Tag: how to retire

Singapore: Your Ideal Retirement Haven Unveiled! Here’s Why
Harvey 0 Comments Planning your Retirement Retire Wealthy & Wise Retiree Tips and Tricks
Why is Singapore one of the top choices for
retirement? Huh? Really? Isn't Singapore one of the most expensive cities in the world? Hello!
Sky high property prices and ridiculous car prices with COE shooting through the roof! So
why would Singapore be considered one of the top choices for retirement? As we Singaporeans
always say Sure boh? Well before I set some context to today's video, a short introduction.
I'm John,
one half of the Corporate Breakout Couple. In 2020, my wife Fran and I retired young in Singapore and
we love making retirement videos. Okay, let me set some context. First, I'm addressing Singaporeans and
Permanent Residents and because this group of people will have no issues staying in Singapore
for the long term. For foreigners without PR, I'd like to share with you some reasons in today's
videos why you want to make Singapore your Top Choice as a retirement destination.
And that
means of course getting a leg into Singapore first working here, getting your employment pass
and then getting your PR and then eventually getting your Singapore citizenship. Allow
me to share with you the beauties about my beloved Singapore. For one, we have world-class
infrastructures and amenities. For example the transport system. The public transport system is
amazing from the buses to the MRTs, they're so well connected and very nicely air conditioned and very
clean as well. Number two: Safety and Security. That is something that we should never ever take for
granted, even though Singapore has a low crime rate. Remember low crime doesn't mean no crime.
Number three: Singapore is a cosmopolitan city and diverse in culture. As a foreigner, you will
feel right at home here. Number four: Singapore is a clean and green city, one of the cleanest in
the world. Look what's going on behind me. People are cleaning up the beach voluntarily. Number
five: Racial harmony.
Singapore has many races and multiple religions and Singapore has
done a great job to keep everyone living harmoniously. I would like to talk about the cost
of living in Singapore. In today's times, the perception of Singapore Incorporated, that's how
we call it, is that it's a very expensive city to live in. That may be true from outside looking
in but for Singaporean and PR who's working and living here, it's important to have context with
respect to your earning capacity, your salary, with respect to your quality of life which is your
basic needs and your wants, and importantly with respect to your purchasing power in Sing dollars.
If you actually dive in into the numbers, you'll find that there's certain cost categories that's
pretty affordable such as your public transport and your Hawker food. If you are Singaporean or PR
earning $5,000 SGD every month and the cost of a unlimited bus and MRT ride card cost $128 SGD,
that's only 2.5% of your total salary. What about Hawker food? You can find meals going
for three to four SGD and that's a very small percentage of the salary.
What about cooking
at home? Cooking at home can be really economical as well and you can find everything in Fair
price and Cold Storage, whatever you need. As much as Singaporeans don't want to admit it, the cost of
basic needs is actually not as high, with respect to the average household income. So is it really
as expensive as what we are complaining about? Let me tell you something. What I really believe
is it's the lifestyle inflation that's causing all this talk and I'm talking about hipster cafes..
can you live without traveling every quarter, half yearly or every yearly? Can you live without your
restaurants, your Japanese, your Italian food? That is the lifestyle inflation that's causing all
this talk.
What about housing? It's true housing can be pretty expensive in Singapore, even
for public housing like HDBs. HDB prices are no longer starting at $100,000 to $200,000 SGD
but going for $400,000/ $500,000 SGD. However as a Singaporean, I know that much of your property
loan can be serviced by CPF, which you cannot take out anyway and the government gives a lot of
subsidies for first timers and not forgetting, most importantly the prices of property in
Singapore generally goes up so you're holding an item of value.
Therefore, your top three expenses
your transport your groceries and food and your housing which is mostly serviced by your CPF, they
are actually pretty low percentage of your total income. In today's video, I actually like to cover
some technical aspects about Singapore, namely the financial stability and strength and the
geographical location and I'm doing comparisons because I've been traveling around together with
my wife, going around the different places and looking at different retirement destinations
and I will still name Singapore as one of the top choices.
