Retirement should start at 30....expert says!
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Shocking & fearful..expect says that retirement planning should start at 30 year old not when you are 50...
Today learn'g fm radio talk abt ppl in 40+ & above....I feel very sad for them cos I know 1 day all of us be in their shoes.......... sooner or later....
Most callers were >40 & true concerns. over the radio I can hear their frustration & anger with Gahmen;
1. Cannot get jobs.... HR says 40+ to old, oni >30
2. CPF withdraw averagely $300/mth..how to survive? Bus/MRT, Pub bill is already insufficient. Not to mention time vaule of money & inflation in next few years...
3. Gahmen keep pushing private sector to employ older works while they are the 1 that keeps cutting ppl who are >35. ie. Army. And not emplying them.
4. Tax, if a person reach retirement age...as tax pay I believe they should not be tax.
5. Reinstead they CPF, many employers already hightlighted that CPF doesn't contribute much to savings. So I don't understand Gahmen logic in lowering older work's CPF. They simply don't give a damme... -
wah... if 30 yrs retire...then i will be retiring in a couple of years liao
yipeee
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I am Croco, Croco am I -
Is that an overseas expert?
It's hard to retire at 30. Well, it's possible, but it's hard.
There will be lots of things that you wouldn't be able to do, like buy things, travelling, ......
Unless one turns vegetarian (even vegetarian food cost a lot now), stays at home all day, it's hard.
One have to look at how much has been earned before 30 also. -
Retirement plan can start anytime from your first job (say 25 years old). Nothing special
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2 have already missed the mark of my argument. Yes an foreign expert said that we (Singaporean) should start saving up for retirement............not retire. So how many Singapore have starting living at age of 30? How many how started to get married, how kids.....or even have a stable job?
So what in the world is this person, who earn probably 10x of you & I can earn per month, stay in outer limits of Singapore, don't even live in HDB have to advice us.....?
Isn't it a staged? Favouring the view point of Gahmen that responsibility of retirement should be individual. Can't people see that Gahmen's idea is that for Sporean not depend on CPF for retirement? So that the amount can be reinvested for gain interest for them? -
euphratis, consider this:
When you retire, say at about 60, you'll get no more money coming in as salary, yet you'll have living costs of maybe $1500 a month, assuming that the house is paid up by then and you haven't set your bank loan terms at 65 years.
OK, so your annual expenditure (for just one person, not counting dependants) is $18,000 a year. Okay, let's say $300 comes from CPF every month - that's still $14,400 you need. Where's the money going to come from?
For argument's sake, say you've got investments and you're depending on the dividends to live on. We'll be generous and call it 8%, which ought to be a good balance between performance and security. At that rate, you'll need $180,000 in capital. That's assuming that you've got the house paid up, say one that's worth $350,000. On top of that, you've got your living expenses while you're working, say at the set $18,000 a year for 30 years - that's $540,000.
In sum, by the time you're 60, you'll need to have earned a total of $1,070,000. And that's if you're frugal and earning something like $36,000 a year - no overseas holidays, no big parties, no real fun.
So have a think about it - do you really want to wait until you're 45 to start thinking about these things? Better get a lot of sedatives, because you're going to have a lot of sleepless nights.
I'm not disagreeing with what you're saying about the government - I'm just saying that you need to make sure that your resentment doesn't keep you from facing the reality described above. -
Ah. I read wrongly. Retirement planning, not retirement
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haha we are living in sg hor... so if u are one a happy happy retirement.... pls dun expect anything much from our big brother ok?? so it is right!! u should start your planning ASAP... just let your money work for u.. anyone need advice on financial planning can pm mi got more detail. haha dun worri mi not an insurance agent or selling unit trust. haha just want to share share. haha
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i heard it from radio 938fm as well.
i am 30 this year and i cant plan for my retirement. because my furst baby is coming and my new flats are coming too. renovation cost, baby cost, parents medical cost. how to save for retirement?
i already start feel the panick when we reach 40 in spore. its true. unless you are doctor, lawyer, auditor or top management director of company, top govt officials otherwise we really should feel panick.
older workers are more expensive to employ because they might take maximum govt medical benefits. for those manufacturing work, they tend to work slower and less productive. for office work, company want to portray young and dyanmic company to customer, with new idea, learn things faster, willing to work harder.
