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Retirement strategy

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It is everyone’s dream to achieve financial freedom and escape from the rat race as young as possible.  Like everyone else, I share the same aspiration. That is primarily one of the reasons for founding this wealth blog. In recent years, many local financial bloggers shared that they have attained semi-retirement status and left the corporate world for good. In this article, I will share my retirement strategy and how I aim to reach my goals.

According to BlackRock’s Global Investor Pulse Survey 2017, it was revealed that Singaporeans worry about outliving their retirement savings but not doing enough to prepare for retirement. Results showed 64% of Singaporeans worry about running out of money in retirement, the highest proportion in Asia-Pacific. Nearly nine out of 10 Singaporeans (87%) believe they are responsible for their own retirement income.

Retirement

Everyone has their pathway in life and one should not compare their financial status with others. My retirement strategy is very simple – I plan not to retire at all. This statement may come across as oxymoron but simply put, I hope to extend my career shelf life as long as possible. I don’t relish the idea of idling around and being seen as not contributing to the progress of the society.

Life is all about challenges and experiences. At the end of the day, I may not have accumulated sufficient wealth to have a comfortable retirement, but I certainly hope to lead an enriching life.

For those who hate working for money, ask earnestly whether you have a purpose that justify retiring without a job. Chances are, you would struggle to find other meaningful purposes or activities that can keep you occupied or active on a day-to-day basis for the rest of your life. You would find that time slow down when you reach retirement and the days become dreadfully long. No amount of hobbies, leisure travelling and rest would keep you engaged for long. After some time, you would be sick of idling around.

And then there is the issue of money. There are bloggers who claim to retire from the corporate world but find themselves struggling to cope with the daily expenses. They start to panic at the loss of income and then turned to become private tutors.

There is nothing wrong with being a tutor as it is a decent way of earning a living. But are they doing this because of their passion to teach or are they tutoring for the sake of easy money? I am inclined to give them the benefit of the doubt but the matter of fact is that the tutoring industry is not regulated at all. Any Tom, Dick and Harry can claim to be a professional home tutor. My question is if you have truthfully attained financial freedom, would you trade one job for another one?

Of course, there are many people who are forced to retire because of poor health or sickness. When that day come for me, I guess there is no choice but for me to throw in the towel. However, my desire is to delay this situation through maintaining good health condition. Now that I am reaching the age of 40, I no longer feel so invincible like when I was in my 20s and 30s. Therefore, I am making effort to do regular exercises and go easy on the food. Maintaining my health is not an option for me now. I also make it a point to do annual health check-up.

Sure, there are financial bloggers who declared that they have enough of being corporate slaves and decided to retire in their 30s. There is nothing wrong with that because ultimately it is a personal decision. But am I envy of them? Honestly speaking, no. Even if I won the million dollar lottery, I would still continue to work because I want to keep my brain active through continuous learning. The moment you stop learning, you cease to exist. There are so many sad cases of elder folks who developed dementia in their retirement age.

Thus, my retirement strategy is to keep working till the day I die. Even though I may not be in the aviation industry 30 years down the road, my plan is to find another job, even if the pay is low. By that time, I would probably not be working for the sake of money. Instead, the focus would be on social engagement and mental well-being. On this note, I doubt I would become a private tutor because I don’t enjoy teaching, though the money is good.

Would I resign now and start to look for my “dream” job? Perhaps not. I do not hate my current job and through the years, I realized that there is no such thing as a “dream job”. Why would anyone create the “dream job” for you? Even if it really exists, why would it be there waiting for you? Dream job is a myth because there is no job that pays very well, has excellent work-life balance, great career progression, can keep you energized and does not inflict great stress.

There are always trade-offs in every job and it is up to you to define your dream job. Every job is an opportunity to gain competency and expertise in your field. A job provides you self-worth and identity. Ask yourself, whenever you go for social gathering, how often do people ask what you do for a living? Even if you are rich and mighty, you would not want to be viewed as being too free and doing nothing.

There will come a day when my earning power peaks and my income gradually decreases. This is expected as I grow older. To prepare for this day, my retirement strategy is to supplement my active income with passive income. The aim is to build a diversified investment portfolio with enough returns or yields to offset the drop in my income. I hope to start building this portfolio after moving into my new home because that is when my financial situation become stabilized. In the meantime, I had been studying the market for the past few years and have been sharing my knowledge in this blog. Going forward, I hope to apply what I have learned.

My retirement strategy involves having an investment portfolio consisting of stocks, CPF savings, cash, property, insurance and bullion. Bonds is something I have been looking at but at this phase of my life, I feel that my portfolio should not feature such a fixed income instrument.

For my stock holding, the strategy is to have a mixture of value and growth stocks, complemented by a few real estate investment trusts (Reits) and exchange traded funds (ETFs). I still enjoy picking stocks because of the learning process of understanding how each company functions. So the bulk of my stock holding would consist of value and growth stocks. Over the years, I have identified these stocks in this blog.