Singapore is a Global Financial Hub,
growing from strength to strength. Our pro business environment, our regulatory system which is very
effective, our infrastructure that supports all that and attraction of top talents substantiates
that. For that reason, we have attracted lots of high net worth individuals into Singapore.
For example Ray Dalio, founder of Bridgewater Associates, one of the largest hedge funds and
we have Google co-founder Sergey Brin, they set up Family Offices here during and after
the pandemic. And we also have high net worth individuals who have converted to Singaporeans
like Eduardo from Facebook, you have Li Xiting, you have Forrest Li, who are from China.
We have lots and lots more bringing more money into Singapore. It's no wonder when the Singapore
Government released their Securities and Bonds, the demand is so strong from your MAS bills, your T
Bills, your Singapore Savings Bond and lots more. And they are all solid AAA ratings. All that is
pointing to Singapore being a safe haven for your money. One of the important aspects of this video
that I would like to cover is the Sing dollar currency strength and the purchasing power.
This is
one of the important things for you to recognize as a retiree in Singapore, holding Sing dollars. You
know that your dollar will work really hard for you because of the strength of purchasing power
that you can buy whether it's for imported goods or traveling around, so this really supports your
retirement lifestyle and your means. I'd like to share with you some charts on the foreign exchange
between Sing dollars and other currencies like your US dollar, Japanese Yen, Aussie Dollars, your
Pounds and how it has performed, to share with you why our Sing dollars has increased in purchasing power
over the years. Let's look at Sing dollars versus Malaysian Ringgit which I'm pretty sure Singaporeans
and Malaysians are familiar with. This is the last 20 years chart starting from 2003 which the number
the Sing Dollars to Ringgit, it was at 2.20.
Today, it has hit a high of 3.50, one of the highest. So you
can imagine the appreciation that that Sing Dollars have strengthened against Ringgit just by 20
years. For those of you who are old enough, you'll know that Sing to Ringgit was actually at par which
is one to one in 1980. Here's the Sing Dollars against Aussie dollars, one of the major currencies
for the last 20 years. The earlier 10 years from 2003 to 2013, you can see that for Aussie Dollars
it's stronger than Sing Dollars around 0.8 on average with the exception of Lehman Brothers, the
Great Financial crisis period in 2008/ 2009 after which you can see that from 2013 onwards, there is
a steady increase. Steady increase of Sing Dollars appreciation against Aussie Dollars to around 1.1, almost 1.15 today. How about the performance of Sing Dollars against the other major currencies?
So for the last 20 years, this is the chart for Singapore Dollars against British Pounds.
In 2004/
2003, it was around 0.31, 0.32 and has gone up to over 0.6 today, almost double. And what about Sing
Dollars to Euros? That was around in 2005, around 0.5 now it's around 0.7 against Euros. What about
another major currency Yen. In Japanese Yen, in 2003 was around $1 SGD to 62 Yen. Now is around $1 SGD to 108 Yen, 109 Yen. So the appreciation for the last 20 years has been very drastic and major for the strengthening of
Sing Dollars. What about Sing Dollars against the Greenback, which is the US Dollars? So in 2003/2004,
it was around 0.6 and hitting a high of 0.8, 0.82 around 2011, and then normalizing to around 0.7
to hovering around the range of 0.73, 0.75 for now. So why has Sing Dollars not appreciated against
the Greenback as much? Well that's because USD is currently still the world's Reserve Currency.
Based on data from IMF as of Q2 2023, they are at 58.88% market share and what that means is
countries of the world are holding their foreign exchange reserves in USD. That's why the US Dollar
continues to be the dominant currency with Euros at a distance second at almost 20% and China RMB
is 2.45%, still miles away from USD.
And what that means is when the US Federal Reserve prints money,
the rest of the world follows along because USD sets the precedence. How does the dynamics of all
this currency impact you as an individual, in terms of inflation and the eroding of your currency?
