• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
Go to Expat Living Hong Kong
Get our Newsletter

Lifestyle Guide To Moving To & Living in Singapore - Expat Living HomepageLifestyle Guide To Moving To & Living in Singapore - Expat Living

Moving to Singapore and not sure where to start? Expat Living is the essential lifestyle guide to living in Singapore.

Menu
  • Living in Singapore
      • Living here
      • Neighbourhood Guides
      • Schools
      • Property
      • Work And Business
      • Finance
      • For Guys
      • Environment
        • UFIT TennisOutdoor activities – group fitness classes, tennis, cycling etc.
        • feng shui focus lucy richardsonExpat Journey: Lucy Richardson
        • Forbidden Hill fathers day gifts15 Fabulous Father’s Day Gifts and Things to Do
        • weddingTop 20 wedding venues in Singapore, for all sorts of couples
      • View all
    Close
  • Things To Do
      • Things to do
      • EL Events
      • Calendar
      • Competitions
      • Noticeboard
        • Muswell Hill comedy Pangdemonium dinner partyPangdemonium brings Muswell Hill to Singapore
        • looking for clues treasure hunt time heistWin big in the Civic District treasure hunt
        • As You Were ArtworksWhat’s on this week and beyond
        • The National Stadium - Sports Hub Best venues for concertsTheatres in Singapore plus venues for events & concerts!
      • View all
    Close
  • Kids
      • Enrichment
      • Kids Things To Do
      • Mums & Babies
      • Schools
      • Tots & Toddlers
      • Tweens & Teens
        • pre & post baby items cleaning by pramwashWhen did you last clean the baby pram?
        • Nexus International School students reading in library learning experienceLearning for the Future at Nexus
        • Forbidden Hill fathers day gifts15 Fabulous Father’s Day Gifts and Things to Do
        • fishing 3aHoliday fun and outdoor activities at this Adventure Camp
      • View all
    Close
  • Homes
      • Home Decor
      • Readers’ Homes
      • Furniture
        • feng shui focus lucy richardsonExpat Journey: Lucy Richardson
        • European bedding best mattressBest mattresses for the best sleep!
        • antique furniture singaporeAntique furniture shops – plus vintage and reproduction furniture!
        • Where to buy lamps in SingaporeWhere to buy lamps in Singapore – lights galore!
      • View all
    Close
  • Travel
      • Asia
      • Australia & New Zealand
      • Rest Of World
      • News
      • Travel Offers
        • ideas for a long weekend awayPlan ahead for that long weekend away!
        • international health insuranceProtecting your health overseas in 2022
        • Krabi Thailand beachfront villas for beach holiday in ThailandBeachfront villas in Krabi Thailand – perfect for your next beach holiday!
        • New ZealandYour mini guide to New Zealand
      • View all
    Close
  • Wine & Dine
      • Asian Cuisine
      • Western Cuisine
      • Bars & Clubs
      • Groceries & Speciality Services
      • Recipes & Classes
        • Pizza12 great places to get the best pizza in Singapore
        • Farmers market - butcher - meat shopTop butchers for good-quality meat
        • Sugarhall DaquriLatest bars in Singapore: New drinking spots!
        • M&S Meat Free NuggetsPlant-based nuggets – here’s what we think!
      • View all
    Close
  • Style & Beauty
      • Fashion
      • Hair & Beauty
      • Beauty Offers
        • hydrating products skinTried and tested: Hydrating Products for Dry Skin
        • ARIANE ZAGURY 2A Curated Fashion House for All
        • Frizz TreatmentIn need of a quick fix for frizzy hair?
        • Spray tan singaporeGet a golden glow quickly with a spray tan!
      • View all
    Close
  • Health & Fitness
      • Dental
      • Fitness
      • Medical
      • Wellness
        • injuries to hip and hamstring injuriesInjuries to hip muscles & hamstring injuries – how to treat them!
        • UFIT TennisOutdoor activities – group fitness classes, tennis, cycling etc.
        • overweightWeight gain and your health – How a GP can help
        • PainWhat is pain and how do you treat it?
      • View all
    Close
  • Shop
    • PRINT MAGAZINE
    • DIGITAL MAGAZINE
    • BOOKS
    • Close

How much can I spend in retirement?

28th April 2021 by Rebecca Bisset 4 Min Read

https://expatliving.sg/how-much-can-i-spend-in-retirement-planning/

Switching from saving for retirement to spending it!

When we look at retirement planning, the big questions are: How much can I spend in retirement? How much do I need to retire on? When and how much do I draw down or ‘disinvest’ to make it stretch? Peter Williamson of Avrio Wealth touches on some of the key issues below.

“History never repeats itself, but it rhymes”. This Mark Twain quote is often rolled out by authors wanting to use a period in history to demonstrate a point of view they hold. However, it was perhaps better observed by humourist Max Beerbohm in 1896; “History, it has been said, does not repeat itself. The historians repeat one another.”

This is worth remembering when it comes to considering financial services advice; in particular, the area of practically applying the conclusions of academic research to personal financial affairs.

Is the “4% rule” the answer?

