Can i ER with what I have?

[aussieguy]

Hi Everyone,

I have been thinking about early retirement for some time.
Basically I am a aussie guy working in singapore, 46 years old and single with no debt. With regards to my finances I have
100k sitting in a aussie retirement scheme for when i turn 60+ which I will mostly forget about for now.

And I have roughly 1.2 million in funds and cash (converted to AUD for the sake of the discussion)
800k cash earning around 5%
400k in various managed funds. ( earnings depend on which month.....)

I work in singapore doing IT and I have basically just about had enough of it and want to get out and relax a bit.. I don't own any house etc so no assets to speak of..
(oh i also had a bit of a medical scare a few years back which is making me want to enjoy life just in case anything happens in the future)

So the way I see it I have a few options:
a) convert all to cash and dump it in various term deposits which in Australia earns 5+% and then live on the interest. Would give me about 60k before tax a year. So if I can survive on 25k and reinvest the rest then that is the first option. Which from reading a few other blogs and sites i could do in a few countries in the world. e.g. asia or central/south america...

b) Consider buying a house in aus for around 250k and investing the rest in either just term deposits or a mixture of funds and term deposits, and then surviving on that. That way i could live in the house or rent that out and live elsewhere. (I could choose to go back to aus... but a second hand reliable car and just take it easy) And at least then i always have a house to live in and get a part time job etc in the future......

I have also been thinking of a few other things on the side i could do to keep busy and maybe bring in some extra cash. But who knows they may not work in the end. So I figure best to play it safe and just work within what i have now.

Of course I could always try and work for a few more years and save a bit more... but that might drive me crazy ;-)

Strangely enough one of my biggest worries is what my family and friends will think of me if i go down this path....

I know there is no correct answer that is 100% certain to allow me to survive for the rest of my life... i almost wish it was as simple as (if total wealth is zzz choose option a, if total wealth is yyy choose option b, but it is never simple)

But firstly of course I need to determine if it is achievable with what i have and what the best way to go about it.

What do you all think? I appreciate any feedback and suggestions you can give me.

Have a great day everyone.

Cheers,
Matt

 

[e86s54]

Matt,

I'll let others discuss the finer points with regards to money. But the amount you need and what else you could make doing odd jobs depends on you. But I say you can.

First, I think you need a leave of absence. I too retired from the technology sector at 47. Before dumping my job, I took 2 summers off in the prior years. That will give you some time to relax and figure things out. I don't think you'll change your mind, but feel more comfortable about your decision. BTW, I thought it would take a while to forget about the 27 years in Telecom...it took 2 weeks!

As many would say in this forum...money is NOT the main determining factor, although we all dwell on it. If you quit today, you could always go back to work in IT or something else. So not much risk there. But as you may already realize, we only have so many days on this planet and we ain't getting any younger. Your life is now.

We regards to your friends...if they are real friends they'll understand and be happy for you. Some will be jealous and others who love their jobs won't understand. But this is your life and peer pressure should not come into play. Having said this...you friends will change as your interests will.

Finally, you'll need to spend more time planning out what your going to do with all your time. Sure you'll relax for the first few months, but ER is not about just that. If you've been a highly engaged type, you need to funnel that energy to something else or you'll be back to work in no time. There are many books out there on the subject, but that too depends on you. I still work part-time with my own business, learned to play a musical instrument, travel, and relax perhaps a little too much...but that last one was a developed skill that took a little time as I initially felt guilty about it.

Good luck to you!

 

[Huston55]

Aussieguy-

Some thoughts about the financial aspects for you to consider.

- Retiring at your age, you should plan for about 40 yrs of income.
- $1.2M, at 3-3.5% SWR (a typically safe SWR range for 40 yrs) will generate $40-$46k/yr
- You don't seem to have a solid basis for your projected $25k/yr expenses; you should estimate/test that to be sure; it's very important
- Ensure you have health care covered before retiring, and within your expense ceiling

 

[Bestwifeever]

You probably can but maybe not. Have you run your numbers through several of the online retirement calculators (including FIREcalc on this site)? You might have to manipulate some things to accommodate the Aussie way, but they should still give you a picture.

And tracking your expenses now for several months, combined with budgeting for your future lifestyle, are both essential steps.

Work is sometimes more palatable when you realize you are financially independent (sometimes less palatable! ).

 

[Sparkie67]

Hi Matt,
I'm in a similar boat - 45 yrs old, about $1M, and pretty much 95% cash/5% gold. I gave up work about a year ago, and am doing ok.

$1.2M @ 5% government guaranteed is $60k pa. Tax and medicare on that is $11947 (FY12/13), or 1%, leaving 4% (48k pa) to cover expenses. Official inflation last year was 1.2% (RBA numbers - take em or leave em!), and projected to be about 2% this year. So your 'spending money', if you want to keep your capital intact relative to inflation is about 2% or $24k per year.

Your withdrawal rate is about 3% - spending / tax. Once the interest rates drop a bit, some diversification would obviously be prudent. Theres no allowance for medical insurance - not really needed in Australia.

Just my 2 cents. Frugal living is your friend!

 

[obgyn65]

I agee with all these points except the first one. The OP should plan until he turns 95, e.g. 49 years from now. The last few years can make a big difference.

Aussieguy-

Some thoughts about the financial aspects for you to consider.

- Retiring at your age, you should plan for about 40 yrs of income.
- $1.2M, at 3-3.5% SWR (a typically safe SWR range for 40 yrs) will generate $40-$46k/yr
- You don't seem to have a solid basis for your projected $25k/yr expenses; you should estimate/test that to be sure; it's very important
- Ensure you have health care covered before retiring, and within your expense ceiling

 

[aussieguy]

Thanks allot for your responses everyone.

Sparkie67 it was good hearing from you, as i love reading the stories on this site about people on this site.

I think one of the best points was made by "Bestwifeever", about work possibly being more palatable once you know you can be financially independent.
That is something I need to consider a bit more over the next few months because once I am more confident in my mind that I dont need my current job then I think then i wont care so much and get stressed/upset buy certain parts of it.

Either way I am not planning on doing anything till about March next year so gives me a bit more time to think etc. So I will be doing allot more research and reading in the mean time.

Hope you all are having a great weekend etc..

Cheers,
Matt