Last Updated on 8, June 2016
In a survey called the DBS-Manulife Retirement Wellness Study released on 5 January 2016, it was found that:
- 2 in 5 Singapore residents are not confident about their retirement preparations.
- 56 per cent of those who have started retirement planning have not sought any form of advice.
- Only 36 per cent believe they can retire comfortably with their current savings and investments.
- 30 per cent expect to downgrade their current lifestyle and habits when they retire.
Comments:
Once again, another survey shows that Singaporeans are ill prepared for retirement.
Why is planning for retirement so important?
First, there will be a time which you cannot work due to physical disability or illness. Unless scientists invent a way to halt aging, your body will eventually age to a level which you will no longer be able to work. Aging can include mental aging too.
Second, as the younger generation grows up, you will need to step aside for them to take over your place. Unless employment rate goes up by double digital every year, you need to step aside for the younger generation otherwise they have no job.
Third, your retirement years can be as long as your working years. This is made worst by the fact that the life expectancy is getting longer. If you have started work at 25 years old and retire at 65, you would have worked 40 years. But what will happen if you live for another 40 years?
Fourth, if you are the sole breadwinner supporting a stay-at-home spouse and school going children, you will have no savings until your kids grow up. Your spouse is unlikely to be able to go back to the workforce to earn a meaningful salary when your children are old enough. So you end up with very little savings for retirement. Unlike the older generation, you cannot rely on your children to support you. They will have their own financial problem. In fact, it is likely they will ask you to help to buy their first home.
The survey by DBS-Manulife Retirement Wellness Study also found that 30% expect to downgrade their current lifestyle and habits when they retire. Based on my experience dealing with those who wish to retire, I have found downgrading lifestyle to be inappropriate. This is because if you have lived a life of certain lifestyle throughout your life, what makes you think you will be happy with a reduced lifestyle? For example, if you have driven a car throughout your working life, you will not be able take the Bus and MRT and compete with the crowd for space to stand. The “priority seats” will always be occupied by passengers pretending to sleep. In fact, expenditure goes up when you retire. It does not go down. Reason? When you are working, you are preoccupied with work. When you are retired, you will spend money to entertain yourself. Even you decide to stay at home, you will end up spending your time trading stocks and eventually losing it all. So regardless of what ‘entertainment’ you engage in, it will cost a lot of money. Besides, medical expenses goes up in an exponential fashion. Insurance premiums also go up. Everything goes up except your salary because you will have none.
Retirement planning is the hardest part of financial planning because the problen cannot be solved overnight. Retirement planning is a lifelong plan which requires discipline and monitoring.
I have to turn away many people when they seek to do retirement planning because it's too late for them to do so. The age which is too late to do retirement planning is after 50 years old.
If your salary is just average, it's too late to do retirement planning after 40.
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The survey has to make Singaporeans look pathetic and under funded for their retirement or else how could they tell the public they have a solution. The public must not fall into the trap that they want to help. They are only interested in the public hard earned money. Is their so called retirement product able to help the man in the street? I don’t think so. They only make their insurance salesmen richer to retire earlier. The men in the street need someone like Wilfred to help them get ABOVE INFLATION TYPE OF RETURN and not those endowment scams that make the insurers and their salesmen richer.
Take all these surveys with a pinch of poison to deaden your senses.
Majority of Sinkies (up to 80%) retirement is dependent on their children giving them pocket money, or paying for their expenses. That’s why you see many elderly Sinkies at 60+ yrs old still so desperate to hang on to their jobs, kiasu kiasi kiabor at their various workplaces not to be fired. If you have already accumulated a substantial retirement funds at 60, you’ll naturally want to slow down and take it easier at work, perhaps more of mentoring younger workers, instead of continuing to play politics, cover backside tactics at work.
The irony of retirement saving is that if you can set aside 30% of your take-home pay for just the first 15 yrs of your working life into a low-cost internationally diversified fund(s), you can retire quite comfortably at 60-65.
I was having lunch today when a tissue seller came to my table. I was shocked when he scolded me for ignoring him because I did not wish to buy his tissue. I was initially furious but soon my feelings turned to pity when I realised that the tissue seller must be always in the state of anger – anger that he has to sell tissue which nobody wants to buy. I estimate his age to be in late 50s and likely must have lost his job.
If he had planned for retirement 30 years ago, it is unlikely he need to resort to selling tissue.
Whose fault? Is it his or the so called “financial experts” insurance product salesmen masqueraded?
Both!!!! He didn’t earn enough to save or he didn’t want to save or he didn’t trust the salesmen. You heard this, “insurance eat people” ? Yes, it is true. When the “thank you’ policy case comes up for trial this month and you will understand how old people saw insurance and insurance agents 40 years ago.
What about insurance agents the cause of people having money no enough? Yes, insurance agents NEVER were or are interested in putting their clients’s interest first nor are they competent in retirement planning nor investment. Look at the CPF members balances today… Are they in blue , red or white? Since 2001 till now 85% of members’ balance is reeling from losses and 15% only meet the 2.5% or slightly better. What do they tell you? You must have heard of churning after 2001.And churning by insurance agents who managed “actively’ for their clients’ accounts until they lost money but the insurance agents got richer. The agents claimed expertise in ‘market timing’ and could predict the future of the markets .Of course the customers were stupid enough to beleive these conmen and women. This game is till played by insurance agents , only regulator is unaware because its head is buried in the mud.
Retirement planning should be left to certified retirement planners. In US , planners must demonstrate their knowledge and skill in investment before they can be designated as Retirement Planner. In Singapore any insurance agents and crap conmen and women claim they are, even a 1 month old rookie. Beleive it?. Worse , the insurers manufacture “retirement” products for their agents to peddle. Come on, any products can be called a ‘retirement product , even the FDs can be called that too. If the FDs can meet the retirement needs of customers because of its safety and liquidity , why not? But what kind of customers with what kind of wealth are they? that they don’t need to grow or to preserve and who can afford to lose the purchasing power and yet can retire very comfortably? Of course the rich with millions to spare. But the majority of Singaporeans who need help to grow at decent rate of return (at least 5% risk premium) instead they were conned into buying inflation eroded endowment products.
Who are the stupid and gullible customers? Go to any mall roadshows and watch the predators at work and you can see how they target the aunties and uncles with 5 pay 10 or 10 keep for 15 or pay 2 and keep for life. What return from these products? Barely 2.5% over the lifetime. These aunties are better off buying SSBond or put in 3 years in Maybank FDs and get 2% compounded. Why get total 10% for lock in of 5 years?
Despite Balanced Score Card product peddling and sales incentive still exist…It is sad day for the consumers of Singapore. The regulator has abandoned them to the snake oil salesmen and conmen.
If you have started work at 25 years old and retire at 65, you would have worked 40 years. But what will happen if you live for another 40 years?
what is the likelihood of anyone living to 105 (retire at 65 and live for another 40 years)?
Since we are talking about life expectancy 40 years later, there is a good chance the life expectancy would have increased significantly. Life expectancy is not static and is increasing every year.
In 2003, a 25 years old female has a life expectancy of 57 years. This means there is 50% chance of living beyond 25+57 = 82 years old. However in 2014 – 11 years later – the 36 years old female has a life expectancy of 49.4 years. This means there is a 50% chance of living beyond 85.4 years old. When the same lady reaches 65 years old, it is likely life expectancy would have increased significantly again.
Unfortunately most people would be ‘force’ to retire much earlier. So realistic speaking is more like work for 25 years but live for another 40 or 50 years.