Why Early Retirement Is Not Possible For Most

In theory, it really isn’t that complicated to achieve an early retirement.

For this post’s sake, let’s agree that early is defined as below 45 years of age. This is reasonable and also considered pretty early for most, considering official retirement age in Singapore is currently 65. And by retirement, what I mean is that one is no longer obliged to work for a living.

Here are the three steps involved:

1. Save 50%* of your total income (inclusive of bonuses)

2. Invest in a basket of dividend stocks that returns 7-8% (3% to cover inflation and 4%-5% returned as dividends)

3. Continue doing this for about 17* years

Then voila! If that individual continues to live on the same amount of expenses, he would no longer have to work at a job he despises just to bring home the bacon. Isn’t the steps above simple? But the problem is that simple does not mean that it is easy. Here are some reasons why I think most Singaporeans will not retire early.


“One more year” syndrome

For some, the retirement years should be closer to the utopia of an endless vacation rather than the life they had while working. Such retirements are not called golden for nothing. They are especially costly.

So one is tempted to postpone it by working for another year, and then another. There’s nothing inherently wrong with that, since it’s just a trade-off. But no one can guarantee that you will still be alive or energetic enough to enjoy that “more luxurious” retirement after that one more year.

And then there are others who would simply not contemplate retirement until they have achieved a 5-figure monthly passive income. Using the same example, that would amount to a need to accumulate $3 million in retirement assets and the household would need to earn an average of $20,000 a month over that 17 years if we maintain the 50% savings rate. Realistically, only the top quintile of income earners would come close to this income.

Believe that investing is like gambling

Most people still treat the stock market like a casino. The successes of market timing or catching the next growth stock dominates the lunchtime chat of white collar workers (that is if they are not talking about the latest celebrity divorce or lives of characters from the latest serial dramas). They are enamoured by the fact that their friend managed to purchase Blumont shares at 11 cents on 17 Oct and then sold them at 24 cents just four days later. Achieving >100% return over the weekend! (I would bet that the friend didn’t tell you he bought some of the same shares one month before too.)

Nobody likes hearing about the slow, boring returns of local telcos or REITs. (What?! It’s not even 10 or 12%???!!!!) Because of this mindset, they would never be keen to save 50% of their salary to build a more conservative portfolio that is expected to return an average of <10% a year.

Not willing to reduce expenditure

It doesn’t matter if the person is earning $3,000, $10,000 or even $30,000 a month. Most people find it hard to save 50% of their income (actually if you save most of your bonuses, the ratio could be lower than 40% of the month paycheck). And that is even if they are earning a few times of what their parents had done. If we rightfully exclude “savings”  used for money bombs (this and that), it becomes even more difficult.

Instead, most would use their 10% of the income saved to punt either 4-D/TOTO or penny stocks, hoping to make a quick and big gain. And as we all know, the odds for these “investments” (more like lotteries) are less than favourable.

Low wages

There’s actually a significant segment of the population that earns below $25,000 a year. Although saving 50% of their income is not impossible, it would require much more effort. The lower the income, the higher the amount of effort required. (Have to admit even I would struggle to save anything if I earn <$10,000 a year) But the fact remains that most of them are either unable/unwilling to increase their income or unable/unwilling to learn to put in that extra effort.

Early retirement is not enticing enough

For some, the option of early retirement is just not worth the above “sacrifices”. Perhaps they don’t really detest their jobs (or simply won’t admit to it) as much as me, or they do not know what to do with the additional time at hand if they didn’t had to work.

My wife actually belongs to the latter camp and she actually found it depressing to “have nothing to do” in her teenage years (too bad for her that I hadn’t started dating her). She worked during all her summer holidays after a one to two weeks break. Therefore, it’s also not surprising that she doesn’t feel the same urgency as I have to save even more than what we currently do.

But luckily for me, she is generally happy with our current lifestyle and is already starting to feel that most aspects of lifestyle upgrades are just inefficient and a waste of both our money as well as natural resources.


*If 50% is too much (maybe you should just give it a try), or you think 17 years is too long (way to go, bro!), you can refer to this post from Mr Money Mustache to re-calibrate the targets.

