We Want More Kids...So...How Does That Affect My Investing And Retirement Plans?

So I shared earlier that we recently have a new addition to our family: little David, who was born 9th March 2017 - a bundle of joy, farts, burps and shits. But lovely =D

And as I was chatting with my wife, she casually mentioned that she won't mind having up to 4 kids (we're at number 2 now), and though I was just a tiny, teeneee bit shocked (hey, it's just day 10 after David was born ok), but I wasn't that shocked.

After all, we've spoken about it before, and agreed that minimum 2 kids, and maximum 4.

But recently, as I've been paying more attention to dividend investing, early retirement and online income, I knew that my numbers would have to change. I know, I'm a lazy numbers guy, preferring to set the large numbers in place, which will solve all the other small stuff (instead of worrying about every single detail).

My original plan was to slowly amass savings, invest them into dividend stocks and reinvest the returns until I've a stockpile of about $2m, which conservatively at 5% return, would nett the family $100,000 per year in dividends. And I thought about it.

My calculations to reach $2m was either:

  • inject $120k per year into dividend stocks, and reinvest dividends would achieve $2m by 12 years

  • inject $60k per year into dividend stocks, and reinvest dividends would achieve $2.08m by 20 years

  • inject $30k per year into dividend stocks, and reinvest dividends would achieve $2.09m by 20 years

Of course, I want to achieve $2m as soon as possible. Today as I write this article, I am 35 years old. I don't want to be 50 when I retire. At most 45 years old.

At very most, 45. That's all I am going to give. Ideally, max 40 years old.

To hit my $2m target by 45, that'd mean working backwards, I'll need to inject $150k per year x 10 years with reinvested dividends.


Is $100k per year enough? Maybe...we should scale back on our expenses?

We spend quite a bit in insurance, and most of us has at least one G8 AIA insurance plan, which is roughly $6k per year per policy, for 8 years. This will continue for at least until 2025 if it's just David, or 8 years with every new kid. Assuming we have 1 kid every 2 years, that'd mean our 4th kid will come out in 2021. At the same time, since Louise and my own G8 payments would end by 2021, max insurance premiums we would be paying per year should be at most $40,000 per year, for all the G8, termed insurance etc.

So assuming that we make $100,000 per year, deducting $40,000 per year would mean that we have to live on $60,000 per year, which in my opinion, is more than enough to live a fairly ok life. Not like crazy luxurious, but enough such that we parents can spend time with children.

Do note that we will have other businesses that will provide us income as well, but I'm assuming that all the income will be injected into dividend stocks for the sole purpose of just living off dividend income. Hopefully that will accelerate the process.

Is $100k per year enough for 4 kids?

I think that based on the biggest expense, as above, being $40k per annum, means that we have to live on $60k, which is about $5k per month, and our house is fully paid off so $5k is nett for us to use without an ounce of guilt.

The biggest costs would be our kid's pre-school, which ranges about $590 with subsidies for a month, to a max of $800, depending on what level. So say at max is $800 x 4 = $3200, leaving us a balance of $1800.


I think...still ok, if we go basic I guess. A bit hard until all the kids go to primary school, where the fees are much lower. Then again, I prefer if we have at least $3000 spare money to use, so I'll need to increase the amount by $1200 x 12 = $14400.

Working backwards, that'd mean that I'll need $2.3m instead of $2m. At 5% returns for $2.3m, that'd mean $115k per year. Deducting $40k per year, balance is $75k, divided by 12 months = $6250 per month.

Deduct $3200 per month for education, that'd leave a balance of $3050 per month to use.

Ah, so my target is $2.3m. Ugh.

So...that's either:

  1. $125k per year x 15 years + reinvested dividends = $2,324,829.00

  2. $105k per year x 15 years + reinvested dividends = $2,379,036.64

  3. $55k per year x 19 years + reinvested dividends = $2,404,946.56

I think frankly, the third choice is the most achievable of the lot, unless my businesses do extremely well.

Of course, this is my personal numbers and circumstances in my life. Yours may be very different, either very low or very high, and with different expenditures for the short and long term.

What's your numbers? Comment below - I read every single comment.

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