Now let's look at this chart. This is the Federal Reserve debt from the Central Bank of USA and how
much debt they're holding till date. Starting from 1971 when the gold standard was taken off when
President Nixon decided that, you know, US Dollars are going to be backed by the Government, that's
when fiat currency was born and you can see debt has started to increase steadily, linear actually,
until around 2007/2008 and what happened was the Global Financial crisis, the housing crisis where
Ben Bernanke, the Federal Reserve chairman decided to go heavy into quantitative easing, printing of
money heavily, you can see from a debt of around 9, 10 trillion, this is trillion not millions, trillion
all the way for the last 10-15 years till around 32 trillion as of today. And what that means is
inflation has severely increased because of the debt incurred and that eroded your purchasing
power all around the world.
You know, Fran and I talk a lot about inflation and quantitative easing,
about money printing and all the different money dynamics in the world because we feel there's a
need to raise awareness in this world, in terms of financial literacy and that's one of the key
reasons why we started our Breakout Academy. Talking about finances, talking about breaking free,
breaking out the rat race and talking about early retirement because we really like to help people
to find their feet in this world so that they can then make powerful choices for themselves. Do
check out our Breakout Academy. I will advise you to not look at Singapore as a single retirement
destination. The world is our oyster. Traveling is the way how we can gain experience and really open
up our eyes.
What am I talking about? For example Singapore is an international hub, a regional hub
for businesses. For example your Finance industry. Do the same for your retirement as well. Use
Singapore as your hub so that you can go around the region especially Southeast Asia like Malaysia,
Indonesia, Thailand where you can stay for 6 months, one year, I mean depending on the visa requirements,
but use Singapore as a hub so that you can really explore all the different destinations in your
retirement life.
That brings me to my next point: Diversification. When you travel frequently and
you're exposed to different countries, different cultures and let's say their stock exchanges, their
housing market and all that, you will feel more inclined to want to invest in the different places.
Why? Because when you diverse across countries, you diverse across currencies and different assets
that actually hedges your risk and reduce your Risk of Ruin. So Singapore is actually in a perfect
sweet spot position to dance with the rest of the International Community and the Government
has done a fantastic job to do that, so that we stay very up to date, very up to tuned and our Sing
Dollars holds its currency strength and continue to strengthen actually, for us to improve and
increase our purchasing power to stay strong and relevant.
And as a retire in Singapore, your savings
and Investments are protected here in Singapore and you really get to stretch your dollars and
as the Singapore government is doing a great job to grow Singapore economically, strength to strength,
you will continue to enjoy a stronger purchasing power. Many people feel very stressed living in
Singapore because of the fast-paced environment. However, you think about it, that is true for
any metropolitan city that's very competitive. However if you are retiree or early retirees like
Fran and I who have Time Freedom, you have plenty of opportunities to explore different aspects of
Singapore in a very slow pace, comfortable, taking public transport everywhere with no rush
and there's no crowd like East Coast Park today, at the beach, there's hardly anybody and we
get to really go to different shopping malls, enjoy our time to explore Singapore.
What
about cost? Actually in Singapore, you have lots of choices. For example coffee. It can be as
cheap as $1+ Dollar in a local kopitiam or Hawker Center or you can go to Yakun and Toast
Box with slightly more expensive about $2 Sing Dollar or if you really want to splurge for
specialty coffee, it can go as high as SGD6-7, it's really your choice.
The point I'm driving at is, don't limit yourself. Create your llfe by your own design. Think out of the box. Singapore can be your home base for retirement but you also can have multiple regional bases for you to enjoy other countries as well. And perhaps for those of you with kids, you can retire early as
well. Think about this.
When you're in your 50s, your kids would have grown up. You can also enjoy
your life to the fullest and think out the box and you don't have to restrict yourself to only
one locality. Given a choice, would you consider Singapore as your top retirement destination?
I'll like to hear from you below in the comments section. Do comment the reasons why you would or
would not! We hope you have enjoyed a different point of view about Singapore today. Do hit
the Like button and Subscribe to our YouTube channel to join our YouTube family. See you in
the next video. If you interested in breaking out of the corporate 9-5 rat
race or embark on your early retirement journey, do check out our Breakout Academy,
where we'll support you further on your goals.

