5/16/2007
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.
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6 comments:
If property prices keep going up, I maybe able to retire next year.
I guess the 50% of Singaporeans who did not plan for their retirement fall into the category of "not having any spare cash and therefore what is there to plan".
And I won't be surprised that these are the same people often singled out as being underinsured by the insurance professionals.
Old age, sickness and death are a given, to anyone who is existing as a human being.
The fact remains that many people do successfully plan for retirement, and the way to start is of course to SPEND LESS THAN YOU EARN, and as far as possible IMPROVE YOURSELF so that your VALUE to others INCREASES over the course of your working life.
You forget that we live in a blistering economy the — the second most FREE economy in the world, and there is no reason not to succeed. Anyone with the courage and the will can be financially independent in 20-30 years, if they really knuckled down and made that a priority.
In your sums, you didn't leave any money for investment. You relied on the CPF (a tax, not "savings" in the strictest sense) to save your ageing ass in your twilight years. This is a recipe for financial disaster, and anyone who follows this pattern deserves the consequences of their stupidity.
In other words, all your figures are CONSUMPTION — including the (presumably) savings and investment for the kids university.
The point here is — if you know your kids education will be 400k, and you save and invest toward that goal, how come there is no savings and investment toward the other important goal of RETIREMENT? How come, the kids are worth saving and investing for, but your own retirement is SUPPOSEDLY to be provided by GOVERNMENT WELFARE — the CPF tax/pyramid scheme, which I guarantee you will suffer a severe CASH CRISIS in the near future.
Don't be an IDIOT. Lee Kuan Yew and his Utopian vision will not save your flatulent old ass. His rhetoric was solely designed to boost the "value" of his party, simply for the goal of achieving POLITICAL SUPREMACY. It has got nothing to do with ensuring your "happiness" or insuring your "security".
Believe in myths if you so choose. But don't expect "compassion" from the likes of me, and others like me.
wah.so fierce one. no wonder sure mati lah.
ya lah, matilah is always full of shit.
Hey anonymous asshole,
If you can't (because you lack the ability) or won't (because you lack the courage or intelligence or both) take me on (i.e. shoot holes in my premises and arguments) to prove that I am "full of shit", as you put it, you are the one that needs the laxative, the enema, the colonic irrigation and eventually the chemotherapy for bowel cancer. :-)
Perhaps you might want to consider adding more fiber to your diet!
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BTW, where did this idea of "retirement" come from anyway? From the time when the world was in the industrial age, where we for a long time had HARD MONEY — i.e. gold as the money standard, which put the brakes on runaway inflation.
These days it is likely that if you simply "work and save", you will "save yourself poor". Therefore, modern man has to some degree, expose himself to risk by investing his money for long term needs.
Life expectancies have also increased, as well as the ability of the general population to remain productive, and actually in many cases to INCREASE their productivity as they grow older.
In our own society, old farts like MM Lee are still working and "earning" (like a gangster) millions every year.
I see in today's paper that the govt is looking at the changing existing legislation to allow older workers to remain in work longer.
So, folks, society in changing in MANY WAYS... and why is this? After all there is "no such thing as society".
The fact is individuals are being more empowered by the overall creation of wealth on the planet and the advent of technologies which have become cheap and good. We can cure some diseases, which not long ago were life-threatening, with medicine costing a few cents. We are able to live "normal" lives with diabetes, gross obesity, heart problems... we've virtually eradicated the age-caused male sexual dysfunction. 80 year old men can sprout the proud erections of an 18 year old, no problem.
Changes occur on the individual level, and therefore society — the collection of individuals acting and interacting with each other an the environment — will change too.
My main gig, of course is being a BEACH BUM. But even a bum has to be "productive" so sustain his existence in "bumhood".
Therefore, I make sure that I put 2-4 hours aside from time to time (a few times a week or a month), to engage in some sort of productive activity which results in some "economic value" to me.
After all that, I am free to bum around, and write opinion on the net, occasionally getting a brickbat thrown at me — but that's ok. A bum and a jester are not too dissimilar.
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