If you’re planning to retire in Singapore, unless you’re the sort of person who finds Kevin Kwan’s novel Crazy Rich Asians totally relatable, forget about sipping piña coladas by the pool in a Hawaiian shirt and sandals with socks while having your back massaged by sweet young things a quarter your age.
In fact, if the recent trend of Singaporeans not being prepared for retirement continue, you could find yourself toiling away well into your twilight years. Two in three Singaporeans don’t believe they can retire at their desired age. Yet the spending continues. If that still doesn’t scare you, here are some myths Singaporeans believe that just might explain their cavalier attitude towards retirement.
My kids will look after me
Many seniors citizens today receive an allowance from their adult children. In fact, in Singapore there is a legal obligation to support your parents, thanks to the Maintenance of Parents Act. If you can prove that you can’t maintain yourself adequately, you can technically apply to the court to order your child to give you an allowance.
The court will consider if it is fair to do so taking into account factors such as whether your child can afford it. We’re already used to the government harping on the need for family members to support one another so the state doesn’t have to.
But assuming your kids can and will look after all your financial needs can be a huge mistake, as many of the old people sleeping in void decks despite having a home they can return to later find out.
For one thing, you can’t simply assume that your kids will have the financial resources to support you completely. Sh-t happens, and should your child face serious medical issues or business failures, expecting support from him can be unrealistic.
Besides, a growing number of Singaporeans married or not remain childless, and even those who choose to have kids are stopping at just one or two. This means fewer people will be able to rely on their offspring, and there’ll be fewer young people supporting the old.
I only need to rely on my CPF
Despite all the often misguided furor over the CPF system, the sad fact is that for a great many Singaporeans, their CPF retirement payouts will not be enough to maintain a standard of living they desire.
How much you have in your CPF depends on how much you earn in your working years, so if your wages remain relatively low throughout your life you can expect to receive smaller payouts than your high-earning friends. That being said, understanding the magic of compounding interest means that at a very minimum of 2.5% interest, your CPF accounts still earn a sizeable amount of money.
Finally, many people assume all the money from their salary that gets deducted and placed in their CPF accounts will be waiting for them when they’re ready to retire. In reality, many people deplete their CPF accounts paying for their HDB flats.
If you buy an HDB flat that’s more expensive than what the government thinks you “should” be buying based on your income band, there’s a dangerously high chance your CPF payouts will not be able to meet your needs when you retire. With that in mind, it would be wise to make sure that you start growing and protecting your money early enough so that you have a strong buffer in your retirement years.
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I don’t need so much money when I retire
What is there to do when you retire besides sipping the occasional kopi at the neighbourhood coffee shop? Looks like there’s no need to save so much for retirement, scoff some Singaporeans.
As an auntie or uncle, you don’t necessarily have to be whiling away all your afternoons at the Resorts World casino to still need a decent retirement allowance. Other than escalating insurance and medical bills, you’ll need to take into account expenses that make life much easier for an aging body.
Are you sure you want to battle the MRT crush when you can barely straighten your spine? Are you sure you want to continue eating MSG-filled hawker fare when the doctor’s been warning you about your high cholesterol levels?
More depressingly, are you sure you want to spend the rest of your days staring listlessly into space at the void deck of your block because you can’t afford to pursue your interests or maintain relationships with the other people in your life? If that’s the kind of life that awaits you, it might not be a bad idea to never retire.
What other dangerous assumptions do Singaporeans have about retirement? Share them in the comments!