24 August 2015

How much does a household spend a month?

Cost of Living

The Department of Statistics publishes various sets of data that are available to the public to download from its data collection efforts. One of the interesting data set I came across is on Household Expenditure:


Average Monthly Household Expenditure
HDB 1 & 2-room: $1,287
HDB 3-room: $2,478
HDB 4-room: $3,918
HDB 5-room: $5,283
Exec Flat & Condo: $8,000
Landed Property: $10,409

My own bottom-up estimates suggest that for my family of four residing in a condo, I would need $7,800 minimally to more or less maintain the current lifestyle. If I were at age 55 now, I would need $7,109. And at age 65, $5,977.

- I do not smoke, drink nor gamble. The occasional Toto don't count.
- I own a car and assumed that I would continue to maintain one till age 64.
- I assumed all housing loans have been paid down. No other debts.
- Overseas holidays are not included. I would need surplus to fund these luxuries.

The numbers seem to be fairly close to the overall statistics. I shall be collecting detailed data over the next 12 months to validate these figures.

Funding the Cost of Living

Based on my norms of 4% extraction from an investment portfolio, that means I would need the following to retire on (figures in bracket are if 5%):
Now - $2.34m ($1,87m)
Age 55 - $2.13m ($1.71m)
Age 65 - $1.79m ($1.43m)

In Teh Hooi Ling's "Show Me the Money - Book 1", chapter 19 on "Debunking the 'safe instruments for retirement' myth", she analysed various $1m portfolios over during timelines, and concluded that a 5% extraction to get $50,000 each year was largely viable. This was despite the ups and downs of the market.

Looks promising.

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