Singvestor’s retirement lifestyle test run

[singvestor]

More than seven years ago I started my first journal on this forum. I was 33 years old and had just woken up to the fact that my finances were a mess and I had to show nothing for 6 years of working. It then took me 7 years to save up EUR 600k after which I quit to start a new type of life.

Lifestyle redesign

I always admired the people in the ERE movement that use extreme lifestyle design choices to live an unconventional life at a discount. People living in vans, storage facilities, secretly in their offices or in the Alaskan wilderness. I feel they hacked the system.

I am none of these things, I just lucked out to get a high-paying job that paid for housing.
My frugality muscles are pretty much atrophied. My solution to problems is buying stuff. I feel it necessary to buy class 1 tickets on trains. I bought more things than I needed, consumed more passive experiences than creating and overall have stagnated a bit, not only on the renaissance man front.

After the Covid era I feel unable to return to normal employment, the thought of sitting in an office 5 days a week is inconceivable. If I am honest it is also because daily interaction with people in this weird office environment is exhausting to just think about. Also seven calls on Microsoft Teams a day is too much.

Time for some lifestyle redesign, closer to the ERE ideal.

My basic situation is already quite good:

• Fully remote job with small salary of €2,630/month but equity in a promising new company
• €550k invested (down from €600k) + €41k in cash
• Free housing in the middle of nowhere in Germany (empty family property)
• No kids or major obligations
• “Free” health insurance in Germany
• €1,560/month for 12 months in unemployment benefit should I be fired or resign after a year of working

1€ ~ 1USD - will stick to Euros in my journal for now.

ERE Lifestyle goals

• Do not rent a permanent apartment, use free house in Germany, plus temporary rentals in areas I like
• Live wherever I want, starting from Southern Europe this winter
• Do not get a car, but carsharing and subscriptions for some parts of the year are ok
• Avoid buying stuff that I do not need, reduce possessions
• Get back to socially and professionally interacting with people outside of close friends and family on a more regular basis

Monthly spending goals:

• Retirement level: 4%/12 of current portfolio per month: currently EUR 1,891
• Salary men level: salary without touching savings: EUR 2,630 / month
• Supplementary level: salary + withdraw EUR 1,000 from savings: EUR 3,630
• 2021 average level: EUR 3,036

Obviously, spending at retirement level is the goal. This will need some adjustments, given that I spent EUR 3,036 each month on average in 2021 - even though I had free housing and grocery vouchers.

The new company has promised to raise my salary to €4k/net after the next funding round, but unhatched chickens will not be counted.

As much as I like charts, this is the only one that matters:



September spending:

In September I spent EUR 1,861 which was a success - living at my retirement budget (WR 3.94%). 21% was spent on car-related expenses - a late bill for my rental car at megacorp and petrol, 9% on work related stuff, such as “mandatory” restaurant visits with colleagues etc. Traveling was the biggest factor, taking up 25% of spending for various tickets and accommodations.

Portfolio update

In September the portfolio tanked, dropping from €599,234 to €567,383 - not a great start to my retirement lifestyle test run. On the bright side I reinvested dividends and some savings, so I managed to invest EUR 1,187 in September.



Hypothetical monthly income @ 4% WR in Euro

€1,891 down from €2,000 ouch



Outlook

In September I was very busy with my new job, but October seems very relaxed, hopefully the new lifestyle is working. I will report the progress on a quarterly basis from now on, next post in January. Hope it will all work out!

[ertyu]

Congratulations. Good job, and well done. Good luck in the next chapter of your life. Looking forward to how you will redesign your life from here on to obtain life satisfaction.

[singvestor]

Thank you so much, Ertyu!

[singvestor]

2022 was wild, I finally quit my job at Megacorp and joined a startup. My plan was to let the portfolio coast and treat this as a retirement test run.
Close to 5 months later, the new life feels great – I am typing this from a Southern European Apartment, overlooking the sea. Corporate life as I used to know it is over, lots of capacity is freed for other things. Sleep has dramatically improved as well.



2022 Financial Update

In EUR terms my portfolio still grew, which was mostly driven by the sinking EUR.


Portfolio allocation

It is pretty much on track these days. I am adding only to the index funds, sold most of the REITs and individual stocks.

Where did my money go in 2022?

66% Saving rate, EXcluding cash buffer, 72% saving rate, INcluding cash buffer.



Spending in 2022:

On average I spent EUR 3,298 per month, despite having free housing for most of the year.

