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Hi,

Uncle chessgame here again. I re-ran your number and assumptions. And i got these initial results.

And I cant compare with your numbers as you didnt state the results you have calculated in your latest article . So maybe let me show what I did instead :

First run of the calculations :

If these are your results, then i think i know why you came to this conclusion :

"Given such strict conditions, I don't think we can say that a Singaporean with average income can successfully retire comfortably at 55 years old under usual circumstances.

Cos the portfolio numbers of $753k is barely above 25x of the annual spend which is at $727k .

I also thought about the assumptions made and i view there needs to be some adjustment to the initial calculations made and the assumptions.

1.     Debt amount - it should not be rising every year with the pay increase. That is not how loan works. Usually, the loan premium amount is flat over the years. If you did increase with the pay, then your statement "Considering a maximum limit of 35% debt servicing ratio, it's very likely that this amount will be all utilised to fund your mortgage loan over the 25 year period. This means little room for any further home upgrades along the way." is not valid .... Cos it does mean that the person is performing "home improvement every year" at 4% increment. So i proceeded to flat line that expense from year 1.

2.     CPF needs to be adjusted for employer CPF. I ignore the max limit of FRS and SA benefit of 4% and kept the same CAGR of 3.5%. However, I capped the max contribution of CPF to 20400 as employee can only do that max limit now.

With these 2 changes - the results are as folllows :

The portfolio number is now a whopping $1.28m if you can grow it at 5% CAGR.

Even if the CAGR was at 2%, the portfolio number is $952k ! that is way above the 25x limit and we have not even considered the CPF and home equity value. If you assume the home equity value is the same the debt contribition, then this person NW (home + portfolio+ CPF) will be a $2.8m !

So i adjusted it further to reflect some other negative adjustments

1. Salary peak at 15 year. ie 7879.13

2. Expense increase to 3% annually

3. Portfolio CAGR at 3%.

With that , this person will still hit $2.3 M networth. which is way above the revised 25x annual expense at 919k FIRE number..

This leads me to think - if we can really not touch CPF.. (like the other blogger that always talk about this) for home equity etc, retirement for the average singapore is really possible as mentioned by that blogger.

The other assumption is that it may not be realistic to think such a person is really average. A person that can get increment every year at 4% etc pushes the assumption of average. Also, life has more expenses that yourself. Family and medical emergencies at the vital growth stage of 35-45 may significantly distort this plan.

Nevertheless, it may be comforting to some that we can retire quite comfortably if we manage these obstacles well. 😁