Will I be able to retire early, given my current financial situation?

Hi anon,

You'll need to know what your basic expenses are right now, and if you feel fairly confident that your passive income can meet those needs (including adjusting for inflation), then sure, you can start to semi-retire. I say that because from 40 to age 85 (the median life expectancy) is a very long time. Inflation could increase, a couple of bear markets could come along at just the wrong timing, and a whole list of other factors can throw the best projections off course. Better to build in an extra level of safety. The 4% withdrawal rule may not hold that much relevance now, I would usually use a 3% rule for safety.

A semi-retirement would mean that you would not be bound to your job, and can pursue other avenues or take on freelance jobs that will provide supplementary income, all while knowing that your basic expenses are taken care of. As you work on your side income, channel it into your income producing assets so that you have a margin of safety. Work on building both guaranteed and variable income sources; guaranteed to take care of the needs, and variable to take care of the wants. And of course, if you have spare funds, CPF SA can be topped up; when you reach 65, CPF life is the best annuity there is, make that your baseline, and every other income source just adds on top of that.

The biggest risk is really longevity; it is the multiplier of all risks.

If your passive income can provide for your basic necessities plus adjust for inflation until about age 90, sure you can possible retire.

But if I may, if you're retiring now, I'd suggest most of your portfolio be guaranteed and very minimal of it to be variable and volatile. This is due to sequence risk as if you're de-accumulating during a bear market, it'll throw off your future projected returns and income and you portfolio might not survive as long as it should.

Theoretically, to get a 2k/mth income that adjusts by 2% per annum for inflation for 50 years, you'll need about 520k growing at 4% return annually.