Since joining the startup, I spent an average of EUR 3,014 a month, which is higher than my salary (which is around EUR 2,650). Not good at all! I have a large cash buffer to draw from, but this is still not ideal.

Without much effort I made some side income of EUR 540 since joining the new company. I did a survey and a paid consultation + I received some sign up boni. I also got a large payment from the old company and some more dividends. This way I managed to save and invest EUR 7,350 in four months after having joined the startup.

The key chart that matters:



In 2023 I must improve my spending.

Obviously, I must reduce spending and at least not spend more than my small salary.

Main spending categories in 2022 were (% of total spending):

• Travel: 19%
• Eating out: 11%
• Groceries: 9%
• Clothes: 7%
• Car: 8%
• Stuff: 5%

With 30% of yearly spending in the travel and eating out categories I am quite embarrassed to post here… I cook quite well and do so for most meals, but I have lived in areas of Europe where the restaurants were amazing and so hard to resist.
Embarrassingly enough I had a free apartment and no rent to pay. This year I need to pay for my own accommodation.

I know how ridiculous this sounds; it truly is. I am unworthy of this forum so far, but I promise improvement.

As a first step, my spending needs to come down from EUR 3,298 / month to not more than EUR 2,650 / month as a first step. Ideal spending level is ~EUR 1,900 / month, which would be at retirement level for my portfolio.
I got rid of my car and will rely on public transport from now on. I also have no more cleaning and ironing service. This frees up ~EUR 3,300 per year.
I should also reduce spending on clothes and stuff. Last year the spending in these categories was high, as I got a suit + shirts tailored and bought another suit and some shoes.

No more of this nonsense in 2023!

Outlook:

After the changes in lifestyle the urge to retire has gotten smaller. I work 100% remote from whichever country I like, I have only 4-5 meetings in a week and not 5-8 per day, my colleagues are nice, work is interesting and meaningful – zero corporate bullshit.
To accelerate the progress I will need to get on the ERE track finally and will keep this journal to be accountable for getting wasteful spending under control.

[Jiimmy]

Best wishes on your new journey! You can do it!

[singvestor]

Thanks Jiimmy!

[DutchGirl]

Hi Singvestor, I think you're doing pretty awesome!

I think that your current happiness or life satisfaction per euro spent is up big time from the middle of say 2022, am I wrong?

You could for example give a score 0-100 , with 100 for the best life you can imagine and 0 for the worst, and then divide your current score by how much you spent this month (or this quarter); and then compare that to the score for say June 2022 and the spending of June 2022?

And so yes, I do hope to see your spending go down a bit, but I think you've already improved your life by a lot.

I do feel like spending less means using more time. For example: if you don't pay a cleaner, then you have to clean by yourself. If you want to spend less on food, then generally speaking you have to cook most food yourself and you have to find cheaper shops/markets/supermarkets to buy the food. Maybe over time your time investment gets reduced a bit again as you learn to cook better meals faster and know better where to go to score deals . (And same with cleaning and other low-expense habits: as you get better at them, you get more time efficient at them or you enjoy them more).

[singvestor]

The second quarter of my “retirement test drive” is over and it worked quite well. I lived in Southern Spain for a bit, did not have to set foot in an office and most importantly: I managed to live cheaply.

In fact, my expenses were much lower these three months and I could live on the equivalent of a 3.9% withdrawal rate of my portfolio.

Q1 Overview

• Salary: €8,546
• Other income: €3,864
• Dividends received (before tax): €2,669
• Expenses: €5,695
• Savings: €8,974

(Savings partly came out of a ~€40k cash buffer I created before quitting)



Current portfolio value: €585,097 / =USD 638.700 / = SGD 848.900

In the first quarter, my portfolio increased from €564,368 to €585,097. This increase of €20,729 / 3.67% was made up of fresh investments of €8,964 and portfolio gains of €11,765.

Utilizing “the Dutchgirl Metric”

I tried matching the happiness to money spent in certain months. Interestingly there was no correlation. In my lowest spending month I was the happiest, as I had settled into a routine of sport, mediterranean diet and long walks along the beach.

Higher spending was often correlated to less happy times, e.g. a quarter of my spending in March was work-related and I had larger health-related costs. The only times I perceived a positive correlation of spending money to happiness was when I was buying gifts for people (small presents, nice dinner etc).

Spending less sometimes takes indeed more time, especially when it comes to cleaning or cooking. It does not bother me much though. Both tasks feel quite good when successfully achieved. In some cases spending less means more time, for example after getting rid of my car. No more taking care of a car with constant inspections, tire changes, maintenance and tax & parking issues feels liberating.

