In 2019, I formulated a crazy, ambitious plan to (1) work my ass off and (2) sacrifice most comforts of life for the next 10 years, retiring by the time I hit 36 years of age. After which, I would finally give myself the privilege to enjoy a life free from corporate work.
To cut a long story short, my plan failed miserably.
Just a year into this crazy plan of mine, I decided I just couldn’t hack it. There were too many sacrifices that I was making, which weren’t worth the early retirement at age 36.
Related Reading:
My Original Plan to Retire by Age 36 (and Why it Failed)
As such, for various reasons that I will explain below, I’m delaying my retirement to age 40.
Note: All currency stated in this post is in Singapore dollars (S$).
Original Plan: Years to Retirement
New Plan: Years to Retirement
Years Delayed
Contents
Why I’m Delaying Retirement by 4 Years
My previous plan to retire by age 36 failed for a number of reasons, as retiring that early required me to:
- Sacrifice 10 of the best years of my life in a cubicle, with no time for passion projects;
- Put off having a family until after early retirement;
- Give up too many material and experiential luxuries; and
- Ignore my physical and mental health.
As such, to combat the issues above, I will be:
- Switching to part-time work for a few years (this frees up more time for me to work on a few passion projects that generate little to no income);
- Starting a family between the ages of 32 to 35;
- Increasing my budget to accommodate things that I love (such as travel and living in a condo with amenities); and
- Taking time for my health every single day.
In other words, instead of working intensely every single day for 10 years, I will be working less each day, but over a period of 14 years.
Both will get me to where I want to be, but only one makes me happy along the way.
Visiting Universal Studios Singapore on a Wednesday afternoon. The benefits of part-time work are clear. 🙂
My New Plan to Retire by Age 40
The Gist of My Retirement Plan
In my new plan to retire by age 40, I’ll be working full-time for at most 5-6 more years, while working part-time or taking mini retirements the rest of the time. Here’s what my working years from 2020 (now) to 2034 (early retirement) will look like for me.
| Year | Sources of Active Income |
|---|---|
| 2020 | Part-Time Work + Side Hustle |
| 2021 | Mini-Retirement (Minimal Income) |
| 2022 to 2026 | Full-Time Work + Freelancing |
| 2027 | Full-Time Work |
| 2028 to 2033 | Part-Time Work + Freelancing |
| 2034 | Passion Projects? (Early Retired!) |
And here’s what my yearly expenses will look like:
| Year | Yearly Expenses |
|---|---|
| 2020 | $9,000 (Living with Parents) |
| 2021 | $9,000 (Living with Parents) |
| 2022 to 2026 | $16,800 (Living Alone, No Children) |
| 2027 | $33,000 (Including Pregnancy Costs) |
| 2028 to 2033 | $26,000 (Raising Children) |
| 2034 | $35,000 (Early Retired!) |
With that, let’s go through these numbers in more detail.
How Much I Need to Retire
The amount I need to retire still hasn’t changed. That’s $1,000,000, and you can click here if you’re interested in how I came to this number.
Year 2020: Part-Time Work + Side Hustle
Income
I switched over to part-time work at my corporate job in early 2020. Instead of working 5 days a week, I work 3 days a week, and take home $1,750 each month. I’m expecting about 2 months of bonus this year, bringing my total take-home salary for the rest of the year to $17,500 (8 months of work + 2 months of bonus).
I’m still side hustling at the same rate as before, and expecting anything between $8,000 to $10,000 for the rest of the year.
The benefit of working part-time is that I pay very little income tax, and get to keep most of what I make. Income taxes for this year would amount to at most $300 to $400, which is fairly negligible.
Expenses
As for my expenses, I expect to spend at most $6,000 for the rest of the year, by being extremely frugal about my spending.
Savings
Savings for the rest of this year should amount to $19,500 ($17,500 + $8,000 – $6,000).
Enjoying a delicious fried chicken meal in an empty cafe at 11 a.m. on a Monday morning. Can life get any greater than this?
Net Worth
As of April 2020, my net worth in cash, stocks and bonds (excluding retirement accounts) stands at slightly north of $180,000.
