As from April 2013 my Journey in Investing is to create Retirement Income for Life till 80 years old for two over market cycles of Bull and Bear.

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This blog is authored by an old multi-bagger blue chips stock picker uncle from HDB heartland!

"The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth." - Dr. Alexander Elder

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Monday, 12 May 2014

Retirement Income For Life Planning Model



Found one nice diagram in BT article by Lorna Tan on "Planning for a sustainable retirement"


The combined illustration of these two diagrams may made it easier to understand the preferred model.





































































































Read? Retirement Income for Life??? (15) - How much is enough for retirement?


7 comments:

  1. Uncle Chua says "young man, Singapore have 4 national taps of water, so we need to have different water (money) taps for ourselves too!"

    Read? Invest Early - to achieve your own 4 Water Taps

    Uncle8888 used 3 taps solution for his retirement income for life.


    LOL!


    ReplyDelete
  2. Hi Uncle8888

    Happen to come across your blog. Interestingly, I realize my blog link in your post! Thanks for reading.

    By the way, care to share what is your 3 taps solutions?

    Rolf

    ReplyDelete
    Replies
    1. Tap 1: CPF OA drawn-down

      Tap 2: CPF MA, SA, RA

      Tap 3: Cash flow from Investment Portfolio through dividends and asset drawn-down

      Delete
  3. May i share my taps too.
    Tap 1: OA only a few thousand (made mistake to withdraw @ 55 and closed CPFIS)
    Tap 2: MA, CPF LIFE (Mistake of withdrawing SA @ 55)
    Tap 3: Same but try not to asset drawn-down if possible.
    Tap 4: a little rental income
    Tap 5: Wife's OA, MA, SA, RA have not been touched since she reach 55 (CPFIS still operational ready).
    CW, i know you are Single Income with 2 or 3 kids, my respect to you.

    ReplyDelete
  4. At a glance, i am planning or actually trying to do this already but not exactly.

    { Withdrawal Rate Rule 4 - Take Retirement Income Withdrawals In This Order
    Also Called The Three Bucket Allocation

    Withdrawal Rate Rule #4: You must take retirement income withdrawals in a particular, prescribed order.
    When you take withdrawals, your retirement income must come from each category in a particular order. For the new investor, these rules can be complex. To simplify the idea, picture three buckets. (See Ray Lucia's book The Buckets Of Money Retirement Solution for a detailed version of the bucket strategy.)

    Retirement Income Bucket #1
    Bucket number one is filled with cash; enough to cover one year’s worth of living expenses.

    Retirement Income Bucket #2
    Inside bucket number two you stack your fixed income investments (sometimes called a bond ladder). Each layer represents one year’s living expenses. Every year, one year’s worth of spending money “matures”, and moves from the “fixed income” basket to the “cash” basket. This assures you always have enough cash on hand to cover your upcoming expenses.

    Retirement Income Bucket #3
    The third bucket is filled to the rim with equities. You may only take money from the equity bucket when it overflows. An overflow year is any year when equities have above average returns; roughly an annual return in excess of 12- 15%. At the end of an overflow year, you sell excess equities, and use the proceeds to refill the fixed income and cash buckets.
    There will be many years where the equity bucket does not overflow. It will take discipline to realize it is okay to let the fixed income and cash buckets get to a low level during these years. Eventually, an overflow year will come along and all buckets will be refilled.
    Following this rule will prevent you from becoming a victim of your own emotions, and selling investments at an unfavorable time.}

    NB:-

    For Buckets #2, how to get better interest yield than CPFIS where we park our money.


    For bucket #3 to succeed, Buckets #1&2 must be successful.

    What say you?
    Practical to apply or not practical?
    i know everyone's financial circumstances may be different.
    Therefore some modification or variation to this "The Three Bucket Allocation" may apply.
    What do you think?

    ReplyDelete
  5. Malaysia Boleh likes to threaten to turn off the Tap so Singapore now has New Water.

    Same here.

    Mr Market also likes to threaten to turn off Tap 3 so I have Tap 1 and Tap 2 but they are normally turn off.

    If Tap 3 is shut off; then Tap 1 can supply up to 67% of the water capacity for living.

    Moral of Story:

    We shall not be threaten!

    LOL


    ReplyDelete

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