This is my target amount that I need in my investment portfolio – a portfolio built around the Bogleheads 3-Fund Portfolio, but modified for Singaporeans – that will generate enough passive income for me to live comfortably in Singapore forever.
The amount was calculated with a 3.33% safe withdrawal rate – to be more conservative than the 4% rule – using a rough estimate of S$6,000 expense per month just for myself.
However, since I published my recent post on the Minimum Portfolio Value for Financial Independence in Singapore, I felt that “rough estimates” and “assumptions” on my expenses wasn’t good enough. That post showed me that I won’t likely need anywhere near S$6,000 to be financially independent so I want to find out my minimum number.
I wanted to get as detailed as possible on my expenses and get the most likely figure that I will be spending when I retire. Then if I wanted to top up for “creature comfort” – which will extend the time I need to save and invest to reach FIRE – I am at least making a conscious choice.
So I started breaking down my expenses and label the expenses per each category. Here’s what that looks like:
|Mortgage / Rent||S$800||S$9,600|
|Early Critical Illness Insurance||–||S$1,300|
|Term Life Insurance||–||S$1,900|
Based on the above breakdown, I will only need S$56,400 to cover all I need for “comfortable living” in Singapore for me.
This translate to about S$47,00 per month in required passive income from my investment portfolio, which will require about S$1,695,000 with a 3.33% withdrawal rate.
That’s a whole S$1,300 per month and S$15,600 per year less than my original estimate! This translates to S$467,162 of the portfolio value less for my FIRE number and cuts the estimated number of years I’ll need to save up by 1.5 years!
Just like that, I’ve shortened the number of years I’ll need to work to be financially independent!
Clearly, in my previous FIRE amount, I’ve left quite a lot of room for safety “just in case” so that I might be able to spend more on travel or make “want” purchases instead of “needs.” However, I still feel like I should allocate some amount for this, so I’m going to adjust my number to S$5,000 per month – with S$300 of monthly buffer – instead of the above S$4,700 (might be too little) or the previous S$6,000 (way too high.)
This means a new FIRE amount of S$1,801,802 at 3.33% withdrawal rate, still a whole 1.1 year less than the original FIRE number.
So I think I will go with that. What do you think? I’d love to hear what FIRE number you are working towards and why!
Until next time.