Can I Retire at 55? Tips for Early Retirement
Harvey 0 Comments Planning your Retirement Retire Wealthy & Wise Retiree Tips and Tricks
If you're thinking of retiring at 55, you want to be careful about where you get your advice and guidance, and that's because most retirement advice is geared toward those who retire quite a bit later, in fact… Most people retire at 62, but things will be different for you if you're going to retire at 55. So that's what we'll talk about for the next couple of minutes here, we'll go over where you can get the money from, and how that works with taxes as well as healthcare, then we'll look at some actual numbers and what it might look like for somebody who retires at age 55.
We might also want to get philosophical just briefly and ask the question, Why age 55? Yes, it's a nice round number. And there are some interesting tax strategies that are available around that age, but let's say you could retire a little bit earlier at 54, would you want to make that happen? Or if you worked a few more years… I know you'll think this is crazy, but if you worked a couple of more years and you could not impact your finances, but still take some of those dream vacations and spend time with loved ones, would that be worth it to maybe work until 59, for example? So we want to figure out exactly why you are pursuing a particular goal and then we can improve the chances of success for you, so let's start with health coverage, this is a tricky one because you're retiring quite a bit earlier than most people who might be near that Medicare age, so you have a number of different options to continue being covered, and it is a good idea to have real health insurance coverage just in case something happens.
So a couple of your choices include, number one, you can continue your current benefits from a job if you have them for up to 18 months in most cases, and that's under COBRA or your state's continuation program, that can get quite expensive because you're going to pay the full price, if you weren't already doing that, plus perhaps a teeny little bit extra for administration, but it is a way to continue with the program that you currently have, so that can be helpful if you are mid stream in certain treatments or if it's going to be hard to get certain benefits that you currently have on a different health care program, unfortunately, that's not usually a long term solution because we need to get you until age 65, which is when most people enroll in Medicare, and you should see your costs go down quite a bit at that point, maybe depending on what happens, so another solution that a lot of people look at is buying their own coverage, and that happens typically through a healthcare marketplace or an exchange, and that's where you just by coverage through an insurance company.
So you can go directly to the insurers, but it's often a good idea to go through… Start at healthcare.gov, and then go through the marketplace or the exchange, and that way you can shop some plans and potentially, depending on your income, you can potentially get some cost reductions that make it a lot more affordable, I'll talk more about that in a second, but another option is to switch to a spouse's plan, if you happen to be married and that person has coverage that's going to continue for whatever reason, that might also be a solution for you, when you leave your job, it could be a qualifying event that allows you to get on that person's program, but let's talk more about saving money on health care expenses before age 65, most people are going to buy a policy based on the factors that are most important to them, so that could be the premium or the out of pocket maximum, the deductible, the co pays, certain areas of coverage, all that kind of thing, you can select a plan that fits your needs.
Now, you might find that those tend to be quite expensive, and so if your income is below certain levels, you might be able to get effectively a reduction in the premium, it might be in the form of a tax credit or a subsidy, so here's just a preview of how things could look for you, let's say your income is, let's say 50,000 in retirement, and you need to look at exactly what income means, but there is no coverage available from a spouse, we've got one adult, and let's say you are… As our video suggest age 55 here, so you might get a benefit of roughly 422 a month, meaning you could spend that much less each month, and that's going to make it a lot easier to pay for coverage on these plans, if we switch your income down to 25,000 per year, the help is even bigger, so as you can see by varying or controlling your income, and this is something you might have some control over if you retire at 55, you can also control your healthcare costs, we'll talk about some conflicting goals here, where you might not want to absolutely minimize your income during these years, but this is important for you to know if you're going to be paying for your own coverage, and if you're experiencing sticker shock when you see the prices…
By the way, I'm going to have a link to this and a bunch of other resources in the description below, so you can play with this same calculator yourself. Now, once you're on Medicare, the cost should drop quite a bit, this is a calculator from Fidelity where we can say, let's say you are a female, and we're going to say you're eligible for Medicare at this point, so we'll bring you up to age 65.
