So much so that I'm tired of saying that I'm retired. I usually just say jobless or taking a break.
It's a lot easier to explain and there's less weird comments.
The thing is, retirement is NOT on many people's minds, so it becomes a hard topic.
And instead of trying to understand or hear my story, people instead try to TEACH me about retirement... or what I need, or what it should be...
HUH? ... An un-retired person teaching a retired person? What retirement should be about?
Something wrong lah...
So today, I'll run through the most common myths that people have about retirement.
1. You need a lot of money
Right on top of the list, many people believe you need a lot of money. Like SH!TLOADS of money.
Millions!
The thing is, people vastly overestimate what they need.
Cos they attribute retirement as lifestyles of wanton entertainment. They think that they will spend the same amount on weekends as weekdays. So if they spend $200 on entertainment on a Saturday, means they will need $75k per year.
The truth is, for many people, when they retire, their lifestyles scale down. They realize they don't need so many things, they usually become more chill.
For my parents, after they retired, they kept spending for a period of time, then reality struck them. They realized that their funds wouldn't last long if they kept up the spending, so they reduced their spending.
In SG, if we look at the spending of old retired folks, their spending is around $2,400 per month per couple. If you stay in a bigger place, you'll end up spending more.
As we grow older, we don't need so much clothes, items, stuff, etc...
We also don't go out for entertainment as much.
Actually, once we start NOT having colleagues to compare against, or stop comparing with neighbours, the propensity to spend drops by a lot.
And that's on average...
And since I'm more frugal than average, with avenues to obtain free resources, then I would probably be able to retire on less.
So when I say I don't have a lot of money, or don't need a lot of money, it leads people to believe... point 2.
2. Without a lot of money you live like a pauper
People tend to believe that retirement without a lot of finances means living a life of restraint.
Of significant self control. Like a retiree needs to deny themselves a lot in life.
OK... There's some truth to needing to be diligent with spending.
I mean that's quite obvious. If you aren't diligent in spending BEFORE retirement, then you probably shouldn't retire anyway. Money burns really fast if you buy frivolous things.
Especially if you're into silly marketing. Like in US, there's special days for everything. They have "National hotdog day", doughnut day, fry day, taco day, etc... all this to induce people to spend more.
They are also very big on festivals, Valentines day, Memorial day, Independence day, etc.
Now, I'm not into these things. Marketing doesn't have much effect on me. I buy what I need, and sometimes I buy stuff I want. Like maybe a nice meal. I don't have many wants, except for better food.
I do treat myself occasionally.
The thing is, I don't feel the urge to treat myself more often.
So I think this could be up to the individual.
If someone wants a lot of stuff and desires, then when they deny themselves, they feel unhappy.
But if they don't have wants and desires, then they aren't denying themselves.
Like for me, I don't feel like I'm denying myself, and I'm living a pretty good life.
My lifestyle has hardly shifted from when I was working.
It's the idea of, I don't miss what I don't want.
3. You lose purpose in life
Now, this is really sad. If work is the only thing giving someone purpose in life.
You give yourself whatever purpose you want to have in life.
If you think work is your purpose in life, then it's a sad case right?
You don't have anything else better to do?
For me, personally, I believe that there is no such thing as purpose in life. I am here to exist and die.
Like any other animal. And I'm ok with that. I don't try to look for any other higher purpose.
Even for anyone who believes in purpose in life, I'm sure they should have more interests besides working right? For someone who loves their job, their job becomes their hobby, that's fine.
But I also think there's a lot of people who aren't happy with their jobs. And they also don't want to quit.
Maybe cos they can't afford to quit, or feel insecure quitting... Then they tell themselves that they have no purpose if they quit...
But seriously, there's a lot to do after retirement, IF you try to find things to do. Else, yea it's boring and there's no purpose, and then... point 4...
4. Your mind slows down
I've written about this before. Keeping my mind active after retirement.
If you have other interests, then the mind won't slow down.
Hobbies, reading, mahjong, sports, whatever...
If you don't have any interests then go back to point 3...
The mind is like any muscle... it will deteriorate if it's not used. Doesn't mean only in work.
The mind can be used in multiple ways. Learning a language, sports, taking care of kids, hanging with friends, etc...
5. 4% withdrawal rate is not safe
I don't understand why people think of withdrawal rates and stuff like that...
It's not like it's some hard rule... If markets do well, I also won't withdraw 4%... I'll withdraw what I need. Which is likely under whatever withdrawal rate I'm comfortable with.
If markets are bad, I'll also withdraw less than 4%...
The idea of withdrawing 4% regardless of market conditions is HIGHLY FLAWED.
It's the same as people who believe savings is a percentage of salary.
When I was earning $2k salary, I spent, $1800.
When I was earning $2500, I spent $2000.
When I was earning $5k, I spent $2100...
Just cos I earn more, doesn't mean I spend proportionately more. I might spend a bit more, but not in the same proportion as earnings.
Wrote something to this extent here.
Same as withdrawal rates. On good years, I spend around the same amount as on bad years.
Any excess I reinvest into the pool of assets.
In bad years, I may cut my spending. Or maybe my spending is already low enough that a bad year still results in excess for reinvestment.
So the whole idea of 4% withdrawal is totally irrelevant to me.
The whole notion that people keep changing their budgets due to market conditions is pretty far-fetched.
So there you have it, the Top 5 things which I think are most misunderstood and wrongly believed by many people.
Do you think there are even more myths and misunderstandings which I have missed out?
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