How do I calculate my retirement needs for early retirement?

Hi anon,

Retirement is a matter of balancing inflow and outflow. What is early is subjective, some people wish to retire by 55 (that's considered early to them), some try to retire by 50 or even 45. I can give you some general pointers:

1. Segregate your expenses into needs and wants. You'll want to make sure that any income source covering the needs are (mostly) guaranteed, and those that cover wants can be variable income sources. Inflate them accordingly and then make projections for your income sources so that you can know at which age, a certain income source pays. For example, dividend stocks can start paying you within a few months, whereas an annuity may only pay in 20 years time, and CPF life only starts at 65. Track and categorize your expenses and you will be able to find your numbers.

2. There is a wealth of information out there, so you are not looking in the wrong places, but perhaps you have not found the information you are looking for. Healthcare (medical premiums) inflates differently from general spending, most numbers I've seen are in the range of 3-5% p.a, whereas essentials inflate around 2.5%. However, due to long term uncertainty, when you project the numbers for more than 40 years, they start to look uncomfortably large and with a big range of uncertainty. Do not be discouraged. Just make sure to review the figures every few years and adjust.

3. Try to also consider the option of semi-retirement, which means that you'll have enough to get by, and perhaps can just opt for a part-time profession for a little extra cash. I know of some people in their 50s who get a decent sum from some retirement plans and dividend stocks they have put money in to tide them over, and they spend maybe 2-3 days a week working part-time, but have 4-5 days off to do what they wish, all while waiting for CPF life at 65.

Sorry to hear that your previous advisor did not take your early retirement needs seriously. It is one of the more common topics that have been brought up by my clients, so I will just share the insights condensed from my conversations with them. However, this community is here to give you inputs and help, so I hope you can take away something from here.

I use a financial calculator app. There are embedded retirement planning tools to find out how long will my money last, how much to withdraw, etc.

On the Google play store, this is the link. https://play.google.com/store/apps/details?id=c...