It is going to be quite a bit higher cost, if you look at it before age 65, and that's because you are paying for those private policies from insurance companies, let's say you're going to live until age 93, and so you might expect to spend roughly 5800 6000 bucks per year, depending on your health and your location and other factors, it could be more or less, but this is an estimate of what somebody might spend, a single woman each year in retirement, of course, that number is going to increase each year with inflation and deteriorating health issues. But this is a ballpark estimate of what you might be spending in the future, now we get to the question of, do you have the financial resources to retire at 55? And that comes down to the income and the assets that you're going to draw from to provide the resources you need to buy the things you want and need, and one way to look at this is to say We want to avoid early withdrawal penalties because again, you are retiring at an age that's earlier than the typical retiree and most retirement accounts are designed for you to take withdrawals at 59.5 or later, to avoid those penalties, fortunately, you have a couple of options, so with individual and joint accounts, just taxable brokerage accounts, you can typically withdraw from those without any penalties, but you may have capital gains taxes when you sell something, those taxes may be at a lower rate than you would pay if you take big withdrawals from retirement accounts, but you just want to double and triple check that, but that can be a liquid source of funds.
You. Can also typically withdraw from Roth accounts pretty easily. So those regular contributions come out first, in other words, you can pull out your regular contributions at any time with no taxes and no penalties, what that means is that's the annual limit contributions you might have been making her by year, so the 7000 per year, for example. That money would be easily accessible, but if you have other money types like Roth conversions, for example, you're going to be very careful and check with your CPA and find out what all of that could look like.
There. Are other ways to get at funds that are inside of pre tax retirement accounts, and it might actually make sense to draw on those to some extent, we'll talk more about that in a minute, but these are some of the tricks you can use to avoid an early withdrawal penalty yet still draw on those assets before age 59.5. The first one is the so called rule of 55, so this applies if you work at a job with, let's say a 401K, and you stop working at that employer at age 55 or later, if you meet certain criteria, then you can withdraw those funds from the 401k so they go directly from the 401k to you. They don't go over to an IRA, you could withdraw those funds without an early withdrawal penalty. A complication here is that not every employer allows you to do that, so 401k plans can set a bunch of their own rules, and one of them might be that they don't let you just call them up and take money whenever you want, they might make you…
Withdraw the entire amount, so if that's the case, this isn't going to work, so be sure to triple check with your employer and the plan vendors and find out exactly how this would work logistically or if it will even work. Next, we have SEPP that stands for substantially equal periodic payments or rule 72. This is an opportunity to draw funds from, let's say your IRA or a certain IRA that you choose, but before age 59 and a half without getting early withdrawal penalties. Now, this is not my favorite choice. I don't necessarily recommend this very often at all, and the reason is because it's easy to slip up and end up paying tax penalties. The reason for that is in part that it's really rigid, so when you establish this, You calculate an amount that you have to take out every year, and it has to be the same amount every year, and you have to make sure you do that for the longer of when you turn age 59 1/2 or for five years.
And even that sounds kind of simple, but it's still easy to trip up, and you also have to avoid making any kind of changes to your accounts, so it's just really rigid and can be difficult to stick to you, so… Not my favorite choice, but it could be an option. Those of you who work for governmental bodies, maybe a city organization or something like that, you might have a 457b plan, and those plans do not have early withdrawal penalties before 59 and a half, so you could withdraw money from that and use some income, pre pay some taxes, and have some money to spend fairly easily, this by the way, is an argument for leaving money in your employer's 457 versus rolling it over to an IRA, because once it goes over to an IRA, you are subject to those 59 1/2 rules and a potential early withdrawal penalty. So that could end up leaving you with 72 to work with, for example, which again is not ideal.
So you might be asking, well shouldn't I just minimize taxes and hold off on paying taxes for as long as possible? And the answer is not necessarily. So it could make sense to go ahead and pre pay some taxes by getting strategic, the reason for that is that you will eventually have to pay taxes on your pre tax money and it might happen in a big lump, and that can bump you up into the highest tax brackets, so it could be better to smooth out the rate at which you draw from those accounts and hopefully keep yourself in lower tax bracket, at least relatively speaking. So when your RMDs or your required minimum distributions kick in after age 72 under current law, that could possibly bump you up into the highest tax brackets, maybe you want to smooth things out and take some income early. So let's look at the question of, Do you have enough with some specific numbers, and before we glance at those numbers, just want to mention that I am Justin Pritchard.
