My experience of early retirement

Early retirement was a popular topic during friends’ gatherings this Chinese New Year.

Many of my friends are in their mid-50s to 60s. Although they are older than me, I was the first one to stop working full-time at age 45. Hence when they mentioned three highs and work stress, or whether they should retire now and what things to do after retirement, I was grateful that I don’t have those problems and doubts.

Early retirement and financial independence

I don’t agree with Investopedia’s definition of FIRE (financial independence retire early). FIRE is not about accumulating wealth 25 times of annual expenses. Nor is it being able to withdraw 4 percent of savings (adjusted for inflation every year after first year) without running out of money for 30 years.

For one thing, after retirement there is a big difference between with or without outstanding mortgages and loans. Also, annual expenditure tends to decrease with age, until one has a serious illness that incurs high medical costs.

On the other hand, good investments provide positive passive incomes. Value of good assets appreciates over time. The amount of savings is not the main factor determining whether one has achieved FIRE. Instead, one should check how far the amount of passive income and increase in asset value can cover future expenses.

In other words, FIRE is not how much one has saved, but the total amount of regular and stable income streams flowing in every year.

Personally, I don’t see any decline in my net worth after early retirement. Contrarily, it is a blessing to see it growing at a healthy pace. Indeed, I now have more time to read financial news, research on investment opportunities, reflect and make better money decisions.

At my age I don’t have to gamble in cryptocurrency or tech stocks. I am happy with old-fashioned fixed income products. A “buy” decision is rare unless there is a big correction on markets with good fundamentals. And thanks to the decision to stock up on bullion after cashing out from my investment properties. It is an unplanned outcome that my new simple life is unaffected by hikes in interest rates, income tax and wealth taxes.

Navigating different stages of life

Our 20s is a phase of self-discovery and exploration to build personal qualities and social circle. The 30s is a busy decade spent on building career and a new family. Then we reach our 40s with better understanding of ourselves and past mistakes to play our roles better. In the blink of an eye, we hit our 50s. We finally realize our limitations and what truly makes us happy or miserable.

“五十而知天命” is a good insight from Confucious for people reaching the age of 50. By this time, we should be clear about our own purpose, destiny and limitations in life. We care less about how others judge us. There is no urge to prove oneself or seek external validation. By following the laws of heaven, we are finally at peace with ourselves.

This mid-life realization changes the goal. With more than half of one’s life gone, the priority shifts from personal achievements to meaningful experiences. Many begin picking up old passions and dreams that have been put aside for decades.

Retirement from full-time work is not lying flat and doing nothing. Rather, it is pouring out the stagnant water in the glass, making it empty before adding fresh water.

In a lifetime, it is difficult to have time, money and health at the same time. When we are young, we don’t have money. Yet we have plenty of time ahead and in the pink of health. When we are middle aged, there is no time when we are busy making money while still in good health. Once we are old, we have money and too much time. But we don’t have health anymore.

Why opt for early retirement

I am greedy and I want to have all three at the same time. Once I don’t have to worry about money, I want to have much free time and good health too.

The first half of life I spent a lot of time working and building wealth. For the second half, it’s time to slow down, stop and smell the roses. Early retirement means one is not being held responsible for a position, a company or a business. Personal well-being becomes the new priority.

On most days, I can exercise twice daily. Pick fresh ingredients to prepare healthy meals. Have good chats with loved ones any time. Travel during low peak seasons. Study what interests me. Spend all the free time reading and doing arts.

In short, I only choose to do things I enjoy, deal with people I like, and say what I want to say. That freedom of choice can eliminate over 95 percent of stress in everyday life. I am much healthier than a decade ago both physically and mentally. For people I know, I may not be the wealthiest. But I am certainly the healthiest.

As American Gerontologist Dr Kerry Burnigh stressed, longevity includes life span, health span and joy span. The latter implies how long a person experiences well‑ being and satisfaction in longevity.

“Sometimes it’s great to be aware of the fact that really if you don’t want to work, you don’t have to work. And it’s very good to have that feeling to say that if tomorrow I want to stop doing what I’m doing I can afford to do it. That’s the freedom that money buys. That freedom is worth something.”

