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How much do you need to retire?

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  1. #1
    tck
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    How much do you need to retire?

    By retire I don't necessarily mean do nothing, just stop rat-racing where money is the main focus.

    What age would you want to do it? With how much in the bank (in today's dollars)? and how much in monthly spend are you envisioning in this retirement?

    I guess it might be important to know if you plan to do so in HK or maybe a more affordable city.

    I was trying to play with some numbers and if I wanted to retire with about HKD 100k (not heavily thought out. I definitely don't consume this much right now, just a round number pulled out of a hat) in passive income monthly at 4%. I would need income producing assets of HKD 30m. I'd like to do it soon to be able to pursue other projects without fear of security.

    How do you guys feel about your retirement goals?


  2. #2

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    Quote Originally Posted by tck
    How do you guys feel about your retirement goals?
    Is this just you or you with a family ? Do you already own your place in HK or where is it you want to retire ? How can this board answer this without this basic information ?...
    shri likes this.

  3. #3

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    You need a bit more than you intend to spend for the rest of your life plus anything you want to leave to your family. Hope that answers your question.


  4. #4

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    Quote Originally Posted by hullexile
    You need a bit more than you intend to spend for the rest of your life plus anything you want to leave to your family. Hope that answers your question.
    The big question! How long are you going to live. I have this conumdrum at the moment. We (my wife and I) have a reasonable basic pension which we will draw on in the next few years but also have a good amount of cash (plus own a house in the UK)

    The question is with the cash - keep it earning a little income some where and draw down on it each year or invest it in a pension??? All depends on how long we are likely to live for!

  5. #5

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    Assuming 4% return on 30m sounds like a job in itself and not retiring. You'll have to constantly watch it to make sure all is ok.

    If you own your property then the amount of money needed would be less without having to pay rent. Are you planning to lead an extremely active lifestyle?

    orel100x likes this.

  6. #6

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    Everybody's numbers are different. Some of us spend more than others, some have expensive hobbies (like travel) and some have family to support.

    First Calculation: I started by keeping a budget added up everything I spent every month and I kept doing that for a few years. I then adjusted for changes to expenses I expected to make once I retired - more travelling, fewer lunches in Central, having to pay for my own medical and dental etc. I then arbitrarily added 20% to the resulting number - I was working on the theory that I would rather add a few years to my working career now while I am in "peak earnings mode" that have to scramble for a job or cut back on lifestyle when I'm in my sixties or seventies. I also wanted a margin of safety which would both cover emergencies and allow me to reinvest some surplus income to offset inflation. This tells me how much income I need.

    Second calculation: make an assumption on how long my money would have to last. I FIRE'd at 47 and DW is a bit younger than me, so I assumed it might have to last 50 years which, from a financial perspective, might as well be forever. Practically, speaking this means that I have to live off the income/profits generated from my investments rather than progressively drawing down on my savings which would be an option for a shorter expected retirement period.

    Third calculation: decide on an asset allocation (stocks, bonds, cash, real estate, bullion etc) that suits your risk tolerance - over the very long time horizon I was hoping for, I was more concerned about the effects of inflation than year to year market fluctuations, so I went with mostly real estate and equities with enough cash to ride out any disruption. There are de minimus allocations to a few other things as well. I also kept some mortgage debt - interest rates were below yields on equities so there is a carry + it provides something of a hedge agains inflation.

    Fourth calculation: take the expected return on your asset allocation and divide it into your budgeted annual expenses - the result is how much you need invested to retire (not including your home and any other non-icome producing assets).

    This will result in a larger number than a lot of retirement calculators or financial advisers will come up with but it also results in a portfolio robust enough to handle a reasonable degree of adversity.

    pin, shri, jrkob and 3 others like this.

  7. #7

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    Quote Originally Posted by MandM!
    Assuming 4% return on 30m sounds like a job in itself and not retiring. You'll have to constantly watch it to make sure all is ok.

    If you own your property then the amount of money needed would be less without having to pay rent. Are you planning to lead an extremely active lifestyle?
    Agree. 4% is doable but it is a higher yield than the HK Tracker fund (HK:2800) so involves picking a portfolio of assets (individual shares and bonds) which means not only more risk but more work.

  8. #8
    tck
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    Haha. Yeah. Sorry for the lack of details, I was really trying to get a perspective of everyone else's goals.

    Even I find it difficult to actually project my monthly spending down the line. I'm unmarried and without kids, currently own my residence, albeit a one bedroom bachelor pad, so that significantly reduces monthly costs for now.Personal consumption is pretty low, though I do splurge with regards to services like personal training, physiotherapy, etc.

    Really not sure how spending would blow up after marriage and with potential children. Would probably have to move to a more suitable apartment for one. All this feels unimaginably far out though hence the relatively arbitrary 100k number. My actual consumption is just a small fraction of that.

    I guess maybe I was trying to peer at others on the other side of marriage, possibly with kids, and to see what kind of number they feel like they need to feel secure.


  9. #9

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    Really not sure how spending would blow up after marriage and with potential children.
    Depending on the state of your income and lifestyle choices as a couple, kids are the biggest destructor of wealth.

    Lifestyle choices include everything from birth to Uni and beyond expenses for the kids.
    jrkob and MandM! like this.

  10. #10

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    Quote Originally Posted by shri
    Depending on the state of your income and lifestyle choices as a couple, kids are the biggest destructor of wealth.
    After government of course ....

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