Category: retire

old retirement, not “retire young”

SG CPI-inflation: 30Y xp, basket composition

Posted on by tiger40490

% of burn rate … excludes tax payment, P in P+I

Is it better to spin off to a new bpost [[30Y xp@SG inflation]]?

k_deflation

For long-term burn rate management, inflation (along with medical) is one of the top 5 concerns. Long-term (30Y) prediction of inflation is unreliable. 3k/M burn rate doubling over 20Y is an unreliable prediction.

If we exclude flights, enrichment, bx, rental cost, then the crbr (couple retirement burn rate) is showing very low inflation. Indeed, each individual’s concept of “basket of goods” can vary greatly, just as each person’s retirement burn rate. (The last observation was echoed by Officer Teo at Bishan CPF service center.) My own burn rate record-keeping is more reliable and relevant data source than official inflation, though I can derive insight from official “basket of goods” including housing, private car, enrichment.

==== CPI basket. https://www.singstat.gov.sg/find-data/search-by-theme/economy/prices-and-price-indices/related-info/faq-on-cpi shows the percentage weights for an average Singaporean family, which contrasts my percentages (in color):

  • 25% housing + utilities .. (excluding telco) SG CPI uses imputed rent, so this weight is comparable to mine (30%). From here on, I need to include a phantom $2k imputed rent into my monthly burn rate. Also 25% weight in U.S. CPI
  • 21% nutrition
  • 17% transport … (including flights) more like 10% due to absence of car
  • 8% recreation + culture …. probably including tourism, dining
  • 6.5% education .. more like 15-20% in my basket
  • 6.5% medical .. (including bx, excl wellness) $176/M more like 4% of my 5k/M. Was 10% in my basket during Q3sg.
  • 5% household_durables … (unfamiliar category) includes semi-consumption or big-ticket items like furniture, electronics
  • 5% misc
  • 4% comms .. includes phones and monthly bills. $200/5k = 4%
  • 2% clothing

Warning: CPI excludes non-consumption expenditures such as loan repayments, purchases of houses, income taxes,,,

Q: which category is currently my biggest category, beside housing?
A: nutrition, utilities (MRT, energy, telecom…)

==== Q: Did individuals’ basket price double over 30Y?
Raymond said “less than doubled over 30Y”. Raymond pointed that actually some items became cheaper, often thanks to Chinese improvement in quality. (See also https://tanbinvest.dreamhosters.com/wp-admin/post.php?post=549&action=edit)  Raymond also felt housing inflation is too high due to government. I think he mostly referred to BTO prices.

Zeng Sheng said “maybe 60% increase” since he arrived in 1998 (22 years ago).

Pauline Teo’s book basically says “yes”, using 3% compound inflation rate. The Jan 2021 DBS seminar also used 3% compound inflation over 20 years. The Singapore CPI inflation rate shows average around 2%/Y, according to my google search in 2020.  BeReadyWithCPF microsite also used 2% inflation to forecast retirement cash flow.

— in 1994 I started living on my own, spending perhaps $500/M excluding rent. When I first met XiaoAn I think he guessed “probably below $1500 including rent” and I said yes. Assuming my 2001 burn rate was $1k/M excluding rent,

Q: would I be able to live alone today at the same burn rate?
A: Yes I’m confident. Look at my c++US phase excluding rent + airfare.

— Q: has price doubled over 30Y from 1991 to 2021?

