Nelson Tan, 55 — Married, Singapore
Nelson is an accounting professional considering immediate retirement. He and his wife have built a diversified set of income sources over the years.
What Nelson has to work with
- Home: Fully-owned HDB flat (primary residence).
- Investment Property: A partially-paid private shoebox apartment. Provides $18,000/year after-tax income, growing with inflation (2.5% p.a.).
- Pension: CPF Life set aside. Will pay $12,000/year starting at age 65.
- Portfolio: $450,000 nest egg in a balanced portfolio (50% Global Equities / 50% Local Bonds).
The linear answer: "Yes, comfortably"
Using steady, risk-free returns, Nelson's assets would fund a comfortable retirement until he turns 85.
The RetireSIM reality: a hidden 20% risk
When we model thousands of realistic market scenarios with ups and downs, a crucial risk emerges.
In 1 out of 5 possible market scenarios, Nelson could run out of money by age 76 instead of 85 — a significant risk that linear forecasts completely miss.
What drives this risk? Sequence-of-returns risk. If a major crash occurs in the first 5–10 years of retirement, Nelson is forced to sell at depressed prices, permanently reducing his portfolio's recovery potential.
Related: Singapore retirement planning, CPF Life calculator, HDB retirement, rental income, sequence of returns risk, Monte Carlo simulation