Assuming a 4% return on investment after accounting for inflation for the rest of the year, here are what my net worth numbers will look like by the end of the year:
| Year | Starting Balance (S$) | Savings (S$) | ROI (S$) | Ending Balance (S$) |
|---|---|---|---|---|
| (1) 2020 | 180,000 | 19,500 | 7,200 | 206,700 |
Year 2021: Mini-Retirement
Income
Ideally, I’d like to stay on as a part-timer in my corporate job, because I love the 3-day work week.
However, the current trajectory of the company indicates that there’s a high possibility that 2020 will be my last. As such, for 2021, I expect at most $1,750 from my corporate job as I serve out my 1-month notice period.
As my students graduate in 2020, my tutoring side hustle will come to an end as well. At the moment, I’m reluctant to pick up more tutoring jobs, as it’s a dead-end side hustle that doesn’t pay a lot. This will drop my tutoring side hustle income to $0 for the year.
However, the plan for my mini-retirement is to, at all costs, not dip into my existing nest egg. To do so, I’d try my hand at freelancing or maybe other part-time jobs. I could also go back to tutoring if nothing pans out.
To cover my expenses, I need to make only $7,250 ($9,000 less $1,750) for the rest of the year. I think that’ll be manageable.
That’s a total income of $9,000 for the year.
Meanwhile, I plan to use this mini-retirement year to work on passion projects (such as this blog). I’m not sure where it would take me, but I definitely want to at least try my hand at it.
A mini-retirement means more time to go out and explore Singapore! That’s my girlfriend on the Sentosa Boardwalk. Entry into Sentosa via walking costs just $1, whereas taking the train costs $4.
Expenses
As for my expenses, I expect to spend at most $9,000 for the entire year, while being super frugal. This possible, since I live with my parents, and I don’t buy many things outside of necessities. Here’s what my monthly expenses look like:
| Category | Amount (S$) |
|---|---|
| Rent (Paid to Family) | $400 |
| Utilities | $35 |
| Necessities | $50 |
| Food (Groceries and Dining Out) | $100 - $150 |
| Transport | $60 - $90 |
| Medical | $50 - $100 |
| Travel | $0 |
| Miscellaneous | $30 - $50 |
| Total | $725 - $875 |
Savings
Savings for the year should amount to a big fat zero.
If we continue filling in the table of my financial journey, here’s what the end of 2021 will look like for me financially, assuming a 6% annual return on investment after inflation:
| Year | Starting Balance (S$) | Savings (S$) | ROI (S$) | Ending Balance (S$) |
|---|---|---|---|---|
| (2) 2021 | 206,700 | 0 | 12,402 | 219,102 |
Years 2022 to 2026: Full-Time Work
Income
In the event that I’m not likely to make any income at all from my passion projects, and if my freelancing is not sustainable/enjoyable, the possibility of which is higher than I’d like, then 2022’s the year I’m going to start working full-time again, hopefully in the Singapore government.
2022 is also the year that I’ll move out of my parents’ house. This will give me more freedom to get a higher paying job. If I go for a government job, with my degree and existing job experience, I can expect a gross income of around $68,000 (since the Singapore Government regularly pays out good bonuses). This will bring my corporate job take-home salary to $53,000, after retirement contributions of 20% of my gross income, and income taxes of $1,500.
Since government jobs are pretty cushy, I think that I would still have time to side hustle. Hopefully, my freelancing efforts from the year before are fruitful, and I can bring in at least $15,000 a year. After income taxes of $1,000, my take-home side hustle income will amount to $14,000. Or I could easily start tutoring again, if all else fails. This would bring my total annual take-home income to about $67,000.
During these 5 years of full-time work, I’ve decided to work as hard as I can (while balancing health and social relationships). This is to pad my nest egg as much as possible before starting a family.
I plan to stop working full-time by the end of 2027, where I’ll be 34 years of age.
Back to the workplace while trying to beat rush-hour traffic. Not my idea of an ideal life, but a necessary evil I suppose.
Expenses
Of course, expenses will increase once I move out of my parents place by 2022. I anticipate that I would spend $17,000 a year, and this will allow me to afford:
- Rent in a condo studio apartment with my girlfriend, with all the amenities I could need;
- Travelling and entertainment on a budget; and
- Inexpensive passion projects.