  • shirt, pants, shoes – i feel didn’t double
  • pouch — doubled.. was probably $2-$3
  • cinema .. didn’t double. Alternatives include home movie
  • backpacks — didn’t double, due to cheap imports from China
  • doctor consultation – didn’t double, due to OPEC-style price control
  • —- nutrition
  • cheapest coffeeshop meal – didn’t double. $3~5, based on … 10 observations. My recall is rather imprecise and unreliable, often mixing cooffeeshop and foodcourt prices.
  • foodcourt .. comparable foodcourt meals costs $5~6. If I compare the price figures displayed in food court, then apparently doubled, but most of those stalls I “never” try. Probably in 1991 they were already pricier than mixed vegie rice.
  • bread – didn’t double
  • milk – didn’t double
  • Burger – didn’t double
  • Ice Kachang (and other deserts) – more than doubled. Used to be $0.60. I feel this is classic luxury item. I should simply avoid it.
  • —- housing-related
  • HDB rental – I was paying $300 in 1995 to 2005. Now should be more than double.
  • electricity tarrif before GST: 16.7c/kWh as of 2005. Not doubled.
  • —- transport:
  • MRT fare – roughly doubled. In contrast, NYC subway has increased from USD2/trip (2007) to $2.75 now.
  • bus fare — nearly doubled. Was 50c
  • air ticket – didn’t double. Actually lower if you include Budget airlines.
  • Taxi meter fare nearly doubled, but Grab is a bargain

https://tablebuilder.singstat.gov.sg/table/TS/M212951 shows about 69 specific items (of the CPI basket, mostly nutrition). It plots the price change over 12 years.

What items are in the hard_basket?

— over 30Y, some things became …. cheaper !? See also globalization reducing minimum cost@acceptableFood

  • laptops, budget smartphones, routers
  • broadband
  • mobile plans. If you look hard, you can find some “products” that are cheaper than before.
  • bicycles esp. foldable
  • haircut — $5 in 1991
  • fan
  • stationery
  • white sugar, beer, … according to singstat

cash→housingRefund→SA

Posted on by tiger40490

Next transfer is $5k OA -> SA, but no housing refund please.

For 10k (up to 150k) of my OA money parked outside cpf (parked in some bank acct or FSM ..), every year it may generate a return of, say, 1.1%.

However, for each year until you sell your flat, this 10k “should” accrue a nominal 2.5 ppa either in or outside CPF.

  • if growing inside CPF, then the government pays me 2.5 ppa. Even 4 ppa is available if you are allowed to transfer that 10k to SA.
  • if parked outside CPF, then I had better find someone to pay me that nominal 2.5 ppa, paying from investment return (if invested) or liquid cash (if parked in banks)
  • so 30 years later when I sell the HDB flat, after the dust settles exactly the same compounded amount (10k * 1.025^30) would end up in OA. OA end balance after flat sale is an invariant. It would be unfortunate if you paid yourself 2.5%/Y from unproductive cash.

Note either government or you pay the 2.5 ppa to your cpf account. You never pay someone else 2.5 ppa

Q: by parking the 10k outside cpf accounts, you get to USE the money (liquidity) for investment, vacation etc but can you generate enough profit to beat the guaranteed compound rate of  4 ppa or 2.5 ppa ?
%%A: Beating 2.5% possible, but 4% is tough.

Now I feel the OA parking space is inferior to SA and MM-mufu, therefore to be avoided unless you have a mortgage.

Sharp Q (from Felicia): For your spare cash beside the contingency fund (100k, as I told her), what use do you have ?

Q: perhaps I should transfer 10k (up to 150k) from bank acct to OA then OA -> SA since I have no use for my spare cash?

Note you can’t really “park” the 10k in the HDB flat, which is not an account you can top up incrementally. The flat appreciates by itself, regardless of your 10k.

— What if (10% probability) we want to upgrade HDB home before 55? As discussed with Felicia,

  • wife said price difference will be up to 100k only i.e. PriceTag – SP = 100k
  • SP (sales proceeds, mostly cash) + wife’s CPF-OA can be deployed to reduce the mtg to under 50k, but my target mtg size is $100k,
  • By the time we take up the mortgage, I would have some CPF-OA balance in addition to the SP fraction refunded to OA. I have the option to deploy it. We may be able to buy with cash + CPF

— cap on SA top-up .. Max amount you can “add” into SA or RA is computed and presented in MyMessages. Before you turn 55, the SA limit is up to FRS watermark. After 55, the RA limit is up to the ERS watermark.

As of Feb 2025, I have reached SA top-up limit. I have ended up with too much OA balance. OA is a kinda bad parking lot for my spare cash. See SA^OA^FSM_parking

Any housing refund will only go into OA.