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26 thoughts on “Why Early Retirement Is Not Possible For Most

  1. Mrs 15HWW

    To add on, retirement does not mean not doing anything. Instead, it’s having the option to choose the work that you like to do and not forced to stick to your unsatisfying job just because it pays well and you need the money. I’m sure many young people will like to have that kind of financial freedom, but they do not have the courage to do it. It could be due to insufficient planning, the lack of knowledge to plan ahead or just simply the lack of confidence.

    I guess I’m lucky to have a husband like Mr 15HWW who has the passion and tools (garnered from the many books and blogs he read) to plan for our finances so that I can sleep without a worry at night.

    1. SGYI

      Hi Mrs 15HWW,

      Your husband is lucky to have a wife like you too. I’m sure he will agree. :p

      I do hope i can plan my finances with my future wife too. It’s great to be able to sit down as a couple and set common financial goals. Achieving things together makes the journey even more worthwhile.

      1. My 15 HWW Post author

        Hi SGYI,

        With Mrs 15 HWW starting to take a stronger interest in this blog, there is no way I would disagree with you. =p

        It’s really quite impossible to find an other half with exactly the same financial goals/mindset as you (be careful of what you wish for too).

        Just have to cajole, convince each other and compromise along the way!

    2. LP

      Hi Mrs 15HNWW,

      So cute of you to reply 🙂

      I think it’s your job to spend on him and yourself to make sure your husband doesn’t suffer a burn out doing all these financial stuff LOL

      1. Mrs 15HWW

        *hint hint* honey, its time to go shopping!

        Frankly speaking, Mr 15HWW is very comfortable with his material stuff and lifestyle. He finds G2000 shirts comfortable, happy with his black waterproof bag from Taiwan night market and contented with his 2.5years old iPhone 4. There’s nothing that he NEEDS to buy, anything more will be WANTS.

        I’m not complaining, in fact I’m glad that leaves me with more budget for some shopping 😛

        1. LP

          Well, I always say that if you’ve never tried something new, you don’t have enough information to know your needs and wants yet 😉 Only when you’ve experienced the high and the low, then you decide whether your choice is the choice of no regrets 🙂

          Let the one who is better at financial discipline control the needs and let the one who is the visionary of life experiences be the one to control the wants. He needs your ‘help’ as much as you need his, he just don’t know it yet 😉

  2. Gerald

    My mentality is the same as your wife.

    I mean how many vacations can you take after you retire? After a while, you will also be sick of traveling and doing nothing.

    SG Wealth Builder (www.sgwealthbuilder.com)

    1. My 15 HWW Post author

      Hi Gerald,

      I think when I mean retire, it’s not so much about taking vacations and doing nothing that adds value to society.

      For example, after I retire from a conventional career, I will be able to have a leisurely swim and breakfast everyday in the morning and then do some part-time “work” in the afternoon (might be unpaid).

      It’s about having the freedom to not work for the money anymore.

  3. SG Young Investment

    To me, having reach retirement stage (where I can choose not to work anymore) does not mean I do not continue to work. When we reach financial freedom, most choose to continue to work but they work something that they enjoy doing.

    I have seen too many of my older colleagues worry about money. If they stop working now they can barely survive. This adds up to stress in thier lives. That’s why I want to plan early and reach financial freedom early.

    On the stock market, investing is indeed boring. Especially now when the market has been flat for so long =.=

    Excitement on penny shares? I’ve lost that feeling of excitement and fear in the stock market after being in it for a few years. I guess this is a good thing.

    1. My 15 HWW Post author

      Hi SGYI,

      I concur. There’s a good chance that what we enjoy might not earn us anything or at the very least, does not pay as well.

      I think most people work too much, sitting down at their cubicles for 8 hours a day staring at the computer screen. This sedentary lifestyle (plus the added stress from overspending) is also likely to shorten our time in this beautiful world.

      For the markets, I am still excited when there’s a correction. It’s an opportunity to invest and increase dividend income. =)

  4. B

    Hi Mr and Mrs HWW

    It’s great knowing that the both of you has financial plans tandem in place at such a young age. I think you two would be a great role model for many if permitted. 🙂

    1. My 15 HWW Post author

      Hi B,

      You’re too humble. Not only are you and Mrs B accumulating more, your seem to have also incorporated more balance into your life at the same time!

