Tag: t_outlay_figure

These are various estimates of the expense level in each (retirement) city.

[21]nestEgg enuf2preempt stressful return2U.S.

Posted on by tiger40490

How does CAD and additional potential health declines affect my answer?

As of 2021, we have a fully paid home enough for 4. I will also earmark enough for two FRS cpfLife accounts. Such a high_ground is an achievement, but might be harder to maintain after SBH.

Q: Beyond those assets, what level of nest egg would preempt/eliminate the need to migrate to the U.S.?
A: I used to (and still sometimes do) feel the cautious answer is $3M. However, based on the below assumptions, we need SGD 800-1600k to justify shelving the U.S. migration idea.

  • Assumption 1a: in terms of SGD monthly burn rate [excluding tax outlays, including bx], I will assume S$5-6k total outlay is “comfortable” even after the recent (2022-24) elevated inflation
  • Assumption 1b: in terms of Singapore salary.. for simplicity I will pick a nice number of $100k/Y from age 47 to 55, but $0 afterwards (in Singapore) -> 700k work income.
  • ^ ^ Those are the big assumptions ^^
  • Assumption 2: after kids grow up, we really don’t need more than $1500/person (inflation considered), so FRS cpfLife can be sufficient
  • Assumption 3: Unlike [1], I may choose to set aside an elastic S$100-200k/child for college -> up to S$400k.
  • Assumption(methodology) 4: Count cpfLife but Ignore NNIA + inheritance + grown-up children’s contribution + ..
  • No assumption about lease spread on HDB flat, even after 2035, since grown-up children may stay with us.

— the calc done in Nov 2021, before selling the #1173 home. I have the spreadsheet in github.

  1. Nov 2021 to 2035 when meimei graduates, we need 6k * 12M * 14Y = 1008k, marginally higher than [1]
  2. 2036 to Jan 2039 wife+I need 36k * 3Y ≅ 110k, matching [1] 100%
  3. Sometime before Jan 2039, top up 200k to my cpfRA to the max, ignored in [1]
  4. 2039 to 2043 we need only $0 assuming my cpfLife ERS starts paying around $3k/M (as I would max out on my cpfLife). This amount is explicitly ignored in [1].
  5. Sometime before Aug 2043, top up wife’s cpfRA by an increment of [$0] to generate $0/M payout. Together we need only $3k/M payout. This amount is explicitly ignored in [1].
  6. ^ ^ ^ Adding 400k [Assumption 3] to the above ≅ 1720k total outlay ^ ^ ^
  7. 700k total salary according to Assumption 1b
  8. nest_egg_needed = S$1020k, excluding our CPF balance as of Nov 2021

However, I stand resolute against lifestyle creep, so S$5k/M is more than enough, and S$200k/child is unnecessary luxury.

— Some implications
Looks like my nest egg is barely enough to justify staying in SG for good !?

Need more analysis from different angles before I would feel assured.

Based on the above analysis, the #1 j4/advantage of U.S. migration is … dev-till-70. Right now with my MLP job I can extend my Fuller Wealth quite fast thanks to low burn rate, acceptable health conditions …. So I would go to U.S. only when I could “extend” faster in the U.S.

— Q: why most of my middle-class peers don’t feel so self-confident if they are in my (financial) shoes?
A1: Assumption 1a amount needs to balloon to 10k+ for them
A2: Assumption 2 amount needs to balloon to 6k for them
A3: Assumption 3 amount may not suffice for them

— Q4: what type of portfolio adjustments would improve my high ground and help obviate/preempt forced flee to the U.S.?

  1. term insurance for occupational disability till 65?
  2. more NNIA with limited appreciation, such as SgCP on mtg? Hig ground would sink. Poor liquidity , heavy debt.. TBD.
  3. USD 100k into SP500 .. no loan. Better buy-n-forget, more like rEstate, but lower DYOC than some rEstate.
  4. more NNIA with USD 100k into div stocks .. (hard to imagine myself persuaded) with some growth potential? Too risky. My high ground would sink.
  5. USD 100k into growth stocks? even more risky.

[19]HIS19: predicted saving=5~7k

Posted on by tiger40490

See also 20% savings rate^lifestyle creep

In 2022, it became tricky to track “monthly surplus saving”. Tricky due to SRS, reno.

