Starting in 2018, as we head down the road towards F.I., this page shall replace the monthly updates and act as our dashboard showing where we currently are.
The charts below are updated automagically when I do my own monthly consolidation in my spreadsheet. Figured that this is a more effective way of tracking our journey to F.I and allow me to concentrate my efforts on other things.
The chart above shows our combined net worth and the year-to-date values of: our savings rate and F.I ratio. The F.I ratio indicates how much of our average year-to-date expenses can be covered by average (year-to-date) passive income generated from our investments. The target for this ratio is 100%, which indicates our lives are fully funded by passive income from our investments!
When our F.I. Ratio hits 100%, then the height of the green bars will match majority of the red areas in the chart above.
Here are my self-determined F.I. Milestones. The graph above shows the amount needed to fully-fund several key areas of our lives. The numbers for each category are determined based on the average year-to-date spending, extrapolated to a full year and multiplied by 25.
Each category has a certain percentage that we’ve determined to be extra spending that we can do without. These are “discretionary” amounts which are indicated in red.
The green bars determine the amount of our current net worth currently able to cover the amount needed to reach full F.I. for each category, up to the “non-discretionary” or absolutely necessary expenses in blue. Categories are arranged according to how important they are to our lives, therefore our net worth will try to cover the more important items first.
Finally, the chart above extrapolates our net worth from the point we estimate we’ll stop working (for others) and start drawing down on our portfolio — starting from our Permanent Portfolio, then Variable Portfolio until we have access to my SRS account, which we will draw down over 10 years, before going back to the Variable Portfolio after that.
The age timeline is based on mine alone but net worth is for both of us combined. I’m assuming the missus has stopped working and her current assets are left accumulating until I hit F.I. and begin our draw-down.
CPF Life monthly payouts are assumed to start at age 65 1Assuming they do not raise this figure based on the amount accumulated over these years from our Special Accounts (SA), with contribution up till the age I pull the trigger. Mrs L.CEO’s CPF payout is assumed to be accessible when she hits 65 (by when I’ll be 69). The payout rate is based on what’s been published by CPF in 2017 2This may be subjected to change. I do not know how they expect people to plan for retirement without being able to tell us the payout rate in the future.
The data in this chart is based heavily on assumptions of our current investment returns and estimated expenses (factoring a year-on-year inflation rate of 1.4%).
Things can and will definitely change. But, its still a fun thing to watch.
(If the above chart doesn’t project till 100-years old, hold your shift button while clicking your browser’s refresh button.)
I’ll update this post with more charts, should I think of any that will be nice to monitor. Or feel free to leave a comment on what you’ll like to see.
Footnotes [ + ]
|1.||↑||Assuming they do not raise this figure|
|2.||↑||This may be subjected to change. I do not know how they expect people to plan for retirement without being able to tell us the payout rate in the future|