Thoughts about “FIRE” in the Singaporean Context
Let’s suppose you want to achieve financial independence as early as practically possible. I don’t think that should necessarily be your goal — as you may see in a moment — but let’s assume. A lot of “FIRE” advice is based on an American perspective, and most of it still applies. But it needs to be tweaked a bit for Singapore, so here’s how I’d think about it.
Disability
In the U.S. almost everyone who works is covered under Social Security Disability Insurance (SSDI). You can think of this as akin to CareShield Life but better in practically every way: somewhat less demanding qualification criteria to claim, higher payouts, no practical minimum payout age, etc. Disability can obviously wreck a FIRE plan, hard and permanently, so I keep harping on Disability Income Insurance in the Singapore context especially. Yes, it’s a cost, but I think it’s an extremely important one since we don’t have adequate backstop disability insurance in Singapore. (The U.S. might not either, but theirs is better.)
Medical Care
Another background assumption in the U.S. is that you probably live in a Medicaid expansion state and thus could fall back on Medicaid for your healthcare needs. And Medicaid is rather good, actually. Moreover, there are no wealth spend down requirements to qualify for “ordinary“ Medicaid. It’s only an income-based qualification. So that prototypical part-time YouTuber earning $5,000 per year may be able to qualify for Medicaid. There’s also an income-based cap on insurance premiums now if you do end up paying for insurance. Medicaid can grab most of your remaining wealth if you end up in a nursing home paid by Medicaid, but that’s usually end of life. The U.S. also has Medicare (age 65+ coverage).
Singapore is different. In my view you should obtain all your medical care from the public sector, and you should always get a referral (to qualify for maximum available subsidies). I think an “as charged” public hospital B1 ward Integrated Shield plan is a reasonable thing to buy, but not above that. And your financial plan needs to account for these premiums including unreimbursed care and public medical inflation. You might consider retiring in another country based in part (or largely) on greater predictability of medical expenses, for example a country with a good public medical system that charges little or nothing at the point of service. I think these issues are very manageable in Singapore, but you should adapt the “FIRE” principles to Singapore’s medical care environment.
Central Provident Fund
”FIRE” in Singapore involves constructing two financial bridges: the first bridge to age 55 (minimum CPF withdrawal age) and the second to age 70 preferably (the latest CPF LIFE payout starting age). In the U.S. the “bridge” ages are different, and for aggressive FIRErs the Social Security pension formula is favorable. (It slightly rewards them for retiring early.) So the underlying math changes in Singapore.
I think you should take as much advantage of CPF as you can in your FIRE plan. It can be quite helpful.
Housing
In the Singapore context I think this means a reasonably sized HDB flat that’ll run at least to age 105 of the youngest spouse/partner. I wouldn’t attempt to reach for a private condo, not if you want to retire early.
This is a problem because the minimum HDB age for singles is 35. Thus a popular FIRE ingredient is living with parents, other elders, or renting a room in a HDB flat. Or marrying earlier, but don’t do that unless you would without the HDB benefit.
Transport
Don’t buy a private automobile.
Marriage/Partnership
Yes, dual incomes are helpful as always. In Singapore same-sex couples don’t have the same rights as opposite-sex couples, so some imperfect adjustments are needed if you’re in a same-sex relationship. Hopefully that’ll change soon, but unfortunately I wouldn’t assume that.
Children
Here’s one reason why FIRE is tough: children are incompatible. Do you really want to FIRE, or will you make some adjustments in this area? Children aren’t free, but they’re particularly expensive in Singapore.
By the way, no children more likely means no life insurance needed. Maybe you’d still consider some term life insurance to help out a spouse/partner, and vice versa.
Geographic Arbitrage
Generally speaking there are more opportunities for geographic arbitrage in both earning and retirement years from Singapore. If it makes sense to take advantage of these opportunities I recommend you do so.
Food
It still makes financial sense in Singapore to cook at home and pack lunches. I know a lot of people think heartland hawker stalls are affordable, and they still are, but you can still save a lot of money preparing your own meals. Or at least when you visit a hawker stall bring an insulated bottle with your own cold or hot tea, coffee, water, or whatever. It costs you 30 cents (if that) instead of $1.30, so you’re saving about a buck every meal. (Those flip top Zojirushi or Kyocera bottles are terrific. About $20 for ~350 ml or $22 for ~500 ml.)
There are tons of other consumer spending tips to help save money, but I’ll skip those.
Investing
Yes, I know real estate is fashionable in Singapore. Yes, I know we have CPF Ordinary Accounts that “nudge” us into buying homes — and then ABSD to make us think twice. I still wouldn’t, not much. The net yields/returns aren’t great, and I don’t think they’re going to get much better. For FIRE purposes especially I’d go with one or a couple low cost index funds, the usual ones mentioned frequently in this forum. And you don’t need a $250,000 down payment to get in the game.
Putting it crudely, perhaps too crudely, real estate is something of a racket here. It’s the one major type of investment that’s rather heavily taxed in Singapore, and it’s effectively price capped (“cooling measures”). Am I inclined to put 68% or 80% or 92% of my net worth in that game? No, I am not. “Everything in moderation.”
Anything else I should’ve mentioned?