now everywhere is talking about cost cutting, i wonder where is the role of NTUC in protecting the interest of blue collar here in spore. spore labour movement is in sorrow state. they are like parrot of govt. just repeating what govt told them to told the workers. when can we have strong labour movement like in HK, australia, Japan and Korea. dispite these country have strong labour movement, their country is still growing.
i heard the last 2 caller a lady calling in to 938 mention should create job like consultant in every company for the older worker because they have vast knowledge which younger dont have. because her mother or mother in law 70+ now is still a consultant in the law firm. i cant believe anyone who talk to great in the beginning can finish the sentence with understanding like this. to be consultant, those are mostly professional. the concern about retirement is not so much focus on those high educated and high management but worry for the middle to lower management level to blue collar worker. at their level, dont think there need for consultant and since company is employing younger to save cost dont think they will create job for that kind of consultant.
all sound cruel but all facts. ever think if u got retrench, the only way out is to be taxi driver??? -
Gedanken,
Good pointers but your views comes in angle of a fund mgr;
Not 100% contribution goes to OA. There are % that goes to Medisave & special A/C. Plus the progressive reduction of contrib./age. So averagely is 14.1% can be invested not 23%.
<35 Empr 13%/ Empee 20% = OA 22%, SA 5%, MA 6%
>35 Empr 13%/ Empee 20% =20%, 6%, 7%
45 Empr 13%/ Empee 20% = 18%, 7%, 8%
55 Empr 6%/ Empee 12.5% = 10.5%, 0%, 8%
So let say with all the inflation, increment, wage reduction due aging. The salary line is at constant $30K/YR. Age 25-60. CPF OA 22% constant contrib. = $6600/YR x 35years = $231K. at age 60.
4 Room flat = 180K x 30 year interest = $360K loan/25years. Your CPF is negative 231K - $360 = (129K) paid to interest. So you get to stay in your HDB FOC 5 years. Deprecation of old flat + [if] property inflation 20% x $180k = $216K upon sales less $129K interest = $87K in CPF if property is sold.
So with CPF minimum sum $120K of $60K in property & $60K in cash. How is he going to sell his flat? Even if he sell his flat, he cannot even meet the minimun sum. Where is his roof? Another house would not at the same price. So he cannot sell.
Other factors omitted in your consideration;
Ceiling low to $4500. This no doubt will be lower soon...anybody above that employer is not oblige to contrib....burden on workers.
Further plan to reduce employer contrib. from 13% to 10%.
Employability of peopel aging, if still under employment, wage reduction with region competition.
Medical problems with aging, healthcare inflation. Health Insureance is primum is constant w/o retrechemnt. Coverage upto 60-65 depending. Thereafter Medisave up to 80. With just 1 case of stroke, a person's CPF & saving can be wipe out. And no more insurance coverage. [Check out cost for stroke.]
Time/value of money & inflation.
Even if return at 8% is a very high hope & cannot hedge against current inflation rate which is >3%. At current market 5% is already very promising. Please check unless you are talk about high risk instruments.
And at age 25 or 30 years old, how is one to have a capital of $180K in CPF to invest with 5 year of working? To date my CPF investment has be negative. Although I have invested in low risk vehicles & dividend; returns hardly makeup for interest & bank charges. It has been invested for > 6 years.
Invest in high risk? what are the odds. If you read CPF board statistics, % of losses with CPF investment vehicles are fearsome. -
Pardon the oversimplified example, E - you obviously know more about this than I do. From the looks of your example, though, the situation looks even worse. At the end of the day, the bottom line still stands - that expert on radio is right in saying that even though it's 30 years off, we'd better start thinking about it soon.
Not that it makes much difference, but the $180,000 investment money I was tlaking about was at the age of 60, not 30. -
i think its ultimately an issue of how u choose to live now, and how u want to live when u retire...
it sounds idealistic and the alternative seems almost impossible, but frankly, i find that many of us are not living within our means.
we spend such a big component of our disposable income on housing and transport, incidentally two things that are guaranteed to lose money in Sg, especially the latter if u buy a car.
my former boss got married not long ago, and from the way i see, he's screwed... he saved on the wedding banquet (which was smart), but he totally splurged on housing and renovation... and he felt that he could cos banks were offering massive discounts on housing and renovation loans that time...
i didn't have the heart to tell him (though i think he knows,) that he's gonna have a very hard time paying off the loans, that he's over-extending his credit and essentially not leaving anything for a rainy day... much less a retirement fund!
do we really need to spend that much? i dunno... no partner, no plans to settle down yet, but seriously... why bother if u're gonna be working 10-12 hrs a day? go home sleep only mah... -
Gedanken,
You are looking at age official retirement age of 62 and above, but what about age before 62?
