Do we have enough Savings????
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http://deluxeforums.hardwarezone.com/showthread.php?t=1278994
Dream or nightmare?
Find out how much you need to stash away now to live comfortably when you retire
By Lorna Tan
YOU have been working hard and dutifully putting aside what you hope will be sufficient savings to build a nest egg to ensure a worry-free retirement.
But the grim reality is this: It simply may not be enough unless you take a serious look at your current lifestyle and finances, and have realistic expectations of how much you need to retire comfortably and how long you think you may live.
You may not realise it, but you make choices about your retirement every day. If you buy a fancy car and take an Alaskan cruise instead of settling for cheaper means of transport and a vacation nearby, you will have less to pad your nest egg with.
Last year, a Singapore Management University (SMU) and OCBC Bank study on money management behaviour found that 74 per cent of Singaporeans want to retire before 62, the current mandatory retirement age. Yet, most are ill-prepared for their golden years. For many, there seems to be a significant gap between the level of retirement funds they dream of and their ability to achieve that sum.
This 'retirement gap' was highlighted by the Life Insurance Association (LIA) at a recent luncheon. Based on a life expectancy of 82 - that is, another 20 years after retiring at 62 - LIA president Jason Sadler said savings of at least $250,000 per person would be needed to maintain a 'reasonable' living standard.
This figure was based on the median earnings of Singaporeans of about $2,500 per month. If a person needs 60 per cent of pre-retirement earnings when he retires, this would work out to $18,000 a year or $1,500 monthly.
'Many Singaporeans have the misconception that the money in their CFP accounts will be adequate to meet their needs after retirement. The reality is that many Singaporeans will not be able to have as comfortable a lifestyle as they would like to enjoy in their retirement years if they were depending only on their CPF savings,' Mr Sadler told The Straits Times.
According to a report recently released by the Committee on Ageing Issues, more than half of Singaporeans might not have enough funds in their CPF savings to last through their retirement years. This reinforced the findings of the SMU-OCBC survey, which indicated Singaporeans aged 55 have only about $120,000 on average in liquid assets, including CPF monies.
And even if you are able to satisfy the CPF minimum sum requirement of $120,000, which will be in force by 2013, it will provide retirees with only $950 a month for 20 years - enough only for subsistence living here.
Mr Patrick Lim, an associate director of financial advisory firm PromiseLand Independent, said the modest lump sum requirement of $250,000 is already formidable for many.
And inflation - the rate at which the prices of goods and services rise over time - will affect hard-earned savings, regardless of the kind of retirement lifestyle that a person wants.
Put simply, the value of money does not stay static. Almost without exception, a pile of dollars will represent less spending power later.
Assuming an investment return of 4.5 per cent and a 2 per cent inflation rate for the different age groups, Mr Lim drew up a table setting out how much you need to set aside each month to accumulate the required retirement fund, based on the sum of $250,000 at today's value, when you reach 62. See Table 1.
Based on his calculations, a 40-year-old person would need a lump sum of $146,989 now, or to put aside $850 monthly, to arrive at $387,117 in retirement savings at age 62.
How much do you need to retire?
FINANCIAL planning outfit ipac's director of wealth management, Mr Ben Fok, said even that minimum lump sum of $250,000 cited by the LIA is insufficient for a comfortable lifestyle.
'This may be enough to meet the most basic needs, but it won't be enough if you want to take holidays, dine out or buy gifts for your grandchildren. Furthermore, if $250,000 is all you have and nothing else, then a huge medical expense would wipe off a large portion of your savings,' he said.
Assuming the lump sum of $250,000 is invested for 20 years with projected annual returns of 3 per cent a year, total compounded returns would be $16,809 or $1,400 a month for the 20 years, he said.
To determine how much you will need during retirement, financial advisers say it is important to know what you want to do in your golden years.
Said Ms Anne Tay, OCBC's vice president of group wealth management: 'As a general rule of thumb, you will need about 70 per cent of your last drawn salary at the time of retirement. The 70 per cent figure is recommended to maintain your current lifestyle. If you are willing to downgrade or change your lifestyle, you may need less than 70 per cent.'
Financial planners also highlighted that it is prudent to plan for at least 25 years of retirement instead of 20, after age 62. After all, actuarial statistics indicate that more than 40 per cent of Singapore males are likely to live beyond age 82. As for Singapore females, more than 50 per cent will live beyond 82, said insurer NTUC Income.
The earlier we start saving, the less we will need to save, says Mr Fok.
By working out the different amounts of monthly savings required to achieve $100,000, he said that if you have 30 years before reaching retirement, you will need to save $172 a month with a return of 3 per cent a year over the next 30 years to achieve $100,000.