– Christian Jagodzinski, German entrepreneur and investor

Go travel before it’s too late

Retirement may be still early for some. In Singapore, many white collars are hesitant even to take 6 to 12-month sabbatical leave to recharge or pursue personal interest. Whether it is voluntary break or involuntary retrenchment, we are afraid to show any gap year in the resume.

In contrast, long service leave is common in western countries. Take Australia for an example. Civil servants are entitled to 3 months of paid leave after 7 to 10 years of service according to different states. A friend’s bother has taught in an Australian university for 30 years. He is having a 12-month long service leave this year for a round-the-world trip with his wife.

In Singapore, after the age of 55 more invitations come from different group of friends to go for overseas holidays. Many are newly retired. The children are more or less independent. This is the precious time before aging parents become new dependents.

No one can be young forever. Gradually, our body cannot stand a nonstop 19-hour flight, or visit a national park that takes 5 hours from entrance to exit. According to Singapore’s data on health span, an average Singaporean lives the last ten years in bad health. It is important to ensure that there is enough time to clear our travel bucket list before the body frails.

Life is short. We never know how much time we have left. If not now, when? A good advice after 50 is the most spoken Hong Kong Cantonese foul language – “delay no more”. Because that “later” may never come. It’s time we stopped being productive and started enjoying life.

Don’t borrow, especially for properties

I strongly believe that if we don’t overspend, overcommit or listen to marketers or scammers to “invest” to beat inflation, everybody should have enough money for retirement. “A new passive income” is the most dangerous sales pitch. As Charlie Munger said, “All I want to know is where I’m going to die so I don’t go there.”

During my one-to-one property consultations, I am often puzzled to see 50-year-olds still planning to borrow to upgrade their home or buy new properties.

White collars have no bargaining power with their employer. In the new AI era, their job is dispensable. Companies often retrench older staff with higher pay to achieve maximum results of cost cutting.

What if they lose their job or have a health condition before they pay off the mortgage? Can they cope in the next recession if property prices dived 25 percent like the last financial crisis? They can’t work another 20 to 30 years to recoup their losses and rebuild wealth again.

After 50, we don’t need brilliance. We want to avoid disasters. By now most of our big moves in life are already behind us. Our ability to take wild risk is gone. Unless one enjoys betting his own retirement fund, which is as wise as putting it all on the casino’s gambling table.

“Many professionals and senior executives have decades of experience and knowledge in their field. When they hit 50, they are doing very well in building professional reputation and personal wealth. With a lot of self-confidence, they believe that they can do well too in investment. And they forget that no baby can learn how to walk without falling many times.”

– “No new investment for retirees”, PropertySoul.com

Early retirement in foreign countries

People around are planning to retire either in Singapore or overseas. Many complain about the high cost of living and fast-paced environment in Singapore. Some want to maximize the value of their retirement savings. Others plan to live a quiet and relaxing life elsewhere.

I am neutral about this. It is fine to grow old in a place with familiarity and sense of belonging. However, going overseas can open one’s horizons to learn how others live their golden years.

When deciding whether to buy or rent in Singapore or overseas, a key question is whether we or our spouse want to spend retirement years in another country. And how long we plan to stay in the same place.

Also, not all countries are tax-friendly like Singapore. Whether leasing or leaving the Singapore home vacant, governments from foreign countries can still tax this “asset”.

Another frustrating thing is: Foreign governments can change retirement visa requirements, immigration policies and foreigner taxations any time they please. It depends on economic performance, government approval rating and election timing. Foreigners may have paid the requested investment sum. But hey don’t have the right to vote and their interests are not protected.

In recent years, I have been exploring suitable cities to stay. Instead of identifying one ideal country, I prefer to shortlist a few favorite places to spend time there every now and then. It is not necessary to relocate. Just keep in mind the maximum length of stay in every country.

Last but not the least, keep all the citizenship and permanent residency. It will come in handy one day.

Read my earlier posts

– “Seeing China from Guangzhou”
– “Elderly care in Taiwan”
– “So you plan to retire cheap?”
– “Overseas retirement – what you don’t know”

If you need advice on property matters or residential properties in Singapore, you can check out my one-to-one consultation service.

Check out my new online courses How To Buy Good Quality Properties and Buy The Right Condos.

My book Behind The Scenes of The Property Market is available for preview and order online.

If you miss “The Future of Singapore Homes” education seminar, you can watch the recording here.