We always talk about retirement in Singapore and the projected expenses that we need to reach financial freedom. I set out on my journey with a target of having a passive income of S$3000 per month by the time I am 40 to cope with the rising cost of living in Singapore and possible inflation of my standard of living.
Now that I am 28 officially, my goals still stand with similar projections.
All I need is S$616,930.67 with a 6.5% annual yield to reach my goal.
Sounds easy? Of course not. That 600-odd thousand amount is the amount of money I have to have in my investment instruments ALONE. All the money I have in my CPF or emergency funds, or even war chest to be specific enough should not count in that amount.
Based on those numbers, I also have to pump in S$30,000 of fresh funds per year. That is not a small amount at all, and barely leaving me any other money for additional savings or other purposes.
But recently, I was introduced to another solution to reach retirement much faster. How fast you say?
On the same projections, it’ll quicken my retirement plans by 5 years. Which means that I can retire by 35.
The question that I want to ask myself is, what if I could retire overseas?
Well, it may not be the ideal solution for everyone, but it’s worth the consideration. And I’m pretty sure that there are many Singaporeans already doing this.
Now, when we discuss retirement, we start by thinking of standard of living firstly, and then how this S.O.L is being inflated over time. And then we decide how much money do we really need over life expectancy. Simple math, really, once you get down to it and your finances.
A close colleague (and friend) of mine is from the Phillipines and I got the chance to work very closely with him over the past year.
Naturally, me being Miss Niao, asked him what were his plans for retirement.
Since he is a Permanent Resident in Singapore, he has the CPF as a component for his retirement plans.
He also has a HDB which he is financing using his CPF funds and some cash.
Does he have plans to go back to Phillipines to retire? Yes, of course.
But how much does he need? I got a rough breakdown of expenses from him and some numbers from the Internet to justify the S.O.L in Phillipines.
Let’s compare this to my own S.O.L here in Singapore and the S.O.L of a city area in Manila.
I’ll try to be as accurate as I can, with the discretion of Google.
As you can clearly see, there is a reduction of 46% based on total expenses. Plop those numbers back into the investment table:
As you can see, with an initial capital of $45,000 and yearly fresh funds of $30,000, at a 6.5% yield, one can survive off her passive income at the age of 35 in the Philippines, with more than enough to spare.
The capital that you need to fork out from your pocket(s) is almost half at only S$325,615.49.
And one who chooses to retire in Singapore can only do so 5 years later.
In addition, I do believe that it is not difficult to get a retirement visa in the Philippines as long as you have money – as how it usually works everywhere else in the world.
So, what’s stopping me?
Now of course, these are just very rough figures and we barely have taken additional precaution to increasing expenses due to inflation and GDP.
But what’s really stopping me is that I have commitments in Singapore that I can’t throw aside by packing my bags one day and decide that I want to semi-retire/retire in Philippines.
And a lot of other unforeseen possible scenarios on how my life might pan out in the next few years.
For example, I could have Singaporean kids who I would prefer to educate in Singapore being Singaporean myself.
I also have to rent an apartment in the Philippines. Foreigners are not allowed to own any asset unless a Filipino has ownership of at least 60% of the asset.
It would also be an entirely new culture that I have to adapt to, although the adjustment is very subjective and I might end up liking one over the other.
Nevertheless, as long as the possibility is open, I might consider it as long as the circumstances allow me to.
The ability to retire at Age 35 is both tempting and enticing.
What about you?
I know of a few colleagues who have plans to return back to their home country to retire, Malaysia being top of the list since it is only across the borders of Singapore.
But rarely of Singaporeans wanting to leave our sunny island, despite a bunch of us having the talent of complaining about almost everything about it.
Do you know of anyone that plans to live outside or Singapore, or is already doing it?
Or maybe you are one of them, contemplating on this option.
Share your views in the comments below. I would love to hear them.
In the meantime, I wish all readers a Merry Xmas and a Happy New Year in advance!
Miss Niao xoxo