Other insights

Expenses averaged €1,898 per month, which is well below my salary and equal to a ~3.9% withdrawal rate of my portfolio
Other income was higher than expected. I participated in a few expert network calls, where I would be paid about €270 per hour, received some sign-up boni as well as other incentives. I never bothered about these extra opportunities while I still had a high paying job, but now I made a little bit of an effort to supplement my income. I also paid myself some profits that were still inside my former small consulting company.
Life felt quite luxurious - I spent a lot of money on unnecessary stuff - so there would be room for further improvement, still I followed Dutchgirls advice and reduced quite a bit of expenses in the first quarter.


The key chart



Still quite a gap to fill - only once the 12 months rolling average spending falls below the 4% WR line, I can start considering myself financially independent. This quarter shows that it is indeed possible.

Outlook

April is looking to be quite expensive, especially because of medical expenses (nothing bad, but I had to pay some stuff out of pocket to get faster treatment) as well as some spending to replace a computer screen which I accidently destroyed etc.

I hope that the startup will manage to enter the next phase this year, after which my salary will be increased from the current €50k to a better €85k. Still a far-cry from my old salary, but I would be able to save quite a bit more.

While it is annoying at times, the work at the startup is still much better than at Megacorp, so I try not to complain too much. Only after having worked there 18 months will the first batch of my shares have vested, so this is how long I have to definitely stick it out at this new job. To this milestone it is still 11 months to go

[lightfruit55]

Out of curiosity, why are you tracking your portfolio in SGD?

[singvestor]

Hi Lightfruit, I lived in Singapore for over 12 years and also did parts of my studies there at NUS. When I started my old journal I was still in Sg. Singapore to date is the country I lived in the longest and probably the only place I ever felt naturally at home. A large chunk of my investments is still in Singapore from that time, for example QL2.

Typing this made me quite "homesick" for my former home, haha... One day I'll be back, if only for 4 weeks of eating all the fav foods again that can be found nowhere else

[lightfruit55]

I read some of your old journal and noted that you were working in Singapore but I didn’t know you were here for THAT long hope you can visit from time to time!!

The reason I asked is because it seems unintuitive to have local assets which is not of your “retiring country”. But then again although denominated in SGD your underlying assets are probably global in nature. I’m no investment expert and hope this observation doesn’t sound dumb!

[singvestor]

Good point actually!

Looking at the Euro-SGD Exchange rate over the last 20 years, I am glad I kept quite a bit of holdings in SGD. I am not so optimistic in Europe's future and having a bit of SGD (tied to USD) feels like a good protection. But then my portfolio is a bit of a mess

[meursault]

I remember reading your posts from a long time, 5-6 years ago.
Congratulations! Best wishes on your new stage in life.

Since you should have a lot more free (flexible) time now, after the "retirement", how did you fill those time and do you still feel happier (than the time when spent working full-time)? I am curious whether hedonic adaptation applies in this case.

[singvestor]

Thank you, meursault! I think in terms of hours I work the same or more in the startup than in Megacorp, but the work is not evenly spaced out. Some weeks I work 60 hours, some 20. In Megacorp I had 7-8 meetings most days, now only one or two, so I can do more real work or learn stuff. So far no hedonic adaptation, but rather lower expenses because of the lower salary

[singvestor]

Yet another quarter has zipped past. Here is the overview:

• Salary: €10,854 +
• Other income: €1,955 +
• Dividends received (before tax): €3,083 =
• Total income: €15,932
• Expenses: €8,528
• Savings: €8,527
  (Partly from my cash buffer that I created before quitting the corporate job)
• Saving rate: 51%

Current portfolio value: €595,316 = SGD 879,800 / = USD 650,600





At the spending level of the second quarter of 2023 I would need at least €0.9 million to retire - so it is still quite far off.
In the second quarter, my portfolio increased from €575,564 to €595,316. This increase of €19,752 was made up of fresh investments of €8,527 and portfolio gains of €11,225.

The key chart



Only once the 12 months rolling average spending falls below the 4% WR line, I can start considering myself financially independent. Spending was too high in the second quarter. I booked an expensive trip to Korea and subscribed to an electric car while living in the German countryside.

Biggest life improvement: blocking Reddit on all my devices


Sometime in Q2 I realized that I was spending way too much time on Reddit. I opened the app or the website as a reflex and then would spend hours browsing and “discussing”. What I realized is that Reddit seems to be a gigantic echo chamber of whatever interest or opinion you might have. At the beginning it is fun, but later it becomes problematic, because of the culture it creates.

