Retirement is often pictured as golden period where one enjoy the fruits of decades of hard work. To some, it could be having a stress free life and doing the things we enjoy. For others it might be enjoying the company of family and friends or engaging in a religious or social cause.
However, due to the pragmatic nature among Singaporeans, not having to worry about money is often ranked as the most important aspect of a happy retirement. Many "planners" among us understand that having sufficient funds is a pre-requisite for retirement and this financial security also helps in creating peace of mind.
It is estimated that the average Singaporean has about $120,000 in cash savings at age 55. It does not take a financial expert to know that this amount is inadequate, especially in high cost Singapore where the costs of a nursing home stay can easily cost thousands per month. So how much does one need to retire in Singapore? Like any confused Singaporean, i turned to the CPF's website and tried out their retirement savings calculator. (Try it out!!)
Current Age: 25 (Fresh male graduate entering workforce)
Desired Retirement Age : 65 (Current Statutory Retirement Age)
Desired Monthly income: $2000 (Cost of subsidised elderly nursing home + buffer for healthcare costs)
No of years the income should last: 23 (Life expectancy of males = 83 + 5 = 88)
Return on investments : 4% (current CPF interest rate for Retirement Account)
Rate of inflation: 5% (2012 3rd Qtr inflation rate = 4.7%)
Working by choice? Or by lack of choice?
We are constantly reminded of how painful the cost is, for the lack of retirement planning, either voluntarily or involuntarily when we see cleaners in their 50s or 60s patrolling our MRT stations, hawker centres etc. Recently there is an incident of an 80 year old dishwasher who dropped dead in the toilet at the hawker centre where she had been working for 6 years. It was reported that she had to work from morning to night with only 2 off days in a month and had looked very sick prior to her death. The government's calling has always encouraged active employment at old age by requesting for our elderly to delay retirement. The question we should ask is, are our elderly working because they want to? or because they have to?
Retirement planning & insurance planning are perhaps the most important aspect of financial planning. One only goes through retirement & death or major disability once in their lifetimes. There is no way one can "learn" through experience and become better unlike (failed investments, failed relationships). A one time failure for many may constitute a lifetime failure as many in old age do not have the luxury of time and energy to recover financially.
A dignity free retirement is a personal responsibility, not an entitlement in our society today.
There were 2 men who died and entered heaven. God asked them: " What was your biggest regret in your lives?"
Man A said: "My biggest regret was not spending all my money before i died."
Man B said: " You lucky bastard, my biggest regret was spending all my money before i died!"
Do read my other articles: