Securing my family's financial security

I was looking at https://www.my15hourworkweek.com/2021/04/13/the-six-steps-of-the-wealth-ladder/ (again), and thinking that I have probably secured my family's financial security. The family's net worth have reached a point (currently about 10x annual expenses) where I think we will be able to maintain our current lifestyle (till the kids start working, and by then CPF Life will soon kick in) even if I got retrenched and forced to take a lower paying job. 

This is a post that I constantly re-read to motivate/remind myself.

I am highlighting the most important paragraph to me here.

The trinity study assumes a retiree will:

• never earn any more money through part-time work or self-employment projects
• never collect a single dollar from social security or any other pension plan
• never adjust spending to account for economic reality like a huge recession
• never substitute goods to compensate for inflation or price fluctuation (vacation in a closer place one year during  an oil price spike, or switch to almond milk in the event of a dairy milk embargo).
• never collect any inheritance from the passing of parents or other family members
• and never do what most old people tend to do according to studies – spend less as they age

It tells me that 25x annual expenses is very safe to retire on. Let's hope I will really dare to retire then!

*I have reached FRS for my CPF and working towards FRS for J. Upon the age of 55 (16 and 19 years away), I fully intend to top up both CPF to ERS such that we can each have a draw down of $2k (in today's money) when we hit 55.

We will be able to get $4k~ (H and J) per month when J hits 65. $4k should be mostly sufficient then.

The turning point

Why do you turn to FIRE? Why are you saving for retirement? Most people I know, don't seem to want to plan/save for retirement yet?

I was thinking what was my turning point? It was probably started due to me having a tumor in 2013. I had surgeries, and have since mostly recovered. Before the tumor, I was quite a workaholic. I vividly remembered a conversation I had with my brother who was working with me in my previous company (He was in another department. We both have since left.). I was having lunch with him (forgot where, parents or workplace?) when I was asking him some work related stuff. He answered my questions disinterestedly. When he realized that I had more questions, he commented that he didn't want to talk about work during his meal time.

Now, my priorities have changed. I realized that if I suddenly pass away, I will have regrets.

On his/her death beds, no one will regret that he should have worked longer hours, take lesser breaks etc. Your colleagues, friends even will probably be sad for a while, but your family will be sad or even suffer for a long time.

I know one of the things I will regret is not spending time with my parents. Now, I try to see them twice a week, and chit chat about things, memories, instead of fiddling with my handphone. Don't wait till they are no longer around.

Net Worth Growth Rate

I started tracking the family's net worth in 2016. Just now, I was wondering about the growth rate over the years.

The growth rate will probably get slower as my income will be contributing lesser and lesser as the family's net worth increase.

Assuming a per year growth of 15%, I will reach FIRE in 9 years, which is the year 2030. Let's hope I don't need that long.

Early month baby

Do you guys believe that babies born in the earlier months have it easier? I do. This article largely explains why.

Invisalign (Day 34)

Since my teeth straightening is a long journey, I decided to catalog the posts better. I changed a date thing in my second post, so its published date updated too. 

From now on, I will include the total day number on the post title and individual aligner day count in the contents. I'm quite confused about my days counting actually because I am supposed to change it at night before I sleep. But I suppose in the grand scheme of journey, +/- 1 day for each aligner will not matter much, as long as my teeth move into the correct position before I change to the next set.

Set 2

The experience of first putting on the second set was not was dramatic as the first set. There was a tight feeling, which did not hurt as much. By the 5th or 6th day, it was hardly noticeable.

But I uncovered how bad my teeth clenching was. My teeth were sore throughout the day. I had to consciously shift my bite to the front teeth. It was a bad decision. There was a night when I had bitten tightly throughout my sleep and my front teeth hurt very badly for the whole of next day.

I visited the orthodontist on day 30. Her advice for teeth clenching was to massage the jaw muscles to release the tension and if possible, open my jaws slightly so I wouldn't feel the urge to clench. On the same visit, she put attachments on 20 out of the 28 teeth that I have, with one tooth having two attachments. The attachments are tiny triangular stones glued to the teeth to grip the aligners tighter. This was part of the programme, so the aligners have the corresponding dents on them as well. I was given sets 3 to 6.

I left the clinic without aligners in the mouth. The orthodontist wanted the first wear to be at least 8 hours. Hence, I will need to have dinner before I could wear my set 3. The attachments scratched my inner lips quite badly and I thought that the abrasion would leave me with ulcers. 

Set 3 (day 4)

Set 3 was much tighter than the first two sets. I was given a handy hook to remove my aligners. After experimenting in the first two days, I concluded that the hook works better on the inner side than the outer side of teeth. The angle just made more sense. 

By day 3, the tightness feeling was almost unnoticeable. Yay to shifted teeth!

And today, I realised that the abrasion from the attachments was healed. I did not have to eat as carefully and painfully as the first two days. Phew~

Contribution to SRS

I have been contributing to my SRS for some time, to reduce my taxable income. I do not top up my SA. This is as SRS is more flexible than CPF SA. In the event that I need to make an early withdrawal, I can, with a 5% penalty. The withdrawal amount is also subjected to income tax. I reasoned that if I were forced to make an early withdrawal, I am likely not working by then and thus have no taxable income.

I was suddenly thinking, if I have more than $400k* in SRS (the maximum tax free withdrawal from SRS is $400k), do I still top up my SRS if I am still working then and need to reduce my income tax? The answer is a "Yes" for me. This is because only half of the withdrawal amount after the retirement age (62 for me) is taxable! 

Even if one's SRS is $800k, the withdrawal per year is $80k. Half of that is taxable = $40k. According to income tax rates, the income tax is only $550.

This is a reminder post to myself.

*if I have 400k in SRS, I should be staring at FIRE in the face, based on the ratio of my SRS stocks to cash stocks currently :)

The goose that lays the golden eggs

According to the Trinity Study, I need 25X (where X is my annual expenses) to retire.

However, I am also interested in one of the points raised in an updated study.

If you choose a reasonable withdrawal rate, you are very likely to end up with much more money than when you started! For instance, a 3.5% withdrawal rate over 30 years with 100% stocks would leave you about six times more money than when you started!

Although I do not live my life for my kids, I do hope that 20-30 years later, my portfolio will be big enough such that my kids are financially secured to a certain extend, such that they can choose how to live their lives. 

If it happens, I will also remind my kids not to kill the goose (the portfolio) such that their kids have a chance to be financially secured too. Maybe I should put everything into a trust then!

-H