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Hi Janjansen
Based on all the information you have provided, I do think you have a good chance of success financially, and stop depending on work for salary income to sustain your lifestyle.
The challenge, imho, is:-
1) continually grow your capital ahead of inflation, and avoiding catastrophic mistakes
2) keeping your annual withdrawal rate to 4% and below ideally (you are already quite comfortable if you are spending $2k a month now)
3) keeping yourself interested in life
4) maintain a decent social life
People tend to focus on (1) and (2) and think that (3) and (4) will take care of itself. But it could be more difficult that one thinks.
One other thing to be mindful of is that once one is out of employment for a few years, it could be difficult for him or her to get back to work and earning the last drawn income. Therefore, your decision to "retire" will be more or less permanent after a few years. This could be unsettling if you find out in a few years your finances did not go according to your plan (in a bad way).
Good luck.
p/s: 1) do remember to include future healthcare spending in your estimated expenditure.
2) if you change your mind and decide to get married few years into retirement, your estimated expenditure is unlikely to be enough. How certain are you that you will never get married?
Based on all the information you have provided, I do think you have a good chance of success financially, and stop depending on work for salary income to sustain your lifestyle.
The challenge, imho, is:-
1) continually grow your capital ahead of inflation, and avoiding catastrophic mistakes
2) keeping your annual withdrawal rate to 4% and below ideally (you are already quite comfortable if you are spending $2k a month now)
3) keeping yourself interested in life
4) maintain a decent social life
People tend to focus on (1) and (2) and think that (3) and (4) will take care of itself. But it could be more difficult that one thinks.
One other thing to be mindful of is that once one is out of employment for a few years, it could be difficult for him or her to get back to work and earning the last drawn income. Therefore, your decision to "retire" will be more or less permanent after a few years. This could be unsettling if you find out in a few years your finances did not go according to your plan (in a bad way).
Good luck.
p/s: 1) do remember to include future healthcare spending in your estimated expenditure.
2) if you change your mind and decide to get married few years into retirement, your estimated expenditure is unlikely to be enough. How certain are you that you will never get married?
(22-06-2012, 06:33 PM)Janjansen Wrote: This is my first post but I have been lurking in this forum for a while. I have been contemplating early retirement for a while now, to get away from the greedy corporate world, and to pursue my own interests. It will be considered unconventional due to my age. Indeed, my friends think I am crazy to exit while in my prime years.
That said, I work solely to achieve financial freedom, and once that is achieved, I do not see the point going through the daily grind until 65 when I will be too old to do the activities I enjoy. About myself:
1. I am thrifty
2. I never go on holidays overseas
3. I plan to remain single
4. I stay with my parents and do not plan to buy property
5. I own a fully paid Toyota
6. I have no debt
7. My monthly expenses is about 2k, including parent allowance
8. I amassed 1 million in cash as of today
I have a modest portfolio consisting of purely government owned or government related dividend blue chips in the stock exchange, telecommunication, defense property, postage and media. The allocation has remained relatively constant over the past 3 years, and is yielding approximately 8% annually. I understand that the principle value of the portfolio will fluctuate, but these companies have historically continued paying dividends even during past crisis.
Now, if increase the size of the portfolio to 1 million with the same allocation, at today’s prices, it will yield about 6%. That translates to a yearly dividend of 60k or 5k per month. Baring unforeseen circumstances, I should be saving 3k per month to act as a buffer for inflation, and setting aside the excess for emergencies.
The problem is my close friends and parents have frowned upon my retirement plan. They keep saying that if it was so easy to retire, no one would be working after 40! In their minds, they cannot contemplate a life without work until at least 60. They also mention that it would be embarrassing for one to be unemployed at 35.
Now, all of these appear to be emotional to me. I do not care for corporate titles and the politics of the workplace. But in terms of finances, I believe that 60k of tax free dividends is enough to sustain a single individual, and support his two aging parents (who also happen to have their own savings). However, being human, I can and will make mistakes, and I am trying to gather opinions or scenarios where my retirement plan is unsound and leave me financially strapped. This is the most balanced forum I know of, and many of you are financially savvy and I have come to respect the opinions here. If you think that there is something I am missing here, I would appreciate hearing from you. Any comments or views are also welcomed. I want to consider every possible scenario before taking the plunge.
Thank you