Retirement: Stage 1

I planned for my retirement for a few years before I actually did the deed.

You need calculate existing net assets, liquid assets, passive income, asset allocation, estimated monthly/yearly expenses. Because you are at the planning stage, you have only partial idea about what will actually happen once you retire.

At this stage, you need to have the flexible mindset, you need to be ready to adjust. Because the reality could be quite different from what you've forecast.

I was working and living in Singapore, so I had additional things to consider, such as relocating to Malaysia. Which city to live in, how much money to bring back, what to bring back, buy car, etc, etc. The hardest part was to bring Ah Wat and Fatty back because their import licenses was only valid for 7-days. That's a story for another day.

I was actually planning to retire in 2017, but some matters made me pull the trigger last year. So, life has a way of messing up your plan. Again, you need to be flexible and on your feet, and tackle the hurdles as if you're running a big project. A big spreadsheet and a notebook helps. On your handphone, you should have reminders, task managers, etc. These are necessary tools.

I think the 1st year of retirement, I spent RM250,000 on this and that. A good part of it was relocation cost and setting up the new home because we didn't bring some of the things from our apartment in Singapore. And I didn't even travel for holidays, so it wasn't because I went crazy with the credit card.

But now the money outflow has stabilised.

Here are some of my thoughts.

1) My first warning to you is this. You will spend more money than you expect on your first year of retirement. One of the reasons is you have more time than ever in your life to do what ever you want. You will spend more money to pursue whatever interest you in away to fill that time vacuum.

Sometimes out of boredom. Sometimes it's due to aimlessness. Others times you're thinking, what the heck, I've worked all my life, now I wanna live a little.

That's all fine as long as you monitor and don't let shit get out of hand.

2) You will be itching to go back to work. I kept looking at Jobstreet in my first year. Not entirely convinced that I will ever want to work again but nevertheless imagine about being back in the thick of things.

This will happen to you as well.

Now that I'm 18 months into retirement. The urge is not so strong anymore. From what I've read, a lot of retirees go back to work after 2 years because they can't stand having so much time on their hands. Or they need the validation from having some responsibilities or power.

But if you can resist that, you will find that the freedom and flexibility to do whatever you want is the greatest gift of retirement.

It sounds cliche but I do engage in some gardening, the joy of seeing fresh tomato hang from the tree that you've planted is priceless. And you can make salsa! Fresh salsa. At one stage, I had so much vegetable grown in my backyard, I had to give them to my neighbours.

3) If you're retired, I am assuming that you have enough income to cover your expenses. That means you need not have another income.

For fuck's sakes, DO NOT go into a business that you know little or nothing about. Just because some friends or family gave you ideas about doing this or that.

You might say, oh I will only use 20% of my retirement funds to fund the new venture. Don't do it. Because, you're right back into "working". I'd rather put the money in some relatively low risk investment that can actually generate 6% - 10%. If you say that's not good enough, then I don't know what to say.

4) The thing about No. 2 and No. 3 above is also closely related to your mindset and how you want to live in retirement.

i.e. How much money do you NEED? How much money do you WANT?

This is important because any imbalance in "the wrong direction" will push you into doing some stupid things.

The more money you need to live a certain lifestyle (Demand) will necessitate you to find more money to fund (Supply) that lifestyle.

I drive a 10-year old Izusu pick up truck which is still running good although the RM2,000 road tax a year sucks big time. Canned bake beans and sardines are my favourite and I have vegetable from my garden. And I cook a mean pasta dish, so why should I spend RM30 a plate cooked by some Bangla or young punk? I always tell my Singaporean wife she's damn lucky to have such a Malaysian husband. We do eat out a few times a week (when I am lazy) but nothing fancy.

You may not think that's a big deal but IT ALL ADDS UP. Sooner or later you are wondering why you don't have enough money. And worse start questioning whether retirement is a good idea or not.

My "uniform" these days are shorts and T-shirts. I don't even cut my hair (although I spend more money on conditioner).

I don't subscribe for Astro and iFlix comes with my Unifi. I download the latest TV series and movies for free. I have the Lacie 6TB 2Big Thunderbolt Series Hard Drive. This thing is a monster. I have a huge library for entertainment. It cost me S$850 when I bought it. But hey, you gotta do what you gotta do. Right?

I am currently running a monthly expense of RM6,000 - RM7,000 but I think I can bring it down to RM5,000/month. (Overseas travel and discretionary shopping are separate because these can be cut to zero if need be).

Whereas my passive income is a fair bit higher than that. I am doing a better job of deploying my funds. For example, I can get 13% returns from peer-to-peer lending (backed by solid collateral, gold bar no less). That's double of what EPF gives me.

Also some REITs (pretty diversified ones) are giving me 9% dividend.

I did my retirement planning based on average 6.5% return on my investment. So if I get a higher return in a particular year, I can spend the extra cash on some fancy traveling or buying some useless gadget. Hahaha.

So, do I need to go start a business or get a job? Fuck no.

The lesson from Stage 1 of retirement: It's all about the mindset. If you get it right, you will fucking enjoy your retirement. If you don't, it sucks to be miserable when you're getting old.