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Another thinking of 45 with a plan...
Old 09-02-2015, 06:58 PM   #1
Confused about dryer sheets
Join Date: Sep 2015
Location: Singapore
Posts: 4
Another thinking of 45 with a plan...

Hi all

I have been a lurker for a while but have decided to step up and post in the hope I can take advantage of the collective wisdom! I would appreciate any thoughts and insight you may have to offer. I am hoping to stress test my plan so constructive criticism is welcomed. I also want to turn my attention to what FI means above and beyond the numbers but I think that deserves its own post!

I work in a high pressure industry and earn good remuneration but unfortunately, due to a combination of stupidity and escalated lifestyle, I only started considering saving when I hit 35 (and kick myself constantly for this fact!). I set out below my numbers and plan and would appreciate any comments. I also have numerous spreadsheets which I would be happy to upload. The numbers below represent my ‘end of 2015’ numbers. I track all numbers on a monthly and annual basis.

I am not married, 39 years old and live by myself in Singapore.


NAV of approx. US$2,067,672 (some of my assets are in sterling so I have adopted a 1.55 FX rate – which is fairly conservative based on current rates). This is made up of the following:

- Investment Property - US$1,915,800 (with a remaining mortgage of US$60,830 at a 3.49% floating rate)
- Old work pension - US$47,795 (I no longer contribute to this)
- A monthly contribution investment scheme (a structured product with a bucket of funds a financial advisor told me to buy) - US$164,907 (this is worth less than I have paid into it!). I contribute approx. US$3,100 pcm.


My basic remuneration is US$500,000 per year plus discretionary bonus. This is subject to a 17% tax rate.
I may also get a profit share on some investment entities. My notional share is currently valued at approx. US$5m. This is completely discretionary and is not locked in at all but is promised. This would not be subject to tax.
I currently save approx. US$336,000 per year made up of my monthly contribution to the monthly contribution scheme of US$36,000 and US$300,000 goes to pay off my mortgages on the investment properties. My saving rate is approx. 81% of net salary.


My current monthly spending is approx. US$4,777. This includes Utilities of US$251 and Rent of US$2,864 (adopting an FX rate of 0.716 US$ to S$). The rest is for general living (groceries, socialising, cable TV, internet etc.). The majority of my travel is either paid for by work (or the loyalty points gathered through work travel) and work pays for medical insurance.

I don’t consider the above to deprive me of anything. Given my expenditure in my early life, I no longer yearn for shiny toys. I have what I need. Experiences and travel mean more to me.

Accumulation Plan

Pay off the remaining mortgages by Feb 2016.
Continue to contribute to the monthly contribution scheme at US$3,100 pcm.
Post Feb 2016, pay all free monthly cash (approx. US$25,000) into S&P 500 tracker fund with the lowest fees I can find. I would note that this does not include discretionary bonus which I consider to be a conservative assumption. I have never invested in the stock market so I am going to read and try and follow the ‘Bogle’ approach. This should help me understand asset allocation etc.

I am aiming for a NAV of approx. US$6m at 45 made up of:

Personal residences of US$1.5m (to be paid for from promised profit share – actual promised profit share is many multiples of this so I consider this to be reasonable and conservative estimate but it of course may not materialise).
Investment Property of US$2.2m (I assume 3% inflation growth rate on the investment properties which I consider conservative but is fairly irrelevant with respect to income generation).
Stocks of US$1.6m (portfolio built from monthly contributions). I assume a gross 5% return on stock (including inflation) – I think this is conservative but welcome comment. Given the time frame, my saving rate seems more important than generated return during accumulation.
Cash of US$300,000 (this will be made up of the accumulated rent that will start generating on the investment properties from Feb 2016 to 2020). This is free cushion / buffer / play money.
Monthly Contribution Scheme of US$400,000. I assume a gross 5% return (including inflation). This may be aggressive given it has not been achieved over the last 3 years so I may need to consider this. I do not take the monthly contribution scheme into my withdrawal considerations.
Old Work Pension of approx. US$50,000. I do not take this pension into my withdrawal considerations. Additional buffer.