I don’t plan to increase my spending until I absolutely have to.
Here’s what a breakdown of my spending will look like:
| Category | Monthly Expenses (S$) |
|---|---|
| Rent and Fees | $750 |
| Household and Utilities | $105 |
| Groceries and Dining Out | $200 |
| Living Expenses | $37 |
| Transportation | $100 |
| Insurance | $40 |
| Healthcare | $90 |
| Discretionary (Travel, Entertainment, Gifts, etc.) | $80 |
| Monthly Total | $1,402 |
| Yearly Total | $16,824 ($1,402 x 12) |
Savings
Savings for each year would be $50,000 ($67,000 – $17,000).
Assuming a 6% annual return on investment after inflation, here’s what my financial journey will look like up to 2026:
| Year | Starting Balance (S$) | Savings (S$) | ROI (S$) | Ending Balance (S$) |
|---|---|---|---|---|
| (3) 2022 | 219,102 | 50,000 | 13,146 | 282,248 |
| (4) 2023 | 282,248 | 50,000 | 16,935 | 349,183 |
| (5) 2024 | 349,183 | 50,000 | 20,951 | 420,134 |
| (6) 2025 | 420,134 | 50,000 | 25,208 | 495,342 |
| (7) 2026 | 495,342 | 50,000 | 29,721 | 575,063 |
Year 2027: Start a Family
By end-2026, I’ll be 33 years old. With close to $600,000 in my nest egg, this might be a good time to start a family. I’ll probably work full-time all the way until my child is born (if I’m so fortunate), so that I’m able to enjoy paternity leave in my full-time job.
Income
Since I’m still be working full-time, my annual take-home salary from my full-time job would still be $53,000, after retirement contributions and taxes. (Although it’ll seem like working part-time, because paternity leave will be anywhere between 3 to 4 months.)
I don’t think I would have time to side hustle this year, so I won’t be including side hustle income.
Expenses
Apart from my regular spending of $17,000 a year, there will be costs related to pregnancy, which would be split equally between my girlfriend and I:
| Fertilisation | $5,000 per person |
| Pre-Natal Care | $3,000 per person |
| Childbirth | $6,000 per person |
| Miscellaneous | $2,000 per person |
| Total | $16,000 per person |
Total expenses for the year would amount to $33,000 ($17,000 + $16,000).
Savings
Savings for each year would be $20,000 ($53,000 – $33,000).
| Year | Starting Balance (S$) | Savings (S$) | ROI (S$) | Ending Balance (S$) |
|---|---|---|---|---|
| (8) 2027 | 575,063 | 20,000 | 34,504 | 629,567 |
Years 2028 to 2034: Back to Part-Time Work
Income
If we are fortunate enough to have a child, I’m hoping to be able to work part-time (3-day work week) in the government sector. This will reduce my full-time gross salary of $68,000 to a part-time gross salary of $41,000. After retirement contributions of $8,200 and taxes of $300, I’ll be left with a take-home salary of about $32,500 from my corporate job. This part-time arrangement will give me 4 days a week to spend with our child.
Hopefully by this time, some of my passion projects would start generating income. I think $12,000 a year (or $1,000 a month) is reasonable after 8 years of work, right? After taxes of $600, I’d be left with a side hustle take-home income of $11,400. If my passion projects don’t work out, that’s fine, and I’d just continue with freelancing, as long as I can work from home.
This brings my total annual take-home pay to about $44,000.
Expenses
Without a doubt, expenses will increase with an expansion of the family. This article has provided a neat breakdown of all the costs involved with raising a child in Singapore.
| Stage of Child Raising | Annual Cost |
| 0 to 2 Years Old | $15,771 |
| 3 to 6 Years Old | $6,823 |
| 7 to 12 Years Old | $11,424 |
| 13 to 16 Years Old | $12,567 |
| 17 to 19 Years Old | $8,292 |
| 19 to 23 Years Old | $17,486 |
With the costs of raising a child being shared equally between my girlfriend and I, my expenses will increase from anywhere between $4,000 to $9,000 a year. (Hopefully we don’t fall into the trap of showering our child with material possessions!)