Of course, this level of savings is simply multiplied by two for $200,000, or three for $300,000, and so forth.
See Table 2, which highlights the importance of saving early.
However, if you have left things rather late and have just five years before retirement, you need to save $1,547 a month, and grow that sum at 3 per cent a year to attain $100,000.
How to bridge the retirement gap?
MR FOK proposes four ways to tackle the gap. First, you can spend less during your working years and save more. The money saved can be invested. Second, you can retire later, at age 65 instead of 62.
Third, you can revise your expectations for retirement and reduce your retirement income, so the capital sum required is not so huge as to be unattainable.
Last but not least: Put your money in more aggressive investments, but bear in mind that investment returns may be volatile, he said.
Mr Lim said one rock-solid way to fund retirement expenses is to buy a participating annuity as it offers a lifetime of guaranteed monthly or annual income, no matter how long you live.
This ensures you will never outlive your stream of guaranteed income.
For instance, a 61-year-old retiree with a single lump sum of $250,000 stands to receive annual payouts of $14,253 annually (for males) and $13,334 (for females) by purchasing an Income annuity plan.
Retirement tips
TO GET you started, here are some tips from DBS Bank and OCBC:
Start retirement planning and saving now, regardless of your age.
Assess the kind of lifestyle you would like during retirement.
Establish a retirement plan. The plan should include your goals, your desired retirement age, the amount of income you will need during your retirement years, and the level of risk in your investment portfolio and strategy to meet your goals.
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surprisingly....no one to comment?
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Only to say that if you cash out and retire in India, Indonesia, Malaysia or even Vietnam/Thailand, you can get away with a fairly comfortable retirement with less.
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I hope this is not the case. -
Once you fall sick at that age the money is simply NOT enough
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Those who have no savings and they fall sick, they either wait to die, or jump a tall HDB building.Originally posted by maggot:Once you fall sick at that age the money is simply NOT enough
Because NO ONE will take care of their medical needs. Because this is NOT a WELLFARE state.
Isn't it nice? Isn't this a nice and warm home country? -
a very informative table i should say...but the table is done based on someone who is healthy. Hence we should factor in the potential medical bills esp when growing older...which lets say extra $200 per mth...then u will see the mthly needed to save actually is pretty high...
sad to say with so many things we need to pay, most wont be able to meet the mthly saving requirements -
I believed MM statement on First World Standard Country..don't smoke me..
Cannot be lah.. 1st World Standard citzen must be very loaded with money but never feel enough money
Cannot be enough saving when we are so loaded leh and what is spending to us, a 1st World Standard Citzen, no even a feather.
You kidding me..
I studied not much.. MM must be right. -
You can lived till very old maybe 90++ but where's the money?
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I am 32 now. I have already made up my mind to move out of Singapore in my old age. In fact I already have plans & it's folding out in China. Plan early.
Not because Singapore is not good. Singapore is a good place for if you are rich & able to spend, but there are even better place if you are rich enough for those places. Singapore is in Middle place & already over what common people can achieve for retirment.
1. I can never save enough for an Ideal Old Age Life. People always expect higher & not willing to down shift.
2. I expect lesser of quility in other country even my $ of spending is greater there. Always expect lesser. Nothing is free it always goes much expensive.
3. I don't want to burden my kids when I am old.
4. I expect to down shift my life for old age. Not many can do this but will have to do this. It's a trend up coming. Give up a car, goes for Bike or public transport. Live in a smaller house where I no need to worry of $. Cook my own food. Eat Lesser.
Look now even our parents are sick we also worried of not enough cash to pay for medical bills. Don't ever think medical will be cheaper next time. Example compare product price now then 10 years ago? For sure it goes up faster then what common people earns. -
Excuseme, what savings?
We heartlanders dont have savings if you factor in
the huge life long debt we all owe HDB!!! -
Then you rent lor...it's cheaper to rent than buy a flat..Originally posted by miongisback:Excuseme, what savings?
We heartlanders dont have savings if you factor in
the huge life long debt we all owe HDB!!! -
Check this out:
"A beautiful and inexpensive place in North America where oceanfront and lakeside lots can be had for as little as $10,000 (or a charming 3-bedroom home on several acres can be yours for under $50,000). Sound like a dream? It's not. This slice of Heaven does exist. Nestled in the North Atlantic on Canada's east coast, Nova Scotia is a little-known paradise steeped in Scottish, Irish and English history...."
http://www.escapeartist.com/efam/71/Living_In_Nova_Scotia.html -
if you own a flat how much will you have left in your cpf after paying all the loans?
you have to sell your flat in order to cash in on the cpf money. then where will you sleep? bus-stops?
the cost of living is so high and there is also no guarantee of life-long employment. see how companies retrench and axe staff.
how much can an average worker save, especially if one is married? how about those with aged parents? how about those with someone sick at home?
there is no free lunch. we are definitely on our own!!!
