Introducing...Vacay FIRE

Vacay FIRE is something that I have been thinking about recently.  It may not be suitable for anyone or everyone out there, as it is a new type of FIRE that I conceptualize based on my personal lifestyle and experience (or treat it as I have nothing better to do, haha).  Personally, I categorize Vacay FIRE as a hybrid between Barista FIRE and Coast FIRE (continue to read on, feel free to share your views to agree or disagree).  So, what exactly is Vacay FIRE and how does it work?

Vacay FIRE requires one to work and save up relatively hard in their twenties to thirties to pursue Coast FIRE.  During this period, individuals will build up a portfolio with a minimum size of SGD 400K (the more the merrier), that can be left to compound at an average rate of 4.5% annually for 25 years till full-retirement at 65 years old.  Meanwhile, in the forties and fifties, individuals can pursue Barista FIRE, where the part time job/ less stressful full time job will pay sufficient to meet necessary expenses.  While Coast FIRE do not allow any withdrawal to be made to the portfolio during the compounding period, a small withdrawal can be made from the compounding portfolio for yearly vacations under Vacay FIRE.

Using my personal estimate and projections:

In the first year when I am 40 year old, I can begin to pursue Barista FIRE where I need to ensure my income will meet my monthly expenses, without much savings.  At the same time, I am allowed to withdraw SGD 500.00 per month or SGD 6K per year from the dividends as vacation expenses, and the remainder of dividends re-invested.  This allows me to plan for either one superb vacation in the year to a faraway place, or multiple simple vacations at neighbouring ASEAN countries or cruises within the year.  In the following year, I am allowed to increase my withdrawal to SGD 550.00 per month or SGD 6.6K per year.  Any unused withdrawals can be reinvested into the portfolio as well, or used for other necessities like medical care, emergencies etc when I am older.

Based on the above rough estimate, the portfolio can grow gradually to around SGD 700K by the time I am 65, all ready for full retirement.  This sum may seem very little and insufficient for the majority, but to me, I think it is a comfortable sum for me as I am single, and my expenses are not too high.   I am happy with simple lifestyle and simple travels like cruises or just short trips to neighbouring countries which will be suffice for me to chill and relax.  Most importantly, there is also supplementary amount coming from the CPF Life payouts, which minimally ranges from SGD 600.00 to SGD 1K, depending on how much I can accumulate in my Retirement Account by then.  Combined with the SGD 30K yearly dividends available for withdrawal from the portfolio, which translates to SGD 2.5K per month, that will provide me with minimally SGD 3K monthly.  This is more than sufficient for me as that will mean RM 9K per month for me to retire in Malaysia.

So, why did I complicate matters to plan for a hybrid style rather than just follow the standard Barista FIRE or Coast FIRE?  Initially I have planned for Barista FIRE, as this blog's name suggests.  However, that will require me to continue to work harder and continue to save more till I am 45, where I will start my Barista FIRE journey, and start full retirement by 55.  However, I think that the future is rather unpredictable.  This may sound too negative, or too YOLO, but I may not live as long as planned, or more accurately, live a sufficiently long and healthy life that allows me to travel and play as I would love to.  So, why not have a more balanced approach starting from 40, where I know I am still able to go places, get to work and play as I go along, and begin my Vacay FIRE soonest possible in 2 years time.  This may sound counterintuitive as FIRE involves Retire Early, but with the need to work part-time till 65 doesn't seem to make sense.  I came to this decision because of 3 main reasons:

1)    The portfolio may not be sufficient to let me drawdown in the next 25 years (if I retire at 55 and live till 80), thus may outlive my portfolio.

2)    Many articles written by individuals who successfully FIRE at a young age find themselves getting back into some form of working life due to the feeling of lack of purpose, especially for singles like me.  Leaving the workforce too early may make me aimless, and lack of purpose.  Probably it is a good idea for me to continue doing some part time and delay full retirement to a later age.

3)    Most importantly, the recent health-scare of compressed nerve at my lower back which left me unable to walk for that day makes me realize that some things need to be done when I am still able.  It also makes me ponder the meaning of life, and the need to keep on saving up for portfolio with no time left for family, friends and self.  I do not wish to regret later in life where I end up with permanent health conditions that disallow me to travel as and when I hope to.

Therefore it may be a good idea for me to embark on this new journey in a couple of years when I am still abled.  Nonetheless, I will always remind myself, change is the only constant.  For now, it may seem like this newly crafted concept of Vacay FIRE suits me well, but perhaps a few years down the road, my requirements and lifestyle may change, and my plans may also change to adapt to circumstances.  It is important to note that these thoughts and plans are strictly applicable for my choice of lifestyle at this point in time, as a single.  It may not be suitable for others.  Hopefully things work out as planned, and this year, I may try taking small vacations to see how it impact my finances and my lifestyle.  The trip in early July to Cambodia (pictures here) was a start.  Let's see how it works out, one step at a time.

Meanwhile, Vacay FIRE...here I come!