This would bring my annual expenses up from $17,000 a year (as a single person) to $26,000 a year ($17,000 + $9,000).
Savings
This would give me savings of $18,000 a year ($44,000 – $26,000).
| Year | Starting Balance (S$) | Savings (S$) | ROI (S$) | Ending Balance (S$) |
|---|---|---|---|---|
| (9) 2028 | 629,567 | 18,000 | 37,774 | 685,341 |
| (10) 2029 | 685,341 | 18,000 | 41,120 | 744,461 |
| (11) 2030 | 744,461 | 18,000 | 44,668 | 807,129 |
| (12) 2031 | 807,129 | 18,000 | 48,428 | 873,557 |
| (13) 2032 | 873,557 | 18,000 | 52,413 | 943,970 |
| (14) 2033 | 943,970 | 18,000 | 56,638 | 1,018,608 |
This gives me a $1.02 million nest egg by the time I’m 40, only 4 years later than my bone-headed plan to retire at 36.
And by this time, I would have started a family, would have travelled to lots of cheap cost of living places, and would have been working on passion projects (that may even generate some kind of income)!
Conservative Assumptions in my Plan
I used the same conservative assumptions in this new plan to retire at 40, as I did my original plan to retire at 36:
- This plan takes into account a realistic 6% real rate of return on investments after inflation;
- This plan assumes that I’d receive only inflationary wage increases and that I’d never get promoted; and
- This plan assumes that none of my passion projects would ever bring me any income before the 8-year mark.
The Benefits of Delaying My Early Retirement
This new and improved plan to retire at 40 addresses all the concerns that made my original plan fail.
First, I now have more time on my hands to work on passion projects. This blog is the first of such passion projects, and I hope to have more time in the future to move on to things like music, linguistics and sports.
Second, and equally important, starting a family with my girlfriend would no longer be delayed until after early retirement. The earlier we try to start a family, the greater our chances of success would be.
Third, I’m not scrimping to save every single cent. I still have some allowance in my budget for things that are important to me.
Fourth, and certainly the most important, I would be giving myself less stress on the way to early retirement, and this helps to improve my mental health. In addition, because I’m able to switch to part-time work, I have time every single day to work on my physical health.
Fifth, this delayed plan to early retirement allows me to work less over the years, since I’m taking advantage of compound interest. In my original plan to retire at 36, I had to save an additional $522,000 (on top of what I have now) to reach early retirement at age 36. However, in my new plan to retire at 40, I have to save an additional amount of only $406,000 to reach early retirement at age 40.
Enjoying S$2 beer in a fancy bar in Cambodia. Delaying my retirement by 4 years will allow me to enjoy awesome experiences like this one.
The Fluidity of the Future
I’d like to end this post by saying that nothing is set in stone. I don’t know where my government sector career would take me, and I can’t predict for the life of me what my passion projects might hold for the future.
The following will speed up my journey to early retirement:
- Getting promoted;
- Having passion projects take off; and
- Enjoying wild gains in the stock market.
On the other hand, the following may slow down my journey to early retirement:
- Getting really sick;
- Getting fired;
- Buying a house in the near future;
- Having more children; and
- Caring for loved ones.
(So, this means more retirement updates in the future!)
But whatever it is, I’m going to try and hold my values close to my heart, and not sacrifice an excessive amount of happiness or health for money.
Even if I don’t retire till I’m 65, as long as I’m happy and healthy along the way, I’m all good with that.
What do you think of my new plan to delay retirement by 4 years? Which path do you recommend I take? Are there any other considerations that should have gone into my analysis?
As always, thank you for reading and supporting this blog.
Really detailed breakdown of your expenses. Nice to see another Singaporean on the FIRE journey. I just want to share you might have forgotten about income taxes on your expenses
Hi Calvin! Thanks so much for dropping by, and I appreciate your kind words. It’s awesome to get a comment from another Singaporean.