After going cold turkey and blocking reddit on all devices, my mood and attention span improved dramatically. I now read longer articles and can concentrate better. I used to spend at least 1-2 hours each day on reddit, which I am now putting to more productive use - a big win. Every other day I still open reddit in the browser without realizing it - only when the page does not load I realize how deeply ingrained reddit was in my routine.
I do not have Facebook or Instagram, which also helps. LinkedIn I need for work, but I am trying to use it as selectively as possible.

Outlook

The best part about the new life is the amount of “bandwidth” that I suddenly have after leaving the corporate leadership role with its stress and endless meetings. I can catch up with people just for fun, I am helping a friend build her new company (for free, just for fun)

[lightfruit55]

I am also considering putting a stop to my reddit addiction. I like that I can use it to get local news and tips very quickly, but too much of certain subreddits can become toxic very quickly.

Regarding your new outlook on life, do you think that leaving Singapore significantly contributed to it? Sometimes, I think that leaving my corporate role will help to change my outlook on life, but I suspect being in an environment like Singapore will make me feel anxious that I'm not 'on track'/'conforming'.

[singvestor]

When it comes to the pressure to conform, I feel that most people are so busy with their own lives that they do not care what others do. People often pressure themselves though. Sg has a bit of a Kiasu culture, but it seems it is changing with the newer generations?

Despite having mostly local friends (thanks to my time at NUS) I never felt much pressure despite unconventional lifestyle choices. Singapore is in many cases ideal, especially the high salaries compared to Europe. Even in well-off Germany, SGD 5,500 net per month would place you in the top 10% of earners. Singapore has a lot of options even after leaving the standard corporate path. It has world class research, startups to explore and lots of subculture that can be discovered...

Having said that, I feel it helped to move somewhere else after over a decade there. It gives a fresh perspective. Also life in Singapore is a bit on easy mode compared to Europe - at times it felt like living in a resort. I still often feel a bit homesick for Sg though - a special place! And the food!

[singvestor]

Another quarter is over…

Here are terrible numbers:

Q3 2023: Overview

• Salary: €8,014 +
• Other income: €1,973 +
• Dividends received (before tax): €2,563 =
• Total income: €12,549
• Expenses: €12,655
• Savings: €5,546 (came from cash buffer which had built up before)

I spent way too much money and only could still invest and “save” because I had a buffer from earlier in the year. The reasons for this spending are complicated…

I had to help a friend in financial trouble with a few hundred Euros. Technically, I lent her the money, but I am aware that I will not get it back and wrote it off as a gift.

Each month I spent over a thousand Euros to travel, as I lived out of Airbnbs and took a lot of trains etc
Generally, the months were very stressful and I focused on day-to-day issues rather than optimizing spending
Right now, things have calmed down and I am feeling better, plus my financial situation is bound to improve as our startup has reached a milestone and my income will increase from ~€2,700 to ~€4,200 net per month. This is still a fraction of my old salary, but should give me more room to save. I hope for this increase to be completed soon, as the CEO has been dragging this on, waiting for a formal agreement to be signed before counting the milestone.

I still am working fully remote and do not have to set foot in an office, so I cannot complain too much.

Portfolio update

Current portfolio value: €600,243 = ~SGD 865,000 / ~USD 631,000



In the third quarter, my portfolio increased from €595,316 to €600,243. This increase of €4,927 was made up of fresh investments of €5,546 and portfolio losses of €529.

The key chart




Obviously, my current spending level is not sustainable and I have to improve this in the coming months.

Outlook

Somehow I feel like I am already half retired. Startup life is not without stress, but there are many days where I just have one single online meeting and can immerse myself in topics. I can go to the gym in the middle of the day and be away from the computer for 2 hours. Life is relatively good.

[fingeek]

Your outgoings seem relatively stable. How much more so you need invested to cover your current €3k/month outgoings?

Glad to hear the semiretirement thought, I wonder if this is because you have autonomy, interest, and potential for mastery...

[delay]

Thanks for sharing! Trains have gotten much more expensive. The bus can be good alternative. Even flying is often cheaper.

Interesting that you live out of Airbnbs. I wonder about that. I have a bed, a TV, a couch, kitchen gear. This makes it hard to move, let alone live out of an Airbnb! Your must have few worldly possessions.

The spending chart jumps out with large swings in spending, from €1,100 in February to €5,000 in August. If I read it correctly, there are five months where you lived within 4% withdrawal rate. Surely a good sign if you can adjust your spending that much.