What Is Early Retirement?
Among people who check stock information or post about it on Twitter (commonly known as “stock enthusiasts”),
this term is often discussed
is frequently tweeted about by salaried workers (commonly known as “corporate slaves”)
and is frequently tweeted about
It’s also known as the FIRE movement overseas, and young people in particular seem to be striving for it
*Financial Independence, Retire Early → FIRE
How much in after-tax dividends would provide peace of mind?
When aiming for early retirement through stocks,
I think one key indicator is the amount of after-tax dividends
So, how much would give you peace of mind?
This will depend on your personal perspective and circumstances
For example, if you’re single and don’t spend that much on living expenses on a daily basis,
an annual after-tax income of 2 million yen might be sufficient for some (about 160,000 yen per month).
However, for a single person whose daily living expenses are higher,
2 million yen would likely be insufficient.
Even for DINKS couples or couples with children aiming for early retirement,
the situation changes.
Even if you already know that, you might still want a rough estimate!
In such cases, a helpful reference is
the Household Expenditure Survey by the Statistics Bureau of the Ministry of Internal Affairs and Communications
The latest 2019 edition included data on consumption expenditures for single-person households and households with two or more people
Upon looking into it,
the average monthly expenditure for households with two or more people is 293,379 yen
What do you think?
I imagine there would be some variation depending on your actual lifestyle.
If you calculate this over a year,
that comes to approximately 3.52 million yen in annual expenses.
However, since this figure is an average,
the picture changes when calculated using the median.
The monthly expenditure (median) for households with two or more people is 243,688 yen.
Although there’s a difference of about 50,000 yen, I feel that this figure
closer to the actual figures experienced by most people.
Annual expenditures based on the median
about 2.92 million yen.
—a sharp drop of 600,000 yen.
Next, let’s look at single-person households.
Since I couldn’t find the median for this group, I’ll only provide the monthly average.
The monthly average was 163,781 yen.
I think it depends on whether you live with your parents or rent a place,
I think most people fall around this range.
On an annual basis,
it comes to about 1.96 million yen.
If you plan to cover your living expenses after early retirement
with dividend income,
the amount mentioned above should serve as a good guideline.
How many shares to buy
So, for a household of two or more people
earn a median dividend income of approximately 2.92 million yen (after taxes),
how much would they need to invest?
Assuming a realistic dividend yield of 3%,
the amount is approximately 125 million yen.
That’s a sum that’s endlessly out of reach for ordinary people ( ；∀；)
Am I the only one who feels this way…?
To cover the average annual expenses of a single person—about 1.96 million yen—
as dividends,
you’d need about 83 million yen
It’s finally dropped below 100 million. Haha
Even so, for a single person to save 83 million yen
quite a long road
Early retirement thanks to compound interest?
If so, why not just use the well-known power of compound interest to
?
You might think that
It’s true that the power of compound interest is significant.
I learned about it from books like *The Snowball* and *The Intelligent Investor*.
But if you actually do the math,
the amounts come out as shown below
Compared to saving alone,
if you invest at a 1% return for 30 years,
you’ll end up with about 7 million yen more.
If you reinvest the returns at a 3% rate for 30 years,
you’ll have a gain of about 25 million yen.
This is the power of compound interest.
But think about it.
If you save 2 million yen a year for 30 years
and even if you were lucky enough to achieve a 3% return for 30 years,
you’ll only save about 62 million yen.
While that’s a substantial amount in reality,
it’s not enough to achieve early retirement.
Moreover, since this is a 30-year timeframe,
if you’re 25, you’ll be 55,
and for someone who is 35, it would be age 65.
This is likely a far cry from the early retirement you envision.
While the power of compound interest is tremendous,
if the amount is small, the effect of compound interest is also small—
I think that’s the reality
The calculation above does not take into account factors such as rising stock prices, inflation,
, so
they are nothing more than theoretical exercises.
However, in the event of a stock market crash, a decline in yields,
or the possibility that prices may never return to current levels
.
I would like you to read this section
as you read this.
Depending on the kind of early retirement you’re aiming for,
Is early retirement impossible?
In my personal opinion,
if you don’t have much income coming in,
I think it’s difficult to achieve through investments focused on ETFs and dividends.
That’s my take on it.
And, while I do
as my main strategy. Haha
However, I’m not aiming for early retirement.
I really enjoy my job, and since it’s a career I’ve always dreamed of,
I still feel very happy.
That said, as I’ve gotten older, I’ve found myself wanting to try all sorts of new things.
For me, creating a stable income to take on new challenges
is what dividends mean to me.
I think the reasons for aiming for early retirement
is different for everyone.
Some may feel their current job lacks meaning
I’m exhausted by workplace relationships and don’t want to work
I want to live without dealing with anyone, interacting only with the people I love
I want to go wherever I want, whenever I want, with the people I love
While thinking this, I aim to live off future dividend income
and aim for a life supported by future dividends,
I have a feeling there will come a day when I realize, “This isn’t what I had in mind.”
First, to aim for full retirement,
I need to figure out
and where to begin.
Diversifying Income Beyond Just Salary and Stocks
Instead of full retirement, reducing my working hours
Treating dividends as a stable source of income
Even if income decreases, consider switching to a job that suits you
Considering your personal circumstances and aptitudes,
I feel it’s necessary to explore different paths to early retirement.
Early retirement is difficult
But today, I’ll keep working hard toward my dreams and goals
I really like
I really like
Thank you for watching until the end♪
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