Since CPF Can’t Help You Retire Early, Here Are 3 Ways to Help Yourself Do It

Jeff Cuellar


Want to retire early? Of course you do! After all, isn’t that the dream of every Singaporean worker – to trade in 50+ hour workweeks and business wear for unlimited beach time, Bermuda shorts, and sunscreen?

Well, if early retirement is your goal, you’ve got a lot of work to do – especially if you want to get there fast!

The good news is that it can be done. The bad news is that you’re going to have to jump through some pretty big hurdles to do it.

Here are the 3 obstacles you must beat if you want to DIY your way to an early retirement:


1. You Need to Eliminate ALL of Your Debt

Getting rid of debt is easier said than done, but it’s something you MUST do if you want to retire early.

Some might argue that you can still retire early without paying off debt, but seriously, retiring with debt is a bit like gloating over a seemingly defeated enemy Oberyn Martell-styleit just might come back to haunt you.

If you’re currently fighting your way to early retirement but have trouble tackling debt, you can read up on how to defeat it with these articles:

One last thing.

If you’re scrappy enough to go toe to toe with debt and win, don’t get too celebratory over your victory. The last thing you want to do is ruin all of your hard work by spending more cash in retirement than you did when you were pulling 50+ hour workweeks in an office.


2. You Need to Adjust Your Portfolio to Compensate for Early Retirement

If you’re think that dumping your cash into a savings account will help you reach retirement quickly, you really need to get up to speed on the power of investing. Because nothing will help you reach your retirement goals faster.

If you’re new to investing or are still dangling your feet in the water before you jump into the investment game, you should definitely read our article for investment beginners. Also, don’t forget to check out our Learning Center section on Investing.

Now, if you’ve got an investment portfolio that’s stock-heavy (higher risk = higher returns after all) and it’s performing well enough to help you retire early, great!

Just don’t forget to adjust your portfolio – because the last thing you want is for those same high-risk investments to tank and ruin your retirement.

Don’t play it too safe either, as shifting more money into bonds will halt the growth of your portfolio, and that’s not good if you intend on living another 20-30 years after retirement.

You still need stocks to grow your money after all!


3. You Need a Damn Good Financial Freedom Ratio

If you’re looking for a way to “score” how ready you are for early retirement, you should measure your financial freedom ratio.

All you need to do is divide the total value of all your assets by your annual expenses.

When you do this, the magic number to reach is anything over 25.

First, tally the value of your assets, which include:

  • Any Business Income You Earn
  • Any Real Estate Investment Income You Earn
  • Cash Savings
  • Stocks
  • Bonds
  • Exchange Traded Funds (ETFs)
  • Annuities
  • CPF (well, you can factor this in once you hit 65)

As for your annual expenses, if you’re debt free or nearly debt free, you’ll need to factor any sorts of memberships, annual holidays, etc. that’ll make up your post-retirement expenses.

Now, let’s look at an example:

If your assets are $900,000 and your annual expenses are $30,000, your financial freedom ratio would be:

$900,000 (total assets) / $30,000 (annual expenses) = a financial freedom ratio of 30

That means you’re in pretty damn good position to retire early… as long as you don’t go crazy with your annual expenses that is.  Also, you should never use more than 4% of your portfolio annually.

That way, you can potentially make your retirement savings last for decades.

Why not factor your financial freedom ratio to see where you’re at? You might be closer (or farther) to early retirement than you think.


What are some other ways you can speed up the process of retiring? Share your thoughts with us on Facebook! For even more useful information on everything personal finance, visit MoneySmart today!


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Jeff Cuellar

I'm known by many titles: copywriter, published author, literary connoisseur, ex- U.S. Army intelligence analyst, and Champion of Capua.