Q: prediction: my visible burn rate including Mindchamps excluding tax, air-tickets and transfers (to wife and grandma), or outlays from wife’s account?
A (as of 2019): 3k – 5k

Q: if including everything?
A: (as of 2019) probably 6k-9k

Q: saving rate target after allowance payout?
A: 6-9k but Be kind to yourself and don’t show off to wife or friends.
A: with mortgage + IRAS outlays, let’s target $6k saved from take-home salary.

Both targets are useful and valuable. but we need different attitudes towards each target.

I’m generally competent at saving but stress can still build up

## 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.

covid19$handout reflect`jobless burn rate #%%kids com` 2me4help

Posted on by tiger40490

Compared to barebones ffree=realistic: BT^YLZ ^wbank^CPF , this blogpost describes a crisis situation lasting months to 2Y. Therefore, the involuntary “jobless burn rate” is lower than the voluntary barebones-ffree burn rate.

  • — covid19 handouts:
  • Japan — JPY 100k (USD 900) for each citizen
  • SG — SGD 3000 for my family of four
  • US — up to USD 3000/family or $1200/person unless your income exceeds 99k/Y. The Dec 2020 handout (described below) amounts to $2400 for a family of four.
  • HK — HKD 10k or SGD1833 for each permanent resident, in 2020

Covid19 rescue budgets by these rich economies often feature a one-time cash handout like listed above. These figures suggest a bare-bones monthly family burn rate of USD $1k/family. Similarly, there are two longer-term rescue programs in the U.S.:

  1. More tellingly, regardless of pandemic, New York state unemployment benefit is up to $504/week for 26 weeks. Total payout is capped at 504 x 26 = $13k, even for a $1M wage earner.
  2. A US expert commentator interviewed on https://www.bbc.co.uk/sounds/play/w3csz8mz said that an extra $400/week on top of state unemployment benefits, adding up to $900/week in NY is higher income than many people’s regular wage, and discourages them from seeking job.
  3. After 2020 Christmas, Trump temporarily vetoed a bill paying out a one-time $600 to (adult/child) Americans earning less than $75,000 a year (https://www.bbc.com/news/world-us-canada-55447731 ). His veto caused widespread /outcry/. A one-time $600 amount is not insignificant for millions of affected families.

Based on these figures, I would say that to the authorities, realistic median family burn rate, on the ground, is estimated[1] at well below 5k/M. Even a 3k/M estimate would render the handout amount as useless as a drop in a cup. Some American families received handout equivalent to 20% of household annual income. This is not rare — very high percentage.

[1] That median is an unknown quantity, so an estimate is all we have. — U.S. safety net is less than other rich countries https://www.bbc.com/news/business-52450958 compares the U.S. covid rescue budget against Europeans: “The discretionary response is very large in the United States but when you’re comparing you need to take into account   that actually more needs to be done in the US because the social safety nets are smaller”

— Q: If my grown-up son or daughter had a high BR (like $6k/M) and comes to me for help during a pandemic, how much would I give out? A: $1-2k/M. That’s close to 70% of the median income, sufficient for basic livelihood.

— Raymond 2020: During the lockdown, Raymond was job hunting and was also scenario-planning for wife’s job loss at MBS — a non-zero probability after the RWS retrenchment. He told me they might need to survive on savings, at a 3k/M burn rate for a family of four. No maid, no private tuition. I think his 3k plan is based on real experience. I trust his estimate.

— Many Singaporeans who didn’t need the $600 handout basically returned it by donating to government-run charities. This underlies the trust of Singaporeans in PAP government. https://www.scmp.com/week-asia/lifestyle-culture/article/3086504/singaporeans-open-their-hearts-and-wallets-donate-needy

[20]brbr: 80LMHI[def]: R.Teo #wbank^BT^FIRE #Khmer

Posted on by tiger40490

update:

In contrast to

  1. barebones ffree=realistic: BT^YLZ ^CPF #w1r6 — voluntary barebones ffree burn rate
  2. covid19$$handout reflect`Realistic burn rate — temporary, covid19-induced involuntary jobless burn rate

, this blogpost discusses a burn rate possibly even lower — 80LMHI [80% of the local medium household income]. See also

Background: A major pillar of my carefree bliss is the fierce /boycott/ to FOMO/kiasu, exclub, so-called 上一个台阶, benchmark with the MDs, chasing the “latency” endless goal,,,, I tell myself and myf kids that we don’t need even more money once we have enough nonwork income to support a certain burn rate. That is somewhere below Level5 of  6 levels@ffree #American perspective.

