Sunday 11 November 2012

Retirement in Spore- An inconvenient truth

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.  

HSBC: The Future of Retirement Survey 2011 (Singapore Report)

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%)

Everyone Needs to be a Multi Millionaire!!! 

Amazing! Based on conservative assumptions, the generation Z of singaporeans today need to accumulate $4.3 million by age 65 just to ensure self sufficiency at old age. Even in today's dollars, our average Singaporean is underfunded for retirement by more than 80%  [($614,510- $120,000)/$614,510] based on cash & investment savings alone.  Most young people you speak to today (females especially) would not want to work beyond age 55.  To achieve this means one needs to have even more money than CPF's recommended $4.3 million figure!     It really makes me wonder if I have to work till my deathbed if wages in Singapore do not rise in tandem with our stellar economic performance.  This has become a critical issue confronting Singaporeans in years to come. With increasing costs of living, especially healthcare costs, our generation may be embroiled in financial struggle just to retire worry free.

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. 

Trivia Joke:

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:


  1. And as our property asset soars in price 5x, 10x, 15x, 20x, which is way beyond 5% inflation, do you really think $4+ million will actually be enough for people now in their 20s and 30s?

    Especially when Real inflation is more in the region of about 20%. Heeey, consider and compare prices for food you paid a year ago and what you pay today.

    Makes me glad I'm past 60.

    My advice to anyone who cares to listen is: Get out of this country while you can. Because this govt, which created the situation, does not have the solutions to the problems. In fact, they're busy compounding them!

    1. there are solutions. but the solutions actually cost money.

      furthermore, the government did not create the problem and has solutions in CPF LIFE and SRS. but those solutions actually cost money.

      Retirement costs money. its not free. Awww. Sad truths.