[21]cpfRA for liquid parking@4% #green^red

Posted on by tiger40490

 

Rule 1: After RA is created at 55, you can top up directly to cpfRA. Cpf dashboard will show your “cpfRA topUp each year” including OA->RA transfers. Supposed they add up to 99k over 9Y, then this portion (red portion) of your cpfRA is implicitly locked up, and never f4w (free for withdrawal from cpfRA).

Rule 2: By pledging your portion of your flat, you can incrementally withdraw from green_portion , defined as the age 55 snap55_FRS_minus_BRS.

The green_portion of cpfRA is freed up and becomes f4w when your pledge is approved. This portion starts at 50% of the cpfRA balance. As cpfRA grows, green portion will become a smaller portion, even if dollar amount remains.

Here’s an illustration. Suppose at 55 your cpfSA balance is 284k when FRS watermark is at 250k. This FRS amount will transfer to cpfRA, and the remainder to cpfOA. Now you can [Rule 2] incrementally withdraw the 125k green portion from cpfRA. Meanwhile, you can also top up cpfRA (see cpfRA top-up till 65). For example, you can top up 35k to the red portion, and subsequently withdraw 30k from green portion. Due to Rule 1, this 35k top-up amount is locked up in the red_portion, in some hidden tracking account. The green_portion is now 125k-30k.

After 55, cpfOA balance is also f4w. Only after (not before) you exhaust that, should you withdraw from the green_portion of cpfRA. Don’t touch the green_portion too early and lose the cpfRA interest.

It’s advisable for my wife to max out the snap55, by topping up to OA or SA before 55. If you top up 100k right [1] before 55, this amount becomes basically “free parking” in cpfRA earning 4% compound.

[1] If you top up 3Y before 55, then this amount is inaccessible for 3Y 🙁 However, if you have idle cash not needed for 2 years until age 55, then you can “deposit” that to cpf OA/SA and wait a short while to have it freed up.

Q: Pledging property…. Is my wife a 50% owner or 5% owner? What if she refunds all of her OA amount?
A: still she is considered a co-owner.

— conditions for withdraw from greenPortion

  • RA balance is above FRS
  • if $0 “housing usage”, then submit additional docs to prove that you have a usable Singapore property with enough cash value.
  • .. It’s advisible to leave a bit of housing usage.

## BestCountry@@ objectively proud@your local living condition

Posted on by tiger40490

 

A teenager is often told that her country (or city) is one of the best to live in the world. In reality, for every country, its nationals have some advantages and disadvantages, but some of the cited advantages are made up by the media or propaganda. They include things like better weather, wider food choices, police presence, strong military force, diversity in population, young population, rich culture/history. Today I want to focus on the factors widely agreed among the rich countries. By these standards, the Scandinavian nations, Japan, Australia .. probably come on top.

Q: how relevant is this blogpost to where2retire?
A: I think most if not all of the factors relevant to a teenager are relevant to a retiree, too, fundamentally.

  • [i=infrastructure]
  • [f=financial]
  • — half ranked by noteworthiness. The obvious ones are ranked lower. I avoid high-level, vague items
  • inclusive workplaces and schools .. relatively free of discrimination [prejudice]
  • [f] low national debt burden .. lower taxes going to debt servicing
  • security in food, water, energy supply
  • efficient legal system .. accessible [affordable] to the public
  • weather .. not extreme or disastrous like heat waves, hurricanes, flooding
  • [i] flood control .. esp. in tropical locations
  • [i] clean streets .. with some landscaping
  • .. adequate green spaces .. esp. relevant in cities
  • walkable, bike-friendly … not car-first !
  • plenty of exercise facilities .. swimming, stadium, jogging paths…
  • [i] electricity and internet connectivity .. reliable (weather proof), fast, affordable,
  • [i] public transport .. reliable, extensive (re Bayonne), frequent, cost-efficient [affordable]. Grandma often points out the MRT lifts
  • [f] stable currency, inflation
  • [f] low GST, low property tax, low utility bills
  • [i] accessibility for those in need
  • universal and inclusive education for 9+ years. Special needs education, leaving no one behind.
  • [i] pollution control .. air, water, noise
  • [i] public healthcare .. accessible, affordable
  • [i] congestion control .. often comes with high /tariff/ on gas or car ownership
  • street safety .. crime rate,
  • PPP-adjusted median household income after tax?

