2

I recently achieved 100 million KRW (South Korean Won, about 86,000 USD) after a bit less than 5 years of work. I'm somewhat proud of myself for being diligent, but I'm afraid if this is not enough.

I'm definitely not a professional in accounting or investing, but I did very crude math myself with these parameters (all in KRW and inflation-adjusted):

  • Current(Year-end)
    • Age: 30
    • Investment input: 83,281,657 - I used a personal accounting app to get this value. I think it is accurate enough, but not perfect.
    • Investment value: 102,386,242
  • Expected
    • Annual investment: 16,800,000 - About a half of my income
    • Buffer fund: 43,200,000 - Additional fund in case of emergency
    • Annual withdrawal: 21,600,000 - National Pension Service claimed that proper living costs for a couple is about this much in early 2014. I'm single, but I want to be prepared.
    • Annual real return rate: 2.00%
    • Tax on profit: 15.40% - Over-simplified.
    • Life expectancy: 90

And this graph is the result.

Estimated retirement fund investment

According to this, I can retire at age 58. But there are things I'm worried about.

  • The tax is too hard for me, so I used a VERY simplified single tax rate.
  • I like my work, but I don't want to work for that long. I don't know what I can work at that age.
  • I'm working on IT. I heard this line of work has an early retirement age. Working until I can retire seems an optimistic expectation
  • I could invest about half of my income only because I'm living with my parents. My parents don't mind about this, but I can't expect this would last forever.
  • I don't have a car or a house for myself. (A car is optional here, but you never know.)
  • My homemade calculation can be wrong, which might mislead me to false hope/fear.
  • Considering my self and my future spouse is already big. But what about children, educations, and medicals... It almost a horror to me.

My point is, even if I do my best, retirement still looks hard. Can you give me some wise words of yours to achieve my retirement?

  • 6
    "I heard this line of work has early retirement age." It's highly unlikely that you'll still be doing at age 60 exactly what you're doing at age 30, but it's perfectly reasonable that you'll still be doing something in IT. (I started out as a programmer, but have been a DBA for 20 years.) – RonJohn Dec 18 '19 at 5:55
  • 2
    @RonJohn And the reason I draw the red line from 30(my age) is... I wanted to see if I can retire earlier than the normal retirement age. It is easier to think that the line starts from 90 backwards, increasing. – user2652379 Dec 18 '19 at 6:44
  • 3
    2% real returns seems like a conservative estimate to me, even when accounting for inflation and taxes. But that depends on how you are investing the money (are low-cost global index funds available in Korea?). I also don't think the "Expected Retirement Fund" line should be a line since it can be invested further until you need to make a withdrawal. There is some fund size beyond which you can live indefinitely only from the returns. With your numbers: 1.3 billion KRW (50× required income), would be smaller with better returns (only 25× assumed by US-centric guides) – amon Dec 18 '19 at 12:00
  • 2
    You can make all of the projections that you want to but the reality is that a multitude of different things (good and bad) are going to happen between now and your retirement date. You can't project now with any accuracy if you will be able to retire at 58. The best that you can do is work, save as much as you can and invest wisely. As you approach 45, 50 or 55, you'll have a much better idea if and when retiring will be feasible. – Bob Baerker Dec 18 '19 at 14:18
  • 2
    This analysis seems plausible but the assumption is, as you note, that your income and expenses stay the same. In your country and line of work, is there an expectation that your income will rise as you become a more experienced worker? Are you expecting to have big increases in your expenses, by, say, having children? Those seem to be missing from your analysis. – Eric Lippert Dec 18 '19 at 19:03

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Browse other questions tagged or ask your own question.