She's under 50. So it's considered an early retirement.
Based on my estimations, I reckon that she's very well off financially and has saved up a substantial amount for her retirement.
My guess is that there should be some properties, investments, endowments, etc etc.
So it's a cushy AUM.
However, even though she has a high AUM, I also notice that she has very expensive tastes.
Now, there's absolutely nothing wrong with expensive tastes. Especially when she has a very high earning power. I mean, she has managed to accumulate a huge AUM even with expensive tastes. That's a great feat.
Like I can't expect her to be frugal right, since she earns more and can afford BOTH an early retirement AND a luxurious life. That's all good.
She did mention that she plans to cut her expenditure though. So she's planning to cut her expensive bags, Europe trips, big car and live a simpler life. Probably a life more luxurious than mine but less than what she's used to.
So I'm wondering... Is that possible? I mean... ok fine, everything is possible.
But I mean realistically, is it as simple as that? Would it be an easy transition?
After years of not batting an eyelid to frivolous purchases, she would have to say no to a bag?
Or maybe she won't say no to a bag, she'll just buy less... But what is less? Did she count how many bags a year she bought previously?
If I remember what she told me previously, her car is worth something like 70-80% of my HDB value when I first purchased my property. Would it be that easy to get a simpler car after retiring? Would she sell the car? Or just wait for the car to expire, then would she get a BMW? Or Toyota?
From trips to the US, UK, Switzerland, would she transit to South East Asian countries? Or more likely Northern Asian countries?
Naturally, she won't need to cut her spending to my levels. So she probably could still go to Japan, buy some branded stuffs, get an above average car, enjoy her high tea, etc. And likely she'll have to find a balance.
She's a really close friend of mine and I truly wish her all the best and that I hope she will be able to find a good balance in her retirement. I'll be keeping in touch with her after she retires and will be able to see how she adjusts to her new situation.
I'm just using her as an example of an extremely successful person who has managed to save up a substantial amount in their lifetimes even though they have maintained a high standard of living throughout their working lives.
The question is, how easy is it to transition into retirement and a lower spending mode? If you're the first to retire amongst your friends, how would they view your decrease in spending? Would you be influenced by them to continue spending when you hang out with them? How would your relationship with your spouse be like?
Based on my experience with my parents, they retired when I was quite young, cos I was born late in their lives. What happened was that they continued spending like there was no difference. We were relatively middle income, not as well off as my friend, and when my parents retired, there was no change in our lifestyle. Even though my dad taught me to be frugal, somehow, he was not able to transition into the super frugal mode of no income. So the cash burn was very real for a number of years. Eventually, they realized that they would not have enough to last their whole lives at that burn rate and had to cut down expenditure even more to make up for the overspending in the early years of retirement.
Thus, my estimation is that most people would fall into this same category. MOST, not all. As in, they would probably not realize that there are still many years more to go, they would continue to spend at levels close to what they were previously used to, and in the later years, find out that their numbers don't work out and have to cut down even further to make the numbers tally.
Oh well, I'll just have to watch my friend for another few years and then I will have another data point to work on. So maybe I'll update on this again in another year or 2 or ... who knows.
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