— More importantly, here are examples of Not “widely agreed” advantages. Many of them are based on FOMO[F] or exclub[e]

  • [e] home to world-class universities/companies? Perhaps parents would envy another country with many world-class colleges… But look at European nations, Japan,
  • [F] a country with pockets of tech innovation? But the locals (as compared to foreign talents) may not be able to benefit. Perhaps young citizens would lament their country’s relatively backward technology but.. Hey, technology is a race! Inevitably, only a small number of national can be leaders. Many developed (and widely envied) nations are technology adopters rather than innovators, in most technology domains.
  • [F] infrastructure .. Perhaps many (including outside observers) would not feel lucky/enviable about limited infrastructure esp. if less connected… But I think some remote island states (NZ, Japan) can be quite prosperous and comfortable. On the other hand, healthcare infrastructure (including sanitation) is a key livelihood feature.
  • natural resources? Look at Japan, Korea, Macau,
  • population density .. there are advantages to dense or sparse locations
  • athletic ranking .. (adjusted by population)

—  Q (related): What nationality is enviable esp. in terms of healthy longevity?

Whenever we compare different passports and identify the handful of lucky nationalities, each of us tends to focus on a specific aspect. There are a wide range of factors. Here I want to explore in and around an important area i.e. healthy longevity.

If a nationality is associated with 1) longevity and 2) “adequate” livelihood, then it would be a subject of envy by most standards.

 

## Sgp CRBR estimates: LZ.Y^CPF^DBS

Posted on by tiger40490

I have several blog posts with retirement burn rate figures… This is an attempt to consolidate the figures, so those blogposts can point to this one.

[c=current estimate, not a forecast]

—
— [c] Author Pauline Teo ….. estimated SGD 1500/M of retirement burn rate for her dad, as of 2017
— LZ.Y .. Full Retirement Sum is generally considered adequate, paying out about $1300/M per person, consistent with my $3k/couple estimate. LZ.Y felt SGD 1300/M/person
— [c] DBS seminar .. As of 2021, DBS research shows that among DBS customers, a typical retiree needs SGD 1390/M (burn rate). $2400+ for a couple. Many DBS customers only receive $600-800/M from CPF-life.
— [c] CPF-life .. Enhanced Retirement Sum is the highest retirement sum available, paying out about SGD 2k/M per person.

placeholder

Posted on by tiger40490

For top-up decisions, see other blogposts…

Regulation 1): full balance of SA + OA up to the FRS watermark will be transferred to a newly created RA. I think excess balance is forever free for withdrawal except the SA cash top-up amount (by CASH) is locked in forever.

Top-up — a $1k housing refund into OA is probably free after 55.

Regulation 2): Some amount of SA or RA balance could be usable for housing, subject to approval, but probably won’t get approved.

Priority 1: minimize age 55 RA lock-in amount, perhaps minimize to the BRS level.
Q: any excess amount can be withdrawn any time after 55? Yes confirmed with  CPF again.

Priority 2: When (and only when) I reach 65 I want to max out on ERS, as justified in y max out CPF-life #ERS . If I top to to ERS 10Y later, then …. not really maxed out.

— Target balance
At 55, after I pledge my property, my OA + SA target balance could drop to rather low, perhaps to BRS. Any “surplus” beyond BRS can be left in RA, available for withdrawal.

This is despite the rare 4% compound return available at CPF only .

Q: Pledging property…. Is my wife a 50% owner or 5% owner? What if she refunds all of her OA amount?
A: still she is considered a co-owner.

DBS seminar: CPI-inflation

Posted on by tiger40490

Most reputable authors from U.S., China (and other countries) present CPI inflation risk as one of the most serious risks for retirees. SG CPI trec is much much better. (However, my friend TJ.Lin disagrees…)

Even U.S. CPI inflation is not so bad in the short term. https://www.cnbc.com/2021/06/08/gold-as-an-inflation-hedge-history-suggests-otherwise.html says that The Federal Reserve tries to keep CPI inflation around 2% per year.