I help people plan for retirement and invest for the future. I've got some good resources, I think, in the description below, some of the things that we've been talking about here today, as well as some general retirement planning information. So if this is on your mind, I think a lot of that is going to be really helpful for you. Please take a look at that and let me know what you think of what you find.
It's also a good time for a friendly reminder, This is just a short video, I can't possibly cover everything. So please triple and quadruple check with some professionals like a CPA or a financial advisor before you make any decisions, so let's get back into these questions, Do you have enough? As we always need to mention, it depends on where you are and how much you spend and how things work for you. Are you lucky to retire into a good market, or are you unlucky and retiring into a bad market? All of these different aspects are going to affect your success, but let's jump over to my financial planning tool and take a look at an example. This is just a hypothetical example, it's the world's most over simplified example, so please keep that in mind, with a real person, we've got a lot more going on.
The world is a complicated place and things get messier, but we're keeping it very simple here, just to talk about an example of how things might look, so this person has one million in pre tax assets and 350,000 in a brokerage account, and if we just quickly glance at their dashboard here, pretty high probability of success, so let's make it a little bit more interesting and say… Maybe that IRA has, let's say, 700,000 in it. What is that going to do? And by the way, this is still a lot more than a lot of people have, but again, if you're going to be retiring at 55, you typically have quite low expenses and/or a lot of assets.
So let's keep in mind here that retirees don't necessarily spend at a flat inflation adjusted level, and I'll get into the assumptions here in a second, but let's just look at if this person spends at inflation minus 1% using the retirement spending "smile," that dramatically improves their chances, and I've got videos on why you might consider that as a potential reality, so you can look into that later at your leisure, but as far as the assumptions, we assume they spend about 50,000 a year, retire at age 55. The returns are 5.5% per year, and inflation is 3% per year.
Wouldn't that be refreshing if we got 3%… So we glance at their income here age 55, nothing, and then Social Security kicks in at 70. They're doing a Social Security bridge strategy. I've got videos on that as well, or at least one video, the full year kicks in here later, and then their Social Security adjust for inflation, looking at their taxes, we have zero taxes in these earlier years because they are just not pulling from those pre tax accounts. Maybe not getting much, if anything, in terms of capital gains, maybe their deduction is wiping that out, so we may have an opportunity here to actually do something and again, pre pay some taxes and pull some taxable income forward.
In fact, if we glance at their federal income tax bracket, you can see that it's fairly low from 55 on, maybe they want to pull some of this income forward so that later in life, they are drawing everything out of the pre tax accounts all at once. It just depends on what's important to you and what you want to try to do, and that brings us to some tips for doing calculations, whether you are doing this with somebody, a financial planner or on your own, you want to look at that gap between when you stop working and when your income benefits begin from, let's say, Social Security, there's also that gap between when you stop working and when Medicare starts, and that's another important thing to look at, but what are your strategies available there? Should you take some income, and exactly how much? That's going to be an area where you might have some control, so it's worth doing some good planning.
We also want to look closely at the inflation and investment returns, and what are the assumptions in any software that you're using, for example? These are really important inputs and they can dramatically change what happens… You saw what happened when we switched from a flat inflation adjusted increase each year to the retirement spending smile, just a subtle little adjustment has a big difference on how things unfold, and in that scenario, by the way, we would typically have healthcare increasing at a faster rate. But like I said, we use an over simplified example and didn't necessarily include that in this case, but you do want to click through or ask questions on what exactly are the assumptions and are you on board with those assumptions? You may also need to make some adjustments, and this is just the reality of retiring at an early age when you may have 30 plus years of retirement left, a lot can happen, and there really is a lot of benefit to making slight adjustments, especially during market crashes, for example, so.
If things are not necessarily going great, some little tweaks could potentially improve the chances of success substantially, that might mean something as simple as skipping an inflation adjustment for a year or two, or maybe dialing back some vacation spending. These are things you don't want to do, that's for sure, but with those little adjustments, you can potentially keep things on track, and that way you don't have to go back to work or make bigger sacrifices. And so I hope you found that helpful. If you did, please leave a quick thumbs up, thank you and take care..
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