It was reported that Singaporeans are suffering from the lack of financial literacy. The problem is actually widespread despite Singapore scoring tops in mathematics. “There is a difference between being educated and being financially literate”, says Professor Benedict Koh of Singapore Management University.
The lack of financial literacy has been shown many times – surveys after surveys showed that Singaporean lack the financial know-how. But to be ignorant is not wrong – the problem is most people remains ignorant for really a long time until it is too late.
To show how bad the situation is, I have a free software that calculates the retirement shortfall. Nearly 80 individuals have used the software so far. I estimate that 25% who used the software are financial advisers using it to plan for their own clients !
Anyway, I randomly picked reports from 10 individuals. It is important to note that the report is purely based on the inputs from those individuals – their expenses, assumed inflation and the sources of passive income.
The observations are:
- Everybody’s financial situation is a total disaster.
- Majority just rely on CPF Life.
- For the minority who have multiple sources of passive income, their situation is not much different because they still have to work due to the deficit in their retirement years.
- Some misunderstood how CPF Life works. For instance, one person thought CPF Life is inflation index (this was before the announcement of CPF Life Escalation Payout).
- One person thought that CPF Life starts at 55 and ends at 80. Both figures are incorrect. CPF Life minimum payout age is 65 and pays for entire life.
- Only the last chart below shows that the person can retire. But I found that it turns out to be a financial adviser who was using my tool to demonstrate the suitability of the two products he was trying to sell to his prospect. Unfortunately it appeared that he misunderstood how the products he wanted to sell works!
Conclusions? Those who fail to plan is planning to fail. But it also shows that those who try to plan may also still fail. Don't forget to try my free software: FREE personalised retirement planning analysis report .
Retirement planning report from 10 individuals
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