Thanks to the efforts of BIGS contributor and venture capitalist Lim Der Shing, we now have a decent simulation tool to track what happens when we start drawing out money for retirement. A link to the academic paper and tool can be found here.

I’m going to share two retirement scenarios and discuss the implications of using such a tool to determine the target withdrawal rate and subsequently the portfolio size to support this retirement lifestyle.

Before getting into the scenarios, I just want to highlight a possible controversy to the use of this spreadsheet.

I use the real rate of return of an equity portfolio to be 7.4% which is considered abnormally high for Singapore markets. This is because I derive long term equity real returns as the inverse of the current Shiller PE ratio for Singapore markets (currently 13.5) taken from the link here. Contrary to …