Can we have $7,000 a month for retirement spending?

Dear Mr Leong Sze Hian, It has been very enriching and educational reading your views on NextInsight. Thank you very much for your contribution. I hope to be able to have your advice and
suggestions as to how I could plan ahead as I near my retirement early next year at the age of 62. 

I hope of course to be able to work for a few more years and even till 70 years if I am allowed to.  I would like to retire with some $2.2 mil which would include $400,000 in our combined CPF Ordindary and Special Accounts. 

My wife has recently retired at 60, and we have both achieved full CPF minimum sum. We have decided to draw down from our minimum sum only after we both hit 65. 

We do not think it is worthwhile to go for CPF Life.  Our only child is working and does not need any financial help from us for now at least.   We own our place, a landed freehold house which we would  eventually hand over to our child.  It is fully paid up.  We are both adequately covered in health insurance. 

We would like specifically your advice on the following concerns:

* If we were to spend some $7000 monthly (we think we need that amount as we would like to be able to travel annually and to enjoy golf and theatres) after my retirement, would we be able to generate that amount from our planned retirement portfolio of:

a.    $400k in CPF (less the min sum) to tap on the interests annually.
b.    $300k in dividends paying stocks to tap on the dividends annually and to hedge against inflation.
c.    $500k in Govt and Stat Boards bonds.
d.    $1 mil in fixed deposit accounts. 

On the issue of govt bonds, would divesting from my CPF ordinary account to goverment bonds be a better alternative?  Would it be as liquid?

 Thank you.

Leong Sze Hian, president, Society of Financial Service Professionals.

Dear reader: To have a retirement monthly income of $7,000 increasing at 2% per annum for inflation
until your wife is 88 years old, the rate of return required on your $2.2 million portfolio, is about 2.25%.

Looking at your current portfolio, the probability of achieving this rate of return is high, from a historical perspective. 

You may like to consider investing your CPF beyond the Minimum Sum, as the amount that can be withdrawn after setting aside the Minimum Sum, if left in the CPF only earns the OA % of 2.5% instead of the average 10-year Government yield + 1% on the Retirement  Account (which is estimated to be about 4%).

Your $1 million in S$ fixed deposits may also be giving a very low return of around 1%.

As for your question on investing your CPF funds in government bonds, the excess CPF pays 2.5%, so investing the fixed deposits first makes more sense  as they only pay around 1% now.

It appears that almost all your assets are S$ based, so instead of some more Government
bonds, you may like to consider global natural resources and real estate funds