However, if you have not experienced deprivation, consider the comfortable and happy Khmer villagers we saw on our last day at Siem Reap, described below. Clearly, each person has a tolerance threshold. Question: What’s yours?

The answer to this question is fairly personal. This requires us to keep an eye on the bare essentials i.e. the essential things in our life, and resist lifestyle creep, and resist kiasu/FOMO/benchmarking.

My tentative answer to this question: I would reference 80% of the median family income among families of a comparable size regardless of ethnicity. (Singlular household data points are automatically filtered out.)

80% of median kinda define the “thrifty middleclass” lifestyle.

— Raymond’s 2013 comment sowed the seed for this answer. Raymond said “Now you have left high-salary WallSt and returned to Singapore. You should start living like the ordinary Singaporean family, unless you continue to draw the WallSt salary.”

If you earn the median family income, and  want to save 20% every month, then your burn rate must be 80% of the median income.
— The Khmer villagers:
Some cultures in SEA, Latin America, and some Buddhist cultures are more satisfied, less progressive than the East Asian and Western cultures. Some ethic groups may be lukewarm about the latency arms race

Unlike the Chinese, these cultures don’t mind FOMO or lagging behind on the curve. They don’t envy that much.

Buddhist monks might be a better reference, but I like my vivid first-hand observations. My Cambodia Chinese tour guide said rural Cambodians have a more satisfied life, perhaps surviving on subsistence farming, fishing. Not sure if they need education and healthcare, which are presumably non-essential luxuries beyond their reach.
— FIRE: I think the burn rate in this blogpost is still higher than the extremely low yet adequate burn rates featured in the ERE and MMM discussions.

Mr Money Mustache, Pete Adeney, with a $2k/M burn rate, wrote “Once you find out the true meaning of enough, buying yourself more than enough doesn’t really make you any happier,”…. “And here in the United States, even a lower middle class level of income is way more than enough to pay for a happy life  – as long as you spend it right.”

ERE author at about USD 700/M is more extreme in his burn rate and in his DIY enthusiasm.

I’m more like Pete i.e. MMM than Jacob of ERE.
— World Bank poverty line for the rich countries is USD 22/day or USD 660/M, similar to the ERE author. In Singapore, If we keep taps on our burn rate, then this level of bare-bones ffree is not unrealistic, largely thanks to Medishield.

At my level of abstinence and discipline, projected family burn rate is SGD 2k/M.
— SG official statistics: SGD 7k median household income from work (excluding employer CPF contribution or nonwork incomes) implies that after cpf deduction, 50% of the Singaporean households only have below SGD 6k/M to take home. Many (more than 33%) households have 4k take-home income only.

Even if my family income becomes median, my expenses are likely lower thanks to no-mtg, no-car, no-maid. In such a case, my savings and brbr would still be above median.

Beware: some low-income households have no kids. A subset of those are singular households such as me in 2004-2006. In contrast, the median “nuclear-family” income is higher.
— The Business Times FIRE article described a max-savings lifestyle, not too different from mine.
SGD 2500 family burn rate excl.housing/driving #BizTimes is another blogpost based on the same article. I feel this figure is close to my 2020 recorded burn rate if excluding insurance, enrichment, flight,,,
— SG vs U.S.
In Singapore, My minimum standard is basic-healthy, at SGD 2.5k/M for my family. This is likely to induce a sense of deprivation in my kids. If it does, then we can reduce some of the insurance coverage

In the NY/NJ, the basic-healthy burn rate might be USD 4k/M, including a company health insurance + a basic car. See my blogpost on U.S. peers’ burn rate

[18] retirement burn rate: 33-50% of current

Posted on by tiger40490

This is my first serious look at CRBR (retirement burn rate) forecasting.

People told me that as kids grow up, my burn rate would decline enough to make my cash reserve appear deep enough (or too deep) for my lifetime. This is despite inflation and medical needs. I think now I am seeing an early sign. Grandparents also see it.

In contrast, some financial planning “experts” say that retirement burn rate is 70% of prime time income. I disagree.

  • my current burn rate is about half my income in Singapore.
  • my current burn rate can half when kids grow up.

Q1: In retirement, how many percent of your current income is required to sustain a comparable lifestyle, assuming asset returns (yield, appreciation…) match inflation?
A: (Conventional wisdom): 75%.
%%A: 20 to 33%, for a comfortable SG lifestyle.

Q2: In retirement, how many percent of your current burn rate is required?
%%A: 33 to 50%

My 2016 burn rate analysis shows that only 2k/m is couple base burn rate, so the conventional wisdom estimate is inconsistent with my experience, and over-generalized and highly misleading.