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Money is always no enough, no matter how much you have.
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My savings mostly thrown into the sea liao
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for ch0i hor money is never enuff to human rite
so i sujes we at times rite no nid to really
kanchiong spider work till jialat late night to find money
die aso for later money go to family
then if worst hor family fight
if ch0i die rite ch0i duwan will
they say rite
"If there's a will, there's 500 relativeS"
true true rite ? betul .. -
S'poreans Ill-Prepared for Retirement: HSBC Poll
Business Times - 27 Apr 2006
Six out of ten Singaporeans are seriously worried about having too little money in their old age, but only one in ten has actually saved for retirement in the past year.
These are among some alarming statistics to emerge from an HSBC global survey of people's attitudes towards ageing and retirement.
The survey, released yesterday, covered more than 21,000 adults in 20 countries and territories, including 1,000 adults aged 18 and above in Singapore.
Many of the findings make worrying reading. Some 40 per cent of those surveyed here said they have never saved specifically for retirement and 62 per cent have never sought information on retirement planning. Eight in ten said they have not made a will, despite the fact that almost the same proportion of the respondents are aged 30 and above.
Almost 80 per cent said they have never made arrangements for care in their old age, although more than half of the respondents are aged 40 and over.
The findings come as countries worldwide grapple with a growing pensions crisis brought about by an increase in the proportion of retirees in their population.
Singapore, too, faces the problem of a greying population. In a report to the Prime Minister in February, a government-led committee on ageing issues projected that the number of residents aged 65 and over will triple from the current 300,000 to 900,000 in 2030.
By then, one in five residents will be in that age group, a sharp increase from just one in twelve in 2005, the committee said.
But while HSBC's survey paints a bleak picture of the current state of affairs, it also gives a glimpse of how Singaporeans think the country should approach the issue. Forty-one per cent feel the government should increase the retirement age before considering other options such as compulsory additional savings, higher taxes or a reduction in pension benefits.
Three-quarters of those surveyed said they would like to alternate between periods of work and leisure or continue working in their later years, with only 21 per cent not wanting to work for pay again. These findings are likely to lend a boost to the government's efforts to increase the effective retirement age here.
But the results also reveal a gap between what employees say would keep them in the work force and what their employers currently offer.
More than two-thirds said they would be interested in working past the retirement age if they could work fewer hours, but less than a third said their employer provided such flexibility for those aged above 50.
The survey group was almost evenly split between men and women, with 59 per cent working either full-time or part-time, 11 per cent retired and the rest unemployed, including students and housewives. Sixty-two per cent had a total household income of less than $5,000 a month, and a fifth of the workers were self-employed.
Falling ill in their old age was the most commonly cited fear associated with ageing, followed by fear of losing their memory or their home. About half said they dreaded being lonely, bored or dependent on others in their old age. Surprisingly, less than a third said they were worried about death itself.
But most of those surveyed also associated retirement with happiness, freedom, satisfaction and hope, ahead of fears of poor health and boredom. The vast majority said they would like to spend more time with family and friends during retirement.
More than half also expect their children to care for them if they are sick or disabled, which may explain why so few have actually made arrangements for their own care. Only a third, however, expect to live with their children in old age.
http://business-times.asia1.com.sg/mnt/html/pdf/retirement_apr26.ppt -
never mind, Johore is waiting to be built into retirement village to take in singapore rejects.
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how coincidental!Originally posted by mistyblue:never mind, Johore is waiting to be built into retirement village to take in singapore rejects.
singapore is thinking of building retirement village!
but judging from the standard of living in singapore, these villages would most prob be for the senior exparts.
nevertheless, singaporeans still win! while resting in the johore retirement homes at night, they can work in the singapore retirement home during the day!
perfect isn't it? -
the senior expats retire and enjoy the sunshine there while local retirees continue to work there as chambermaids, cleaners, waiters and whatnot.Originally posted by Cindyfeh:how coincidental!
singapore is thinking of building retirement village!
but judging from the standard of living in singapore, these villages would most prob be for the senior exparts.
nevertheless, singaporeans still win! while resting in the johore retirement homes at night, they can work in the singapore retirement home during the day!
perfect isn't it? -
Build it along the johor strait..very nice sea view..and our singaporean can look forwarded living in one of the unit when retired..so good.Originally posted by Cindyfeh:how coincidental!
singapore is thinking of building retirement village!
but judging from the standard of living in singapore, these villages would most prob be for the senior exparts.
nevertheless, singaporeans still win! while resting in the johore retirement homes at night, they can work in the singapore retirement home during the day!
perfect isn't it?