— The DBS seminar
On 30 Jan 2021 After the presentation, I confronted the presenter “Your 3% inflation over-estimate (DBS official estimate) seems to discourage people from saving and encourage people to spend more”. I still believe it. The presenter (Adeline?) replied “We are encouraging people to save and invest.” Ok the difference is saving-n-investing vs saving.

Look at the average people without enough Earn/Save/Invest capabilities. If the average people believes inflation is well-controlled for the long term, to average 1%, then they would be motivated to save more. If they are led to believe inflation is fluctuating beyond control, and higher than they feel comfortable, then they would feel discouraged from saving.

The presenter’s answer seemed to imply “The ordinary Singaporean retiree will need a huge retirement nest egg, but even if you save like hell your savings will be decimated by inflation, so the ONLY solution is investment in growth assets.” I disagree on multiple fronts.

Key issue 1: 3% compound inflation rate is an overestimate in the Singapore context. I discussed in numerous blogposts. She used a refrigerator for illustration — $1000 fridge today will cost $2000+ in 25Y. Well, I would predict there will be smaller fridges mass-produced in cheaper locations, costing far less. This globalization effect (discussed in this blog) is visible in clothing, electronics, toys, bicycle etc.  Instead of fancy merchandise, retirees need reliable, durable or low-cost designs. Retire-in-style is lifestyle creep, not necessary or admirable.

Key issue 2: the proposed nest egg size (around 1M, identical to Pauline’s) is too large for most people. It is not mandatory and it’s too hard to achieve, so most people would get by with less to spend, and it will be fine, not unacceptable.

Issue 3: CPF-life is a bedrock that DBS tends to downplay as insufficient due to inflation. All annuities have limitations, but I am convinced that CPF-life is the most reliable insurer with probably the highest payout rate.

Now if you ask ordinary folks to save like hell and invest large amounts, they would have no confidence, because all the investments “fast enough to beat inflation” are risky. That’s propaganda. I think even 2% compound return can beat the inflation I experienced. Therefore, if you lower the target return to 2%, then there are many safe-n-easy investments such as CPF and money-market funds.

So for most ordinary folks with up to 200k long-term risk capital[1], I agree with DBS that mufu is easier, but not really safer[2]. (Personally I would prefer stock-picking for 20k.) Mufu can cover equities and bonds. Obviously DBS wants to promote mufu since DBS makes money mostly from mufu and endowments.

[1] There is likely some other cash piles, but they could be earmarked for education, housing etc or they get depleted.
[2] equity mufu is subject to the same market risks as stock-picking. Liquidity is inferior due to management fee and longer trough.

 

 

BeiJ: roam`retirement city

Posted on by tiger40490

Q: disadvantages? This bpost will not list them.

Millions of outsiders view Singapore as an unsuitable retirement destination like “my last choice”.

Pattern: once a retiree gets used to a place, and develop coping solutions, most of the disadvantages (of the place) are accepted with serenity. I see it in my parents, in the retirees of NY, or Boston (cold),,,

#1 remedy for (many) disadvantages of any place — get used to living there.

— Beijing has certain advantages.

  • advt: healthcare? better than ruralChn
  • advt: familiar city, cf Malaysia, U.S.,,  In fact, Beijing is the #2 most familiar cities to me. I feel I belong there.
  • advt: Tianjin/Zhejiang relatives
  • advt: good infrastructure in many aspects, more reliable than cheaper countries. See separate bpost on ChM
  • advt: no car dependency. Extensive public transport.
  • advt: customer service helpline .. much faster than U.S.  (too much menu, long queue,,,,) Singapore helplines are often understaffed.
  • advt for wife: No need to cook everyday. More varieties than Malaysia.
  • advt for wife: Language
  • advt for wife: far more comfortable than Malaysia or U.S.
  • advt: trusted friends [classmates]. In contrast,  need to make new friends if in Malaysia
  • advt: airport: travel time to Sgp [my harbor] is better than ruralChn
  • advt: CPI cheaper than Sg. My money can buy me a more comfortable/easier lifestyle
  • advt: close to the travel destinations that interest me

currency_in_circulation

Posted on by tiger40490

This bpost can belong to tanbinvest or the recrec blog. I keep it in tanbinvest for now because it is about SGD currency strength, affecting my long horizon (including retirement) planning.