If I retire in Malaysia or China then burn rate should be even lower.

— needs vs wants .. Pauline Teo’s book is the first to point out this difference. In Feb 2021, I told Felicia of OCBC that many retirement discussions mix wants and needs.

I asked Aaron of DBS “Among the retirees you know, there must be many whose cash flow needs become significantly lower because kids have grown up.” Aaron said yes but other retirees increase spending after retirement, often on extravagant things, such as sight seeing, dining out, gifts for grandchildren. I find this lifestyle naive (lacking wisdom) for a retiree so I asked him further “But those spends are not financial Needs like medical needs or survival needs. I can understand if I have 3 times more money than needed as a retiree, I would probably spend it, rather than leaving it to my kids.” Aaron agreed.

According to both Aaron and Felicia, some Singaporeans seem to fancy “retirement in style”. They would see their burn rate increase when they stop earning salary! Are they day-dreaming?

The rationale seems to be “After working hard for decades, now I can pamper myself !” OK maybe for the first 5 years.

BR]US^ cflowPrjn]US^ outlay_figure^ cmcUS

Posted on by tiger40490
  • t_outlay_figure .. covers Singapore, Chn and country-agnostic topics.
  • .. burn-rate and beyond
  • .. Not_suitable for U.S. because there are many other tags/categories for U.S. burn rate.
  • .. If “overcrowded”, then I will pick some frequently reviewed posts for possible untagging, provided they are under cflowPrjn or t_BR]US
  • t_BR]US .. all-encompassing burn rate
  • cflowPrjn … includes any incomes or burn rate, in a projection. Not_suitable for past burn rate analysis in the U.S.
  • t_midClassUS .. is more specific, about middle class

SG retirement brbr: questionable estimate #Pauline

Posted on by tiger40490

 

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.

##struggl`families earn`$7k #Julius/LZ.Y #discipline

Posted on by tiger40490

Oth risk — this blogpost is less focused, less specific, less concrete, less rigorous than other blogspots below , but I like the 7k benchmark as a concrete, real-world benchmark.

My neighbor Julius complained about high living cost in SG (and loss of good jobs due to foreign professionals). After I told him about my friend R T whose double income adds up to about 9k gross, Julius immediately replied that a SG family would be lucky and comfortable once household gross income hits 7-8k. I wonder why 7k would be a struggle.

Q: if burn rate can be 4k/M for a family of four, then why is 7k income a struggle? Note the 7k median earlier.
A: a key factor — Median nuclear-family income is higher.

I assume he was describing a /stereotypical/ Singaporean Chinese family with kids (we both fathers of two), and possibly with grandparents to support financial.

  1. CPF deductions — 1~2k fixed percentage. Let’s assume 6K take-home
  2. —- My guesstimates of the G9 biggest (ex-CPF) expenditure categories:
  3. tuition + enrichment … — once surpassed 3k for my kids. ZengSheng feels for a family with 2 kids, childcare is the biggest outlay category
  4. essentials like nutrition, transport, utilities — could be 2-3k
  5. [m] maid — up to 1k. common if both parents work
  6. travel + dining — was almost 1k for my family.
  7. [m] car ownership? Not sure how many “struggling” families would take it on. Perhaps quite a lot.
  8. [m] allowance for grandparents? At least $500 IMO. Aaron Lee agreed, at least for the local Chinese family
  9. [m] mortgage — usually by CPF-OA, but some take on an investment property, with additional mortgage burden.
  10. insurance premiums? life policies, endowments, medical. I only have medical so probably lower
  11. [m=”light” burden in my current carefree life]

— a friend of mine with two kids in Grade 12 and College Y2. Self-employed, so his net income is around 7-9k, after some haircut (He quoted 30% haircut as standard). He did an calculation for his 2019 burn rate . Around 7-8k/M or 七八千. Struggle? He said there is livelihood pressure.

  • including mortgage. (Without mortgage, he said perhaps 五六千, but I feel he was less sure). I guess he has two mortgages for his two condos.
  • including insurance of 一万多 / Y. This estimate is vague, because I didn’t want to poke my nose in
  • probably excluding another 一万多 / Y insurance for a grandma
  • including private car monthly cost, which is needed for his daily work. I doubt he amortized the car purchase cost.
  • no more maid
  • including vacations. His family likes vacations.
  • including $500 piano lessons

I told him my wife spends presumably $1k, so our total burn rate is $4k+. So mine is $3k/M below his. He immediately pointed out mortgage as #1 difference. Car is probably #2 difference. Then we compared our insurance cost. I feel these factors explain about $3k.