Withdrawal Plan

An after tax withdrawal of US$100,000 per year in today’s money (I apply a 3% inflation rate). It should be noted that I am trying to take into consideration the possibility of having children etc. and additional travel so assume that my spending will be higher in FI. I will also have to pick up medical insurance (I have no medical issues and don’t smoke) etc. Also, I am thinking of living in southern Europe in the sun with a second holiday home somewhere I can ski.

My thinking is that the above should mean that my assets should keep me comfortable in perpetuity but I have no issue diminishing my assets over time. Further, I actually think I may be able to take more annual income based on a combination of rent and 3% SWR on Stock.

NAV is not so relevant for me as I adopt a passive income calculation. In this context, the investment properties generate approx. US$60,000 per year after tax in today’s money. I assume a 4% rent increase year on year. I don’t assume any ‘empty’ periods. However, these properties are central London, have historically achieved rent increases of above 4% per year and have never had an empty period over the last 4 years (appreciating historical performance is no guarantee of future performance). This leaves me with having to generate approx. US$40,000 (in today’s money) from stock (I exclude monthly contribution scheme and old work pension and consider that an extra buffer). I apply a 3% SWR. I should also note I have tested the proposed withdrawals with gross stock returns (including inflation) at 3%, 4%, 5%, 6% and 7%. This is designed to be indicative only given I have simply applied these rates on a straight line basis (which won’t happen in reality) and not adopted Monte Carlo etc.

Assumption Impact

Aggressive Assumptions:

3% inflation on draw in withdrawal phase (this may provide for a gradual reduction in real spending power taking inflation into consideration, if above 3%). This may not be an issue given I would imagine spending may tail off naturally.
4% rent income inflation with no empty periods (I consider this the most aggressive assumption but London has achieved this).
Discretionary Profit Share (included because of its discretionary nature).
3% inflation on costs / expenses during accumulation phase.

Conservative assumptions:

Ignores the fact I may want to work post FI. This is a distinct possibility but I want to ignore it for the above calculations.
No salary increases during accumulation phase.
5% gross return on stock (including inflation) so 1%-2% real return.
Contributions to stock portfolio made at end of annual calculation period (in reality, contributions will be made monthly).
Haven’t included the monthly contribution scheme in my calculation of the stock portfolio. My assumed withdrawal rate is below 3% on just the stock portfolio. Would be lower if I included the scheme.
I haven’t included any slowdown of expenditure over time but would expect this to occur.
Less than 3% SWR on the stock element.
No sale of assets contemplated. I could always sell the Investment Properties at a later stage if cash becomes an issue.
Does not include my old work pension in the calculations

Happy to answer any questions.

Thanks for reading.

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Another thinking of 45 with a plan...
Old 09-03-2015, 06:26 PM   #2
gone traveling
Join Date: Oct 2007
Posts: 1,135
Another thinking of 45 with a plan...

What is pcm?

You may be too aggressive in your assets being tied to one or two rental properties. That's the bulk of your current asset base and I would get more diversified before retirement - otherwise you have a very "compounded conservative" plan on many fronts.

You currently have 36x annual expenses. And you have no heirs so no need at this point to leave money behind. You can cover 36 years as it stands now just spending existing capital assuming 0 percent real return on your current assets. That gets you to 75 years old. Add in the growth in pension money and money put aside into stock now that actually DOES grow and I think you will be able to buy another 10-15 years. That gets you to 85 or 90 doing nothing further other than hold your spending runrate.

What if illness from stess prevents you from going to 45 at the same income level ? Can you switch to lower pay lower stress role ? Do u have disability insurance ?

Singapore real estate is stupid expensive right now. Is the property in UK or spore?

I would also consider what lower cost locations you might consider in retirement to reduce your expense runrate.

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Old 09-03-2015, 07:45 PM   #3
Confused about dryer sheets
Join Date: Sep 2015
Location: Singapore
Posts: 4
Many thanks papada111, that's very helpful. I guess Im still trying to understand the dynamics of it all and work out the best approach for me. I was looking at trying to ensure that the investment properties represent about 50% and I just tend to lean towards property because it feels like a slightly more real asset (a slightly woolly approach I know but I can see bricks and mortar). The properties themselves are based in London. Singapore is too crazy a property market to break into!