Currency in circulation .. is explained in [[TheEconomicsOfMoneyBankingAndFinancialMarkets]] P412 (FedReserve). Other central banks may use their own systems to calculate/report their currency in circulation. However, there is some international agreement (or standard?) as the Bank for International Settlements provides detailed statistics of the worth of banknotes and coins for 18 major currencies.

— Q: Does money printing affect currency strength?

A: For USD, [[TheEconomicsOfMoneyBankingAndFinancialMarkets]] has lots of details but I guess the Fed money printing process is equivalent to printing physical money.

Excessive money printing without _additional_ foreign reserve is dangerous, and can lead to currency depreciation.

I guess many central banks actually borrow money (by issuing bonds with legislative approval) to print its own currency.

— Q: how is the total “currency in circulation” affected by electronic banking?
A: [[TheEconomicsOfMoneyBankingAndFinancialMarkets]] has a chapter on money supply, but I haven’t read it. I believe that banks have rigorous (audited and consistent) systems to account for every penny.

Fundamentally, electronic payment is only a record of physical movement of cash and should never take place without “physical”.

(You could be a company, part of a local or central government, or another bank.) A bank would increase your account balance by $1 exactly when you deposit $1 physical cash. Things are more tricky when you deposit foreign currency (as exporter do) or when you receive electronic transfer, but I believe all changes in your account balance is backed by physical movements of physical cash.

The vault (of a central bank or a private bank) holds gold and foreign bank notes. These assets change hands upon an electronic transfer between institutions.

 

prevalence@poverty: U.S.imt Sg

Posted on by tiger40490

With a vague title, this blogpost may eventually merge with a blogpost with a less vague title.

Why I care about poverty in my chosen country? It is subtle… Inequality, social unrest, financial strength of the government…

Q: why is poverty less widespread among Singapore nationals (Citizens + PRs) than U.S. and other countries?

— Reason: very high home ownership
— Reason: (my personal observation) price levels are generally lower than U.S., except raw foods
Inflation for basic necessities (not discretionary consumption) is, for decades, managed by a nanny state. Not managed in U.S. and many countries.

U.S. price levels can be very low, mostly due to efficient companies operating in free market. Government has much less control.

— Reason: SG government probably has a (not perfect but) functional system to keep track of every needy family including broken families. Arguably the most valuable feature of the “system” is adequate manpower. The system is not perfect but is far more effective than other countries in case-management to keep each needy family from falling behind.

In the U.S. the church and charity organizations play this role at a smaller scale. The case load is much higher per 1000 families, so they can’t cope.

— Reason: less freedom to bring yourself into poverty.
Many [1] people fall into poverty due to self-management (including self-discipline). They must want to be successful before a system can help them avoid/escape poverty. Singapore government leaves less room for “wrong moves” including falling off the train.

Strict control on gambling, debt, alcohol, drugs. Education system is compulsory, stressful and competitive. Savings are compulsory. The problem kids are identified early and put through years of tough programs. The systems push them to work harder, make the best of themselves and not rely on the system.

I have heard of many Singaporeans speaking of “hard to survive in Singapore” and “easier life in western countries”. Some (not all) of them don’t want to be very successful and would rather have an easy (lazy) life. Some of them would spend and gamble their way into poverty.

If you just want to be poor and become a problem to the Singapore system, then you have to work hard to remain poor. As long as you are on their radar, they will come and push you to work harder.

— Reason (minor): The government has numerous training programs to up-skill the unskilled Singaporeans.

[1] In every country, some percentage of the poor actually want to be successful i.e. work hard, but are stuck. The most valuable help IMO is training.