Can you afford to plan for retirement?
Professional people find it astonishing that 50% of Singaporeans did not plan for their retirement. The point is that how many Singaporeans can afford to plan for their retirement? Take the example of a two paycheck average $5k income family with two children. I believe this is representative of an average Singaporean family. With 30% CPF contribution over a period of 30 years, his CPF savings should be $1500 x 14 x 30, using 14 mths pay and all things remaining unchanged. This will give $630k. The remaining will be his take home pay at $1.68 mil. I f household expenses plus personal expenses for the two parents is $3k pm, total is $1.08 mil. The cost of raising two children to university level at $200k each is $400k. Presumably he owns a car for 20 years and monthly expenditure, including instalment etc is $800. This will cost him $192k. Then we have $1.68m less all these expenses the balance is $8000! Nothing left really. And all the holidays, social commitments, hospital bills etc are not even considered. His only savings is in the CPF. And the full amount would probably be used to pay for a 5 rm HDB flat and a little left in the Medisave. Can he afford to plan and save? Even if he is a thrifty person, thriftyness is frown upon in this island, he may put aside $100k. And all he needs is a major hospitalisation of one member of his family and it will be wiped out. In order to be meaningful, two old folks need to have about $200k in their CPF on retirement. This is based on the minimum sum and Medisave expectation of the CPF Board. If these average Singaporeans have no spare cash to save, what is there to plan? Just work and work is the best plan, really.