the xpSelf. The rmSelf does care about the xpSelf [hedonimeter]
2ADL→$5k/M provid`Decades@ decent living has in-depth discussion of living with chronic conditions.
relocate4retirement: 8practical questions #Forbes
https://www.forbes.com/sites/davidrae/2018/10/10/move-in-retirement presents 8 practical questions to help you decide Whether to relocate when you retire.
Q2 is about staying close to loved ones
Q3: Rent or buy home after you relocate?
Q4 is about healthcare
Q5 is about pastimes and recreations
Q6 is about friends…. Kinda less important for me.
Q7: what’s wrong with where I call home now?
retirees do worry about inflation erod`nest egg
https://www.cnbc.com/2021/06/07/heres-an-option-to-protect-your-portfolio-from-inflation.html says CPI-inflation is a top concern as investors fret about the rising cost of groceries, housing, gasoline and other living expenses.
Q: Is this widespread in the U.S. or Singapore?
A: I have limited insight. I would assume this is a top concern among some retirees in _every_ country, but less in SG
We can look at realized inflation. One of the biggest complaints of Chinese citizens is inflation in everyday purchases i.e. CPI inflation (housing doesn’t qualify). SG is not bad as discussed in several bposts.
Q: is SGD 3k CRBR realistic?
A: I still feel confident.
Sgp: higher GNI, lower post-tax wage than U.S.
midclass]SG=richer than ]U.S.: Melvin3
[[Living off Dividends in Retirement]] #5%CDY
See also
https://www.simplysafedividends.com/intelligent-income/posts/1-living-off-dividends-in-retirement (updated after the 2020 pandemic) is fairly in-depth as an info-commercial, written to promote dividend stock picking as an alternative to bonds/ETF/annuities…
The webpage mentions a 2015 WSJ illustration (not in-depth analysis) assuming
- assuming (Treasury yields match the inflation rate) stock dividends grow 3.5% per year …
- assuming you retire with $1 million .. perhaps for an affluent couple
- assuming you desire $40k/Y in annual inflation-adjusted retirement income… higher than cpfLife ERS payout
- assuming inflation runs at 2% .. comparable to the official SGD inflation target
- assuming 600k of your nest egg goes into dividend stocks, generating $18k/Y at 3% DYOC .. realistic
“(Dividends) can reduce volatility and make it psychologically easier for retirees to stay the course during times of turbulence.” — I feel the same.
“Living on dividend income in retirement can make it easier to stick to a plan by providing passive cash flow without incurring the stress of figuring out which assets to sell and when, especially if another market crash is around the corner.” — echoed on my blogpost https://tanbinvest.dreamhosters.com/wp-admin/post.php?post=17257&action=edit
— Why dividend stock picking beats dividend ETF .. “Some of (the stocks in an ETF) are good businesses with safe dividends, while others are lower in quality and will put their dividends on the chopping block. Some have high yields, others hardly generate much income at all. Simply put, an ETF is a hodgepodge of companies which may or not match your own income needs and risk tolerance very well.” — echoed on another blogpost or email
— concentration risk in high-yield sectors .. “only owning high-yielding stocks concentrated in one or two sectors, like real estate investment trusts (REITs) and utilities. Should interest rates rise and trigger a major investor exodus in high-yield, low-volatility sectors, significant price volatility and underperformance could occur.”
— Be suspicious of unsustainable CDY above 5% … “In our opinion, investors are usually better off pursuing lower-risk stocks that yield 5% or less. These companies tend to have better prospects of maintaining and growing earnings and investors’ principal over time.”
T:US is a rare high-yield blue-chip.