My view on CPF savings is that the retirement account (RA) pay-outs would be useful in my twilight years but I would not do voluntary top ups to my CPF Special Account (SA) while I am young. Even though the SA interest rate is considered high (4.5%), cash flow is important to me as well. Many people also overlook the fact that our CPF Ordinary Account (OA) can be used for a variety of things, such as buying houses, paying for our children’s education and investment purposes. Hence, I would not consider using cash to top up my SA nor would I transfer fund from my OA to SA. Instead I would continue to let my CPF accounts grow by continuing to work as long as possible.

Gold bullion would serve as a risk diversifier in my portfolio. As a highly liquid asset, I like gold as it serves as good asset to hedge against market shocks and uncertainties. Most people view gold as a form of “investment”. I used to share the same mentality. However, over the years, my understanding of gold has changed and gold to me is a form of wealth preservation asset. My retirement strategy is to accumulate gold worth of about 20% of my portfolio value by the time I reach retirement age.

In my next article, I will share my retirement strategy on property and insurance. If you think this article is of interest to you, please continue to join me in my wealth building journey by subscribing to email notification of new blog posts.

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Magically yours,

SG Wealth Builder

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Updated: September 26, 2017 — 1:44 pm

5 Comments

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  1. ‘…ask earnestly whether you have a purpose to justify in retiring without a job. Chances are…’

    I’m retired. If I have a job, I’m not retired. I know many of my retired friends are enjoying life, too busy in activities from minding grandchildren, social work, charity work, travelling, attending seminars to learn new things like investments,health, art, socializing, hobbies, or enjoying doing nothing. We stop work( retire) because we want to,and most importantly, able to.

    I always believe that when an employer pays you one thousand dollars, he will extract ten thousand dollars worth of sweat from you. If your lunch break stretches beyond the mandatory time, your pursed lips must align his temperament.

    Even if one wishes to continue to work till death, one must still need to plan for retirement. The contingencies are myriad in life, from poor health, corporate restructuring, disruption, redundancy and change of mind. You must position yourself such that you work because you want to, not because you have to. You may like your job but you may not like your boss or stand his nonsense. Or some other reasons that make you drag going to work. There is nothing worse than being forced into retirement when one is not ready, financially or mentally.

    If one needs to do something, do not work for others, it is pathetic and only for the young. It’s a manifestation of poor or no plannng. After forty or more years of working, if one has not accumulated enough to retire, at least employ yourself, run a business or be a Private Tutor.

    In these volatile economies, traditional or conventional jobs are unlikely to remain for decades. In one working span, probably forty to fifty years, he is likely to have two to four jobs. A basic degree is not enough, one needs to learn, unlearn and relearn new skills all the time.

  2. I stepped down from mgt post more than 10 years ago and opted for a support role in the company which happens to be my first job. I also told HR the salary grade (several levels down) I should get in the new role. I have achieved financial independence and have good passive income through the following means :-
    – Live simply – I live in HDB flats (I had 2 bites of the cherry, both 1st hand) , no car, never took loan since my 1st HDB loan
    – No maid, and my wife was homemaker till my children were old enough
    – Took educational insurance policies for my 3 children (all had/having U edn)
    – Invest simply only in stocks – found others too complex for my simple mind
    – Live below my means (but never scrooge) and invest my saving/reinvest my passive income -the magic of compound interest is real.
    – Leave CPF intact even though I could draw out the excess when I reached 55. More than 10 yrs ago, My wife and I used our CPF Ord to top up our SA. It was a good investment to us.
    – Use cash and not touch Medisave (4% is a lot of interest)
    – Optimise the tax reliefs given by govt e.g CPF cash top ups, SRS
    – For my parent/ parents in laws, with their approval, my wife and I put the monthly allowances into their CPF as cash top ups for the tax relief. They in turn get the allowances from CPF monthly. My working children are also topping the CPF accounts of their grandparents.

    The excess time I have is spent in my hobbies and going on tours with my family. Working at slower pace with comfortable financial backup, knowing any time I want to stop, I can, is satisfying. But it is important to continue in the social circle. Whatever we do, we must feel useful whether at active work or at retirement state.

  3. Hi Senang Uncle,

    You have the ideal retirement lifestyle I been dreaming of! Well I guess you have reached financial freedom and don’t work for money anymore.
    I have obviously not reached your stage yet but your story is certainly inspiring. Thank you for sharing the tips!

    Regards,
    Gerald
    http://www.sgwealthbuilder.com

  4. Hi Fred,

    Seem like you are enjoying life at the moment. Good for you. I trust that you don’t have to worry about money in your retirement.
    But on the point of working for ourselves when we are old, I guess not many people have the option to choose.
    Sometimes circumstances dictate us to work for money in our twilight age. But yeah, agreed that it would be terrible to slog even when we are old.

    Regards,
    Gerald
    http://www.sgwealthbuilder.com

  5. I have just retired 2 months ago, partly for health reason and the other part, age – having worked for 4 decades.
    Waiting to see if I can cope with retirement in the months ahead…..

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