I don’t think I’m THAT old, but retirement is something I’ve been thinking about for a couple of years already. I think about it most intensely when I’m slogging away at work at 2am and imagining doing the same at 60.
But this is, apparently, something that doesn’t concern most of our fellow Singaporeans—in spite of long hours at work, widespread problems with stress and low levels of job satisfaction, few people bother to prioritise retirement planning.
Despite the fact that people always talk about how worried they are about retirement, over 4 in 10 of the Singaporeans who responded to a recent survey had not started saving for retirement, including 27% of the respondents aged over 55. Amongst those who had started saving for retirement, to 69% “saving” meant relying completely on CPF.
Now, the interesting thing about this survey is that respondents were asked to state their excuses for not saving for retirement. 36% said they simply couldn’t afford to, 25% said they had other priorities like their children’s education, and 19% were trying to pay off existing loans.
Singaporeans also aren’t investing as much as they could be, with 21% declaring there was “no point” in doing so. 40% didn’t want to invest because they wanted to keep their cash liquid.
The above survey results chill me to the bone. I’ve already heard way too many tourists and expats ask in disturbed tones why there are so many super old people working in menial jobs. Thanks to our aging population, I can only imagine what the situation will be like a few decades from now.
Here are some things I’ve taken away from the survey responses.
1. Singaporeans should not be pinning their retirement hopes on their children
Saving for their children’s education seemed to be a big reason why the Singaporeans surveyed could not start saving for their own retirement.
The sad thing is that many of these parents probably weren’t even talking about saving for their kids’ tertiary education—there are enough loans like the CPF Education Scheme for local students, while banks provide study loans for those who go the private or overseas route.
Instead, many of these parents are probably shelling out hundreds of dollars each month on tuition for their kids. Singapore’s tuition industry is work a shocking $1 billion, with 70% of parents sending their kids for extra lessons, including 40% of parents with kids who are only in pre-school for cryin’ out loud—even as only one third of the parents were sure that tuition was actually pulling up their kids’ grades.
If parents spend all their retirement money on tuition for their kids, they’re indirectly forcing their offspring to look after them when they stop working. Is that right or fair?
For many families, the issue is one of priorities. If you insist on spending $500 a month on tuition for your kids, which is the average monthly spending for 50% of families who engage private tutors, you’d better be prepared to cut back in other areas.
The problem is that young Singaporean parents often want to have it all—they not only want to pay their kids’ way to good grades, they also want to enjoy those family holidays in Japan, go out for restaurant meals and equip every member of the family with an iPad and iPhone.
Another issue seems to be the fact that many parents take a no-holds-barred approach to providing for their kids, signing them up for frankly ridiculous enrichment classes that promise to turn them into little Einsteins (the programmes that promise to get kids into GEP being one such laughable example), or for expensive extra-curriculars like golf or sailing.
If all this comes at the expense of your own retirement planning and you expect your kids to support you when you can no longer work, are you being a responsible parent?
2. Just because you qualify for a loan doesn’t mean you can afford to pay it back
While a significant number of respondents cited existing loans as an obstacle to retirement planning, no information was provided on the type of loans they were repaying.
However, it’s probably safe to say that for a great many of these people, home loans were part of the equation. In addition, a large percentage of car buyers take up car loans. Then, there’s the escalating problem of credit card debt, the biggest cause of which is plain and simple overspending.
While Singaporeans are quick to point a finger at the high cost of living, the fact is that nobody can force you to take out a loan. Successfully applying for a loan or swiping your credit card is supposed to be a premeditated decision that is granted only to those who are credit-worthy.
In 2014, the MAS warned that 5% to 10% of property purchasers in Singapore were overstretching themselves. The kicker? Most of these mortgage holders were far from being low income earners, and mostly earned more than $6,000.
The problem appears to a psychological one that affects too many Singaporeans—we like to spend as much as we think we can afford. Why buy a four room flat when you think you can afford a five room? Why not buy a car since you can just about scrape together enough pay for the cash portion? Why not take that lavish vacation since your bonus is coming in next month and you’ll be able to pay your credit card bills with it?
It’s a simple question of not being disciplined enough to plan for retirement because you want to enjoy yourself today. Even if the cost of living were to fall, this problem would still exist for many—they’d just move on to bigger, shinier purchases.
3. Those who have the cash to invest but don’t are either lazy or ignorant
A disturbing number of respondents seemed to have very misguided ideas about investing—you “never know” what will happen to that money.
While investing obviously does carry some degree of risk, planning of your portfolio is meant to mitigate that risk. And those who are investing in the longer term can actually afford to take greater risks since they can wait to cash out when the market goes back up.
But that’s all gobbledegook for people who think investing means “playing” the stock market or liken it to a night at the Resorts World casino.
And those who insist investing is too “complicated” for them usually have never actually bothered to get informed.
It really isn’t rocket science—for many young people, the way to go is to open a brokerage account, and then find out about how to invest by attending seminars (the Singapore Stock Exchange organises free ones) or reading material on the internet. As you go along, you will learn about other types of investments like bonds and ETFs, but for most beginners that’s a good start. Follow us on Facebook as we delve into more areas in which you can consider starting your investing journey with.
People who stubbornly refuse to invest might wake up when they realise how much money they’ve been losing over the years to inflation. By then it might be too late.
Have you started saving for retirement? Tell us why or why not in the comments!