About income taxes – You’re right! It’s so silly of me to have forgotten. (I think I must have gotten too used to paying low income taxes since I don’t make a lot of money now!) Thanks for letting me know. I’ve made the changes to my take-home salary in the income segments above. Many thanks Calvin 🙂
It is nice to know more people in the FIRE community especially in your own country. I would like to hear your thoughts on some investing questions
1) STI ETF – I do hold some of this in my portfolio but only a small percentage like 8% and I am hesitant to add more as I don’t find the performance good compare to S&P 500 ETF. Would you continue to actively increase your holding in STI? My own projected investment returns is 5% and I don’t think this ETF can provide that.
2) How do you invest in the Vanguard S&P 500 ETF? Do you buy it through a brokerage and hold it or do you use a robo investment service?
Stay safe and all the best for your FIRE journey!
Hi Calvin!
1) STI ETF – Yes you’re right. The performance is poor compared to the S&P 500 or any other index in the U.S. I have a lot of holdings in STI only because it was what I started investing in years ago. I discovered the power of international exposure only recently (sometime in 2019). Definitely go for U.S. indexes if you’re looking for 5% returns. I think you’d definitely get more than that in the long run. Also, diversification isn’t great in the STI. Lately I’ve been investing only in the U.S. and in individual stocks. Haven’t bought STI for a while haha.
2) I opened a brokerage account with Standard Chartered Bank, and they allow exposure to the U.S. market. I’m thinking of opening an account with Interactive Brokers though, to ease up on the withholding tax. I recently came across this article at Millennial Revolution that I found super useful in decreasing withholding tax. What about you? How do you invest in the U.S.?
You too, Calvin! All the best for your FIRE journey as well. Keep me updated when you retire early 🙂
Hey Liz, I am currently using Autowealth with a 80% equities/20 bonds portfolio where I deposit monthly. I do have some SSB, STI ETFs which I have not added to them for quite sometime as I find the returns mediocre.
The downside of using a robo-investment service is the 0.5% expenses they deduct annually from your portfolio so I am wondering if it would be better if I just buy VTI from Irish domiciled ETFs so i only get hit by a 15% withholding tax rather than the 30% WHT for US based ETF hence I was curious on how you are doing the US portion of your investments.
This Covid pandemic have affected my FIRE progress but when I read about your cubicle article the “soul crushing” part really make me determined to see the journey through!
Hi Calvin! I agree with you on SSB and STI. I thought about taking out some SSB last time, but never got around to doing so because the returns weren’t great.
Thanks for letting me know about Autowealth! I find that the annual robo-advisor fee of 0.5% seems rather hefty though. Just thinking – Since I plan to accumulate $1,000,000, and draw down only $30,000 a year, the annual fees of $5,000 each year that would eat quite a bit into my retirement expenses. I’m not sure if I could afford that.
Definitely buy the Irish-domiciled ETF! 🙂 A difference in 15% withholding tax is a lot of money. I’m planning to do so too, and I’m still trying to read into the Double Taxation Agreement but I think I’ve still got some research to do (it seems rather confusing to me since I’m new to this). Any chance you might know anything on this?
Thanks for reading another article of mine! Means a lot 🙂 It’s interesting how determined we get to reach FIRE when we dislike our jobs haha. How far away are you from FIRE? I hope you’ll be back on track soon!
I am not too sure about the DTA but I know of some investors going for those ETFs to reduce the WHT on their dividends. https://blog.seedly.sg/how-to-invest-in-ireland-domiciled-sp500-etfs/ or IWDA which reinvest the dividends so you don’t get hit by the 30% WHT. I probably still need to calculate the brokerage fees, custodians fees to see when to shift the portfolio over.
My original FIRE number is 750K but as a “Kiasu” singaporean I decided to bump it up to 1 mil, more than halfway there now and hopefully to hit the magic number within 2-3 years if the markets recovers.
Thanks for the link Calvin! I especially like the reinvesting in dividends, it’s super helpful. Yup, I definitely need to calculate all the fees myself too! Do let me know when you decide to shift your portfolio over, if you do 🙂
HAHA same here! I could actually retire with less than $1 million, but my “kiasu-ness” has made me want to bump it up to $1 million too. Congratulations on already being more than halfway to FIRE! Do keep me updated on your progress. 2-3 years will go by quick and you’ll be financially free soon! 🙂