CPF: Have You Saved Enough? Think Again...
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S'poreans 'not well-prepared for early retirement'
Most surveyed by AXA think their CPF savings are enough, but it may not be so
By Arthur Poon
Oct 10, 2006
The Straits Times
SINGAPOREANS have a clear idea about retirement - call it quits at 54 and enjoy a better living standard. Think again, says an insurance expert.
The unrealistic financial expectations of many people here were unearthed in a global survey of 10,000 people by insurer AXA.
Respondents were asked about the ideal retirement age, what plans they had made and if they expected a better standard of living after retirement.
The local findings, as outlined to a conference by Mr Richard Shermon, chief executive of AXA Life Insurance Singapore, showed a worrying disconnect with reality.
'There is a huge retirement funding gap in Singapore,' he said. 'People dream of an early and comfortable retirement, but they are not financially prepared (for it).'
Those dreams include retiring at an average age of just 54 - earlier than people of any other country - while one in four believe that their living standard will then improve.
And 90 per cent of Singaporeans think they are saving enough by contributing to the Central Provident Fund (CPF), Mr Shermon said, and almost half think their CPF will give them a monthly income equal to their last drawn pay.
The reality, he said, is that the minimum sum required in a CPF account will be $120,000 by 2013, but this will provide a meagre monthly payout of less than $1,000, assuming that one draws on it for more than 10 years.
Many people, such as sales executive Steven Chin, 54, and a father of three, are not sure about where they stand.
'I estimate my CPF savings will give me $1,500 to $2,000 a month after retirement, but I have never really done the sums,' said Mr Chin.
The need for people like Mr Chin to plan was addressed by the CPF Board's chief executive, Mr Liew Heng San, in the opening address yesterday.
He told the conference organised by the Singapore Actuarial Society that the ageing population poses vital challenges. He also expects financial support for the elderly from family members to shrink.
'There might be a value change in that elderly parents may now be more reluctant to rely on their children for financial support. With more working overseas, we can also expect family support to become more fragile,' he said.
CPF has in the past focused on helping members accumulate savings but not given enough thought to how the savings should be disbursed post- retirement, he admitted. An area that CPF is studying is a bigger role for annuities, and how these products can be better designed for the Asian market.
Mr Liew urged members to defer CPF payouts if they are financially able to do so. 'For every one year that they postpone payouts, they can extend it by two more years'.
The reason: Members with only the minimum sum will have just 20 years of payouts if they start getting them at 62.
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Funding gap
Ninety per cent of Singaporeans surveyed think they are saving enough by contributing to the CPF. Almost half think their CPF will give them a monthly income equal to their last drawn pay.
The reality, says AXA?s Mr Shermon, is that the CPF minimum sum will be $120,000 by 2013, but this will provide a meagre monthly payout of less than $1,000, assuming one draws on it for more than 10 years. -
buy flat
the entire CPF already swept clean liao
how to save up enough for retirement?
tok is easy, but even if don't eat, also need to pay for bills and loans how to save up siah -
Money always not enough
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we spent most, if not all of our money on a hdb flat.
how much money can we get out of our cpf upon retirement?
not much unless we sell the flat!!!! and if we do, where do we go from there? sleep at the bus stops?
of course, if your cpf contribution per month is much more than your housing loan then you probably wouldnt have to face such a problem. -
the first time is ALL yr CPF
regardless u enough to pay a not..
so after that got to start from 0 -
they leave 2k behind for emergency.Originally posted by BufPuf:the first time is ALL yr CPF
regardless u enough to pay a not..
so after that got to start from 0 -
Hence, based on you people's response, isn't the purpose & objective of CPF basically LPPL? A Lost Cause, or a shell of a 'receptacle' for gov to collect funds to roll their overseas investments? -
Originally posted by ShutterBug:
the ridiculously high property prices make the cpf scheme meaningless.
Hence, based on you people's response, isn't the purpose & objective of CPF basically [b]LPPL? A Lost Cause, or a shell of a 'receptacle' for gov to collect funds to roll their overseas investments?
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This CPF policy, among many others, are the reasons WHY our gov are so dead set against public expressions like Protests & Demonstrations. Becasue these issues will be raised and they will be hard put to explain - because there exists those in public who aren't brain-washable. -
The CPF scheme is actually an excellent one but prices of HDBs are not.
If one really does meet the minimum sum at one's age of retirement, today it's still 62, then the person may enjoy amounts of $700 plus till $1,500 for at least 20-25 years. With a meagre minimum sum of between $90,000 to $120,000, one can ask little more of this payout.
It's always wise to have one's own savings too.
My $0.02 worth.
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Retirement inadequacies are the result of the following:
1. Insufficient knowledge of market conditions
2. Inconclusive knowledge of one's personal financial assets and requirements
3. Too much reliance on govt
Anyone who has observed the past and present market conditions will know that CPF alone is insufficient to sustain the post-retirement era. Recently, CPF closed off the loophole that permitted voluntary top-ups over and above your 20% monthly contributions. That was disappointing because it removed our chance to take advantage of the highest interest rate in town to maintain our kitty. The downside being it could not be touch till post 55yrs.
