Magic number to retire; even no scare 3% inflation. How?

How to fight 3% inflation when you retire?

Some say $1,000 per month is enough to retire; another say $3,500; yet another say $5,000.  And that is assuming no inflation effect that capsizes our plan.

Assume if you can retire with $5,000 per month singly.

How to do it?

Using my default Vindeep Xirr calculator, this policy gives xirr: 3.57%.

~~~~~~~

Yr0: Age 47 (2012): Bought $100k policy. (Before my birthday at age 48 in 2012)

Yr3: At Age 50 (2015): $5k payout cash started

Yr4 to Yr11 (2016 to 2023): Age 51 to 58: $5k payout cash.  I have been collecting guaranteed $5,000 p.a. for past 8 years.

Yr12 (now) at age 59 to Yr 19 at age 66 (= 8 years more before policy matures). 

Yr20 at age 67: maturity sum $118k payout (which can be drawdown at $5k for next 23 years.) or $8k p.a. for next 8-years to account for inflation.

Yr-21 to Yr-21+22: another 23 years drawdown $5k.

~~~~~~

2.  My own retirement expenses

This article, I hope to share with you how one can retire with $5,000 per month when retire and not even worry about inflation.  All through 3 retirement income Taps; that is:

Tap#1: CPFLife at Max ERS topup annually

Tap#2: CPF OA Interest drawdown.  Notice that I assume no interest from SA, even that I have 6-digit SA Balance. Reason:  Once drawdown made on CPF Interest, SA balance will be drawdown to zero.  So, assume $0 interest as buffer.

Tap#3: Important to me.  This is my 18 endowments (new n resale ones) payouts.  My payouts started last year:

2022: $40k

2023: $70k

2024 to 2028: $40k... 

Monthly cost expenses for singly (with 3% inflation)

Age 60-69: $5,000 ($60,000 p.a. × 10 = $600,000) or $4,000 + ($1,000 from CPF OA Interest).

(total just cash needed: $4,000 × 12 x 10 = $480,000 for age 60 to 69).

At 3% compounded inflation, the $5000 monthly cost would become $6,700 need.

Age 70-79: $6,700 ($80,000 × 10 = $800,000);

or $5,000 + ($2,500 from CPFLife)

(Total just cash needed: $5,000 × 12 x 10 = $600,000 (for age 70 to 79). 

($1,700 p.m. paid in excess by our CPFLife of $2,500 p.m. ERS payout; withdraw at age 70; compound at 7% from age 65 to 69).

At 3% compounded inflation, the $6,700 monthly cost would become $10,500 (to enjoy the current value of $5,000 p.m. lifestyle) at age 80.

Age 80-85: $10,500 ($10,500 × 12 × 6 = $750,000);

or $5,000 + ($5,500 from CPFLife+CPF OA Interest).  

Total just cash needed: $5,000 × 12 x 6 = $300,000 (for age 80 to 85).   By then, the OA would have accumulated to pay $2,000 p.m.

Grand total cash: $480,000 + $600,000 + $300,000 = $1,500,000 for drawdown from age 60 to 85.

If one has cash portfolio of $1,500,000 to invest @4.0%, it can collect dividend/interest ( $5,000 p.m. yearly.)

In this way, one can retire with $5,000 p.m., without worry about inflation.  With the effect of inflation  already buffered by our CPF.

Now we know the magic number is $1.5M.  And beat 3% inflation achieves with CPF help.  

How to save for it?  It may be a tough number to build.  Anyway, earn more save more.  Earn less, work longer to save for it.

And one can even bequest the entire $1,500,000 portfolio.

But don't forget your accumulated srs balance for further buffer.