      Don’t dare to 班门弄斧. LOL

  5. Victor

    I would appreciate you teach me how can I save 50% of my salary, when I have 2 school going children, and a wife not working?

    I do agree if the salary is reasonably high enough. But what you say of my salary of $3000. If I can save 10% to 20% , that will be a blessing to me.


    1. My 15 HWW Post author

      Hi Victor,

      I don’t think I am in a position to teach anyone yet, and especially you since the 15 HWW’s household expenditure already exceeds your income.

      I do understand that being in a position to retire early is a huge privilege and an option not available to everyone.

    2. LP

      Hi Victor,

      i think the spirit of this post is that if you can’t do 50%, surely you can do 25%? If not, how about 12.5? or 6.25%?

      The key point is to start doing something now instead of delaying. If your salary of $3k is too low to save, and if you REALLY want to retire early, you just need another source of income. There’s no other way to do it without the sacrifices that comes along with it.

      Of course, if you don’t want to be so hard on yourself, then maybe you don’t really want to retire early. it’s your decision after all, and there’s no need to follow others. Retiring early, 100k before 30, FF, passive income seems to be so fashionable these days, lol

  6. Createwealth8888

    Once we have reached certain financial target, we can afford to slow down and work just enough not to get fired i.e. getting out of Rat Race.

    Performance based bonuses and future job promotions may not be our concerns


    1. My 15 HWW Post author

      Hi CW8888,

      I hope that one day, I would be able to work shorter hours doing something I resonate with and willing to put in full effort during those hours, even if there’s no performance bonus or promotions. =)

      You seem to be speaking from experience and congrats if you are already out of the rat race!

    1. My 15 HWW Post author

      Hi Dividend Warrior,

      I have many friends telling me the cost of raising a child would render early retirement impossible. Since I am not at that stage, quite unfair for me to comment. But sometimes I do wonder why it’s so expensive nowadays. Is it really the cost or it’s the expectations of the parents?

      1. HSLIM

        Hi Mr and Mrs HWW

        I would say it is the expectation of the parents that make cost of raising children such a challenge, creating false sense of high expenditures. Over these years, my wife and I who are just another ordinary middle income couple still manage to save & grow our wealth while raising our two schooling kids. And without having big ticket items like car.

        1. My 15 HWW Post author

          Hi hslim,

          Thanks for sharing your own experience.

          I tend to agree with you, even though I haven’t had kids yet. The parents want their kids to have the “best”, but sometimes those stuff might not be necessary or even needed for the children.

    1. My 15 HWW Post author

      Hi Drizzt,

      I feel that achieving 4-5% of dividends isn’t impossible although it would likely restrict one to certain sectors. A more complicated method would be a 4% withdrawal rate and that might require selling some shares from time to time.

      And indeed, a big assumption here is the 50% of income saved are all used to invest, which might be too unrealistic or risky for most. Maybe we can set aside the 1st year of savings as emergency funds? That would then lengthen the time to 18 years, which isn’t too bad too.

  7. Jared Seah

    A good Sunday morning to both Mr and Mrs 15 HWW!

    Husband and wife tag team? Sweet!

    Reminds me of Wrestlemania during my NS days – Hulk Hogan, Mancho Man Savage…

    Opps! You both too young for that era…

    That’s the beauty of youth – not knowing what cannot be done 😉

    Imagine well meaning friends telling you what you have just written – majority can’t achieve early retirement – so why bother?

    Might as well don’t start? Safer to stick with the crowd? Better to dream and complain?

    Ever wonder why its the older people (don’t you dare look at me!) always saying this too risky that too dangerous? Yet are they happy?

    Life is more fun with some bruises and scars along the way – we can invent fantastic war stories to smoke the babes!


    P.S. Mrs 15 HWW, you knew he was smoking about that tiny scratch he got in NS right?

    1. Mrs 15HWW

      Hi Jared, are you trying to create a spat between Mr 15HWW and I on a Sunday morning?

      To be honest, I don’t really care and don’t want to know. Ignorance is bliss 🙂

      I guess I’m just feeling too bored being a silent reader, so ta-dah~