Most people who are googling retirement planning will come across something known as the ‘4% rule’. This is indeed a good starting point. It’s a basic guideline on how much to save for retirement: 25 times (or the inverse of 4%) of what you will need in the first year of a 30-year retirement from your portfolio. The 4% rule is a rule of thumb used to determine how much a retiree should withdraw each year from their portfolio without reducing the account value. It was developed by a financial planner William Bergen in 1994 and has been used to calculate how much a retirement fund should be.

Beyond that, adapting for your own personal spending rate, based on your situation, investments and risk tolerance, and then regularly updating it is sage advice.

How do you determine your personal spending rate?

Start by asking yourself these four questions:

#1 How long do you want to plan for?

Obviously, you don’t know exactly how long you’ll live, and it’s not a question that many people want to ponder too deeply. But to get a general idea, consider your health and life expectancy; your family history may be useful, as might the most recent government data from your country. Also, consider how you feel about the possibility of outliving your assets and/or your access to other resources; for example, government pensions, private pensions or annuities.

#2 How will you invest your portfolio?

Equity holdings in retirement portfolios provide the potential for future growth and help support spending needs later in retirement. Cash and bonds can add stability and can be used to fund spending needs early in retirement. Each investment serves its own role. Generally, asset allocation has a relatively small impact on your first-year sustainable withdrawal amount, unless the portfolio allocation is very conservative. However, it has a significant impact on the portfolio’s ending asset balance.

In other words, a more aggressive asset allocation has the potential to grow more over time, but the downside is that the “bad” years tend to be worse than with a more conservative allocation.

retirement planning
Asset allocation can have a big impact on a portfolio’s ending balance, but it’s not just a mathematical decision. The pain of losses is often observed to be more memorable than the pleasure in gains; this effect can be magnified in retirement. It’s important to choose an allocation you’re comfortable with (especially in the event of a bear market), not just the one with the greatest possibility to increase the potential ending asset balance.

#3 Can you live with confidence that your money will last?

Think of a confidence level as the percentage of times in which the hypothetical portfolio did not run out of money, based on a variety of assumptions and projections regarding potential future market performance. For example, a 90% confidence level means that, after projecting 1,000 scenarios using varying returns for stocks and bonds, 900 of the hypothetical portfolios were left with money at the end of the designated time — anywhere from one cent to an amount more than the portfolio started with.

Targeting, say, a 90% confidence level means spending less in retirement; the trade-off is that you are less likely to run out of money. If you regularly revisit your plan and are flexible if conditions change, then 80% might provide confidence that you can be successful even if you manage to overspend slightly.

#4 If conditions change, can you make changes?

Research around the 4% rule assumed a rigid guideline; that is, spending didn’t change, and investments didn’t adapt as conditions changed. Useful in theory, but it has its limits. Making simple changes to spending during down markets can increase the likelihood that your money will last – like adapting the way you take a vacation. Time flexibility in retirement can be a very useful attribute. 

Applying the answers to those retirement-planning questions

Some basic thoughts to keep in mind:

  • If you’re regularly spending above the rate indicated by the probability of success level you choose, you need to find ways to spend less.
  • Consider all cashflows as part of your annual withdrawal amount.
  • Consider all sources of portfolio income to support withdrawals/spending, which includes capital gains. Avoid inadvertently skewing your portfolio away from an asset allocation that delivers the stability and growth required to help your portfolio last.
  • There are other assets that are useful in the portfolio, such as real estate and private equity.

The bottom line

The transition from saving to spending from your investment portfolio can be a challenge; this is especially true when there are so many opinions and propositions justified by anecdotal or statistical history out there. There will never be a single “right” answer to how much you can spend from your portfolio in retirement.

What is important is to have a plan and a general guideline for spending. Then adjust it as and when necessary.

No matter, we’re quite certain that your time shouldn’t be wasted on listening to historians repeating each other … “If you obsess over whether you are making the right decision, you are basically assuming that the universe will reward you for one thing and punish you for another.” – Deepak Chopra

To see if you’re on the right track, book an appointment with Peter Williamson at pwilliamson@avriowealth.com, or call him on 9277 3442.

Avrio Wealth Pte Ltd
9 Battery Road, #28-01

6240 6865| avriowealth.com

 

Rebecca Bisset

Heading up Expat Living, Rebecca started off in photography and video. A bit of a nomad before Singapore, she likes to travel when she can but she finds looking at properties as exciting! One day she's going to build her own house...

Get the latest events, stories and special offers
sent to your inbox.

By signing up, you'll receive our weekly newsletters and offers, which you can unsubscribe to anytime.

Categories: Finance For Guys Living in Singapore Tags: avrio wealth retirement planning

You May Also Like

feng shui focus lucy richardson

Expat Journey: Lucy Richardson

finfluencer financial scammers

Scammers and finfluencers!

sports schools in singapore students jumping sack sports activities

Discover the sports programme at this international school

Primary Sidebar

  • Competitions
  • Noticeboard
  • Subscribe
  • About
  • advertise
  • Contact
  • Privacy

© 2022 Expat Living Singapore, All Rights Reserved.