What may actually work to generate sustainable retirement income for Panda/Koala retirees in Singapore market?
The commonly recommended 3% to 4% rule based withdrawal by FAs and/or on the ground tested method based on War Chest as calibrator to generate sustainable retirement income across market and economics flowing into Cash Reservoir to minimize any down the road forced assets draw-down during market low.
Draw-down of assets during market low to support living expenses is a bad investing strategy!
5th year into retirement (2017 to 2021) - Actual outcome
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During boom years, the 3%-4% will be much more than budgeted expenses ... these excess should be channelled into cash reservoir.
ReplyDeleteThe main problem is if there is bad
& long bear market in the first 5 years of retirement ... this is when cash cushion prepared before starting retirement comes in.
Agreed. Before we retire, it is better to prepare for a sizeable war chest and a few years of cash reservoir.
DeleteThanks CW for sharing your retirement journey. Its helpful for people like me who are near retirement and are looking for role models.
ReplyDeleteSince my wife retired in Jan this year, it does get lonely waking up early to go to work each morning.😅
Think savvy retirees such as Mr Fire Station from the US also practiced setting aside cash reserves of three years expenses to ride out any crisis. Mr Fire Station retired in 2016 at age 49, and he has seen networth grow even in this 5 years.
For us, I am also planning to set aside about 3 years of cash reserves (~ $400K). Problem is there is no good place to park this cash reserves that can give decent interest in the meantime. So far the bulk of the money is parked into our DBS multiplier accounts where it earns anything from 1 to 3% pa. The rest are earning less than 0.5% pa.
Would love to move the money into our CPF but is capped by the allowable limits each year.