I am not convinced that insurance companies are a good avenue to invest our monies as the interest rates usually span several years and seldom accurately takes into account inflation and other depreciation aspects.
Coupled by the fact that most insurance agents (financial planners) are not FA trained, you take the huge risk of placing your trust in them. -
Yes, true...Originally posted by Rock^Star:The CPF scheme is actually an excellent one but prices of HDBs are not.
If one really does meet the minimum sum at one's age of retirement, today it's still 62, then the person may enjoy amounts of $700 plus till $1,500 for at least 20-25 years. With a meagre minimum sum of between $90,000 to $120,000, one can ask little more of this payout.
It's always wise to have one's own savings too.
My $0.02 worth.
But look at it; we're living in a so called First World country, with all the facilities and infrastructures of a well developed country, people are well educated and qualified, but ironically, jobs are given to FTs, our gov has fully entrusted FTs from jobs to producing babies, while its people have to scrounge for and save every single scent they earned just so to get by in old age and to enable them to afford a coffin when time comes.
Is this PROGRESS??? Or does it look more like SLAVERY???
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the worst thing is they know that the cpf scheme is not working but cant or did not do anything to rectify the problem.
with the influx of foreigners jobs are lost. those post 40 have a reason to be worried, especially if you have unpaid housing loans. -
PRECISELY dragg....Originally posted by dragg:the worst thing is they know that the cpf scheme is not working but cant or did not do anything to rectify the problem.
with the influx of foreigners jobs are lost. those post 40 have a reason to be worried, especially if you have unpaid housing loans.
I tell you, all the more our gov will NEVER allow public speeches or expressions - because this big ugly skeleton in their closet will be paraded up and down Orchard Road! -
Before somebody comes in comment, I want to re-iterate this:
No country, and this world, are solely made up of Engineers, Professors, Doctors/Surgeons, Lawyers/Judges, Scientists/Rocket Scientists, Tycoons or MNC Magnates, etc.
I believe that CPF is tuned for elites, and those who earn mega bucks. While the rest, they're just trying to carry water with a bucket shot full of holes.... -
Yeh pretty sad, no freedom of speech too. A country will only truly progress the day we are allowed to speak freely w/o fear.Originally posted by ShutterBug:Yes, true...
But look at it; we're living in a so called First World country, with all the facilities and infrastructures of a well developed country, people are well educated and qualified, but ironically, jobs are given to FTs, our gov has fully entrusted FTs from jobs to producing babies, while its people have to scrounge for and save every single scent they earned just so to get by in old age and to enable them to afford a coffin when time comes.
Is this PROGRESS??? Or does it look more like SLAVERY???
A delivery uncle who takes home $1,000 a month ten years ago, is still taking the same pay today. He will have no money at all for retirement.
But I still reiterate my stand. Not all FTs are bad. Quite a number are necessary so that our economy may be sustained. -
Enjoy young, die earlier better. Let us draw our cpf to buy cars.
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instead of coming up with a solution or admitting that the scheme is failing they keep extending the retirement age and withdrawal amount.Originally posted by ShutterBug:PRECISELY dragg....
I tell you, all the more our gov will NEVER allow public speeches or expressions - because this big ugly skeleton in their closet will be paraded up and down Orchard Road!
knn, it is only making matter worst.
frankly i cant imagine what it is gonna be like 10 - 15 years from now. -
This is the problem; the unthinking public.Originally posted by ditzy:Enjoy young, die earlier better. Let us draw our cpf to buy cars.
Lets prove to them, that we can all think for ourselves by keeping our own savings.
But I doubt they would allow, because I strongly believe they NEED our money in their coffers for their own needs....
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nope..Originally posted by dragg:they leave 2k behind for emergency.
my one left 100 buckz nia -
Just like what one female client of 20 something age and a professional have described in her own words; "Aiyaa.. CPF is just an ILLUSION! I wouldn't bank on it!"Originally posted by shinta:nope..
my one left 100 buckz nia -
They need our money to buy more shin corpse.
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Ahh.. fark lah.. that was the worst wayang I ever saw of them...Originally posted by ditzy:They need our money to buy more shin corpse.
.. die die must look good by saying something clever... -
as much as i sound pessimistic life full of financial worries is not worth living, especially if you are old.
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This Singapore!!!!! Freaking PAP Govt.
I served my NS and a pure Singaporean. Today, I realised that I don't even have free space to stand here on ''so called'' our homeland.
Maybe should not be free...but why are we paying housing loan with interest that would be doubled when is fully paid up? Notwithstanding the interest that we are paying....but a leased of 99 years which we will have to surrender our home to the govt eventually.
We are just slaves to pap.
FREAKING PAP