New rules will be come in force in 9 year's time, by 2013 min sums = $120,000 to be kept when reach 55 years old. From 2013, CPF members must meet the CPF and Medisave Minimum Sums requirements before withdrawing their remaining Ordinary and Special Accounts balances.
(www.cpf.gov.sg/cpf_info/goto.asp?page=cpfchanges_menu.asp)
With current job situation, any person at age 45 will find difficult in getting at job replacement if he/she is retrenched. For blue collar worker like construction, they have to retire by age of 50 at most.
This will leave vacuum or a "black-hole" when you & I reached 55 to 62 years old. For those who fall short Min Sum or just a few dollars above water line. How are they going to survive?
Singaporean are having children later in 30+, 40+ or even 50s. So how long can they support themselves & their children education?
Yes, retirement is a personal responsibility but it cannot entirely be push away as Gahmen is the one who is setting the stage. There are alot of things to ponder & a lot of things beyond us. One thing is to ease the standards of living which is inflating rapidly, housing, medical & education...
Therefore if the expert is residing & retiring in Spore & amougst us. I do not respect his/her comments...not to mention even Singaporean seated in "P" wants to really learn to commoners like us. [/url] -
Dear Gedanken,Originally posted by Gedanken:Pardon the oversimplified example, E - you obviously know more about this than I do. From the looks of your example, though, the situation looks even worse. At the end of the day, the bottom line still stands - that expert on radio is right in saying that even though it's 30 years off, we'd better start thinking about it soon.
Not that it makes much difference, but the $180,000 investment money I was tlaking about was at the age of 60, not 30.
In fact I appreciate your comment & sincerely want to really understanding what we Sporean are in for. You & I should be worrying, worring the vaccum Gahmen has create 55-62. But in anyway how many Singapore can live to the age of 62? 7% by survey. Life would be better if you reach age 62, but whatever invest & return are still hardly imaginable for survival.
If you consider an invest again, 8% is what the bank charge you. Max returns are 2.3 - 5.7% (source NTUC income), the portfolio of the underlying invested fund are relatively mid-risk to high risk. Any Insurance company will not provide that lucrative return unless your invest directly in manage fund/stock & shares. Don't forget xxx% of amount goes to life fund, xxx% goes to investment fund. Therefore not 100% of $180,000 will be working for you. Not to forget % goes to the annual management from 0.85% to 0.95%, agency fee & admin insurance company. http://www.income.com.sg/insurance/investCPF.asp
There is another scheme that is very popular is the annuity starts paying you back at age 62 at assuming 2.6% max returns you get $446 for male /$415 for female. But at $450 in future dollar value.....? What can 1 buy with that?
http://www.income.com.sg/insurance/glannuity/
But don't forget Insurance company are not fools & had done their homework & male dies young than woman. Singapore mortality rate 65 years and over: 7% (male 109,418; female 136,629) (1999 est.). This person dies before 62, only 97% is refunded to CPF with interest of 2-2.5%. Don't forget CPF charge interest for withdrawal which works out to be negative.
Housing is getting more expensive. Gahmen has in fact currently they are reducing the per/sqft area of flats but selling them at same price. Another illusion create to fool the public. So I cannot imagine the housing prices in next 10/20/30 year's time. -
There no retirement in Singapore.Keep working Folks for your Cars,Living expenses, House (condo) or children.
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work for your house, when reach a age of retirement apply reverse mortgage....starting from zero, ending with zero
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Given the current and future trends of structural unemployment, I think I will already be a very happy man if I dun starve me and my family to death.
Any other talk about retirement planning would possibly be something else that falls under the 'luxury' catagory. -
Never save your money in any Bank. Go and buy share with high divident.
The interest rate is now 0.1 % but share give you about 4% return -
Next year then I think abt it...