I suspect my costs will rise in FIRE (or there is a significant possibility of them doing so) given work currently picks up the tab on a number of items including medical, travel etc. Also, I do intend on getting married and having kids which I kinda need to pay for.

So many unknowns make it pretty scary....
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Old 09-03-2015, 07:59 PM   #4
Recycles dryer sheets
Join Date: Apr 2014
Posts: 112
UKExpat, you appear to have it relatively well together at a young age.

My question to you is non financial.

If you stop work at 45, what do you do with yourself for the 60 - 80 hours per week I expect that you currently spend working?

That is the dilemma I face.

I note that you are planning on having children (which is great). Just remember that they will tie you down and restrict your ability to travel at a whim in retirement. You will be able to travel - but you may be restricted to the 6-8 weeks "high season" of school holidays.

I think your expense estimate is too low if you have children unless you retire to a location such as the UK, Australia or Western Europe where the family will have access to free health care and education (and in my experience, even though it is available, if you have been used to the expat lifestyle you will probably opt for private schools and private health care).

I am looking at an after tax withdrawal rate of US$125,000 pa for my wife and I (after children basically off our hands) to maintain the lifestyle we are used to.

Good luck.
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Old 09-03-2015, 08:16 PM   #5
Confused about dryer sheets
Join Date: Sep 2015
Location: Singapore
Posts: 4
Thanks Aus_E-Expat

Use of time is a concern. work takes up 90% of my free time at the moment and I have spent most of my working life going 90kph with my hair on fire (no pun intended). The second part of my plan is to 'retire to something'. This goes beyond the financials and revolves around me taking a holistic look at what it is I really enjoy doing. I plan on maybe doing some charity work or perhaps doing some part time lecturing. I want to ensure I am not retiring from something but rather to something.

I agree with you that the expat lifestyle spoils you! I haven't ironed a shirt in over 10 years :-). I was looking at US$100k post tax but I take your point on board. I suspect when it comes down to crunch time i will definitely be a victim of one more year syndrome and look to add some additional buffer. At that stage, each additional year should add about US$12,000 per annum post tax to my withdrawals, if all goes well. My girlfriend also works and earns six figures and I have deliberately excluded her numbers from the calculation just for extra buffer.

Out of interest, whats your investment asset number to generate the US$120k?
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Old 09-04-2015, 08:34 AM   #6
Thinks s/he gets paid by the post
Join Date: Apr 2006
Location: North Bay
Posts: 1,005
Hi I'm another Asia expat. It seems to me that your numbers and plan are doable if you can keep up your current income and savings rates, but with a caveat. Being an expat in Singapore and single, but with the expectation of retiring married and living in the UK (or elsewhere), you don't have a very good handle on what your retirement lifestyle and expenses are going to be. It's great to create and follow your plan now, but you will need to revisit it and evaluate it very seriously as you get close to retirement and you can better estimate expenses. It really seems like you're well on your way, though.

One comment about your investment strategy. I wouldn't put all the stock portfolio in a single S&P500 fund. I'd diversify more, capturing a broader range of US stocks as well as international equities. Even if it is only a relatively small part of your portfolio, I think it is worth diversifying your equity holdings more than just the S&P.
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Old 09-05-2015, 02:23 AM   #7
Confused about dryer sheets
Join Date: Sep 2015
Location: Singapore
Posts: 4
Many thanks Scrinch. I think you have hit upon the biggest issue we have. We are living a fairly transitory lifestyle at the moment with many of life's unknowns still undecided (marriage, kids, location etc etc). My GF and I both want marriage and kids but you never know what life is going to serve up. I think at the moment we just keep trucking as we are and evolve the plan as we go along. One of the things that does provide some comfort is that Singapore is probably one of the most expensive places to live in the world so hoepfully general living costs (ex kids) will hopefully go down.

With respect to children (if we are lucky enough to have them), we are hoping to live in southern Europe so will take education (and the cost thereof) into consideration at that stage. If I have to work an extra year or two so be it. But I absolutely agree with you, once we know about kids and where we want to live (and tax in respect thereof) we can better plan for the future.

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