— discipline for consistent saving

Q: So how about saving for college/retirement? Such a long-term plan can be very hard to implement. Many would shift focus to near-horizon and save what they can.

Based on this quick check, I now believe saving $1k/M would be challenging for this stereotypical family trapped in a cashflow low ground. ZengSheng also felt this stereotypical family would be hard pressed to save any meaningful amount. I agree with him that for the Chinese, saving at least $1k/M is essential.

This is also the Singapore government’s stance.

Financial discipline is easy for JackZ, RaymondTeo, me, and my dad, but hard for other family members and can be a challenge for my kids.

— FOMO^livelihood

Based on my personal record and analysis, 4k/M burn rate can be sufficient for a family of four, without the level of discipline of the ERE author. So family livelihood is taken care of , but why why would a 7k family feel so bad?

I would say FOMO peer comparison is the main underlying reason.  As stated in ffree^FOMO #9K/M, if you can’t afford the nice things that your neighbors, ex-schoolmates and colleagues can afford, then you feel left behind and poor.

barebones ffree=realistic: Covid^wife^Claris

Posted on by tiger40490

See also CRBR estimates

During my q3sg years, I concluded and declared repeatedly that my wife and I can be realistically satisfied with SGD 3k/M non-work income. Perhaps 4-5k as a family of four? Perhaps a Level 5 ffree , as defined in 6 levels@ffree #American perspective

Now, during my hib19 phase, A major pillar of my carefree bliss is the fierce boycott to FOMO/kiasu, exclub, 上一个台阶, benchmark with the MDs, chasing the endless latency goal. I tell myself and my family that we don’t need even more money once we have enough nonwork income to support a certain level of lifestyle. So What burn rate is “good enough latency” for you? I guess this is between Level5 and 6 of ffree. This blogpost is more about barebones ffree something like Level 5.

Location is key, which determines affordability of housing, education, car ownership, hospitalization,,,, long-term (nursing) care,,,, rental demand,,,, inflation,,,, utility fees,,,,. These include some of the major concerns in every adult. I achieved my bare-bones ffree precisely because I have my answers to each concern. ( The early-retirement-extreme author also has answers to each item. )

I feel good but not conceited about my burn rate + savings rate. Also proud of my passive income. This is a constant wellspring/fountainhead of positive feeling. Hopefully no attachment.

I mention my ffree to many people and I start to feel positive about it, hopefully not losing my feet on the ground.

— covid19$$handout reflect`Realistic burn rate suggests as low as $1k/M family burn rate.

======== a few burn rate figures “just enough to be comfortable” for various individuals
— first, a U.S. figure: https://moneywise.com/a/the-7-stages-of-financial-independence says “Because lifestyles vary, a simple man can say that $20,000 is more than enough to cover everything he would need every year for the rest of his life, but another person may need $50,000 or $80,000 to cover their basic lifestyle needs and the occasional holiday abroad.”
— value-investing seminar “published” estimate: pre-retirement burn rate SGD 2k/M/head is considered decent for a typical Singaporean family, perhaps an HDB heartland family.

Instead of 2k/person, Aaron of DBS said 10k/M nonwork income would be comfortable for financial freedom. I feel this is one young man’s wild dream.
— Philip.Che once said if his family of four had SGD5k/M non-work income then his life would be comfortable and he would feel free to do something else.
In Dec 2021, Claris of HSBC said SGD 10k/M is a typical burn rate for a family of 4, echoed at Gabbar a few weeks later. I think such an “increment” is mostly driven by peer benchmark. Is it inflation? My basket cost grew 15-30% over 20Y.

— Similarly, at wife’s spending level, she told me SGD 4-5k excluding housing, major medical, college tuition and travel. As of Sep 2020 her answer was SGD 5k/M. I feel this quality of life is more than “bare-bones”. This quality of life is comparable to the amount my friend LZ recorded over 2019.

She wants freedom to spend any way she wants, without asking for approval.

I kind of believe I can be truly comfortable at, say, SGD4k/M burn rate (excluding housing + major medical + college tuition), but for her, the ‘comfortable’ level is possibly SGD8k/M.

However, what if the “peers” all make SGD20k a month? See %%bare-bones_ffree ^ envy+FOMO