How much is enough?

In another word, bro dream is asking me a complex question with no simple answer. How much is enough? This amount will depend on what are my values, goals, and desires.

I define financial independence end goal as when staying employed becomes an option or effectively out of the rat race; and I do not need to depend on an active employment income. My nett worth drawdown and passive income will be able to support my living expenses for the next 25 years after 55 i.e. assuming not living beyond 80 years old. Both my parents did not survive beyond 70 years old so I don't think I will last beyond 80, probably, my spouse would.

(1) What is my expected monthly living expenses for next 25 years?

I have been tracking my monthly living expenses since Jan 2001 so I know what is the maximum, minimum, and average monthly expenses. Then, I use this formula Expected Monthly Expenses = (Maximum + 4xAverage + Minimum)/6 to estimate.

(2) How much is enough?

Enough = 25 x Expected Monthly Expenses x 12

(3) Where to find this amount?

I will exclude CPF Special, Medisave, home; and absolutely zero debts. I will live at this home till death. BTW, home is five walk from MRT, shopping mall, and park. 15 mins bus ride to Punggol marina. I don't think I will want to shift elsewhere.

(4) Is this really enough?

Next, to do some sanity check and baring unforeseen life events, and if it happens, then life will be much tougher and will have to face it when it come; otherwise, there will be never, never, be enough. No matter how much?

I assume that I need not support the two elder ones when they start working and the monthly expenses will be reduced by 40%, and when the last one start working, the monthly expense further reduced by 20%.

With the assumption, then I overestimate the living expenses forecast for next 25 years to include 3 kids university expenses, medical expenses, major household applicances replacement, house repairs, and some misc.

The sanity check does show this amount is enough barring any unforeseen life events happening

(4) Where is the contingency fund?

I plan to allocate 50% of this amount for drawdown for monthly expenses and it will be able to last for 10-12 years. The other 50% for investment income which will help to offset inflation. From history, the market cycle between the two peaks is less than 10 years. I will be able to recover any capital losses. CPF Special account will be the additional buffer.

(5) Lastly, pray to God for blessing and good health.