Singaporeans "prefer to retire later" than save more

business-times.asia1.com.sg :

Uniquely in the world, Singaporeans would prefer to work for more years than to be made to save more for their retirement, said Dr Harper, director of Oxford University's Institute of Ageing. She was in town to present the results of a HSBC survey titled the Future of Retirement, which covered 22,000 individuals and 6,000 private sector employers in 21 countries, including 1,000 individuals and 300 companies in Singapore.

41% of Singaporeans surveyed said the one thing the government should do to deal with the rising cost of supporting an ageing population is to raise the retirement age. In contrast, less than 25% of respondents around the world, and about 33% in Asia, supported raising the retirement age. In most other countries, the most popular policy was more compulsory saving.

Separately, a panel on financing retirement said Singaporeans must rethink their dependence on the CPF. Panellist Jason Sadler, president of the Life Insurance Association of Singapore, said 72% of funds deposited in low interest CPF accounts could be invested elsewhere, and that as of 2000, more than half of the assets of Singapore households lay in residential property. Most Singaporeans would remain 'asset rich but cash poor' at retirement, he concluded.

- Well, I'm not so sure whether it's more of a "prefer to retire later" or whether it's more of a "no bloody choice". My father now drives a taxi, after a supposed "early retirement" from teaching. Some retirement. There are those who work as HDB cleaners (i.e. the common areas in public housing estates). And there's a grouchy old auntie at the coffeeshop near my workplace, grumbling and mumbling to herself as she clears away the dishes at lunch-time. At least the elderly folks at the Macdonald's and such have the benefit of an air-con workplace. But I wonder, did all these people "prefer" to retire later rather than save more?

A (very) simplified calculation - for every $1.2 million dollars, you get just $1000 every month with each 1 percentage point of return. So if the prevailing FD interest rates are around 2-3% like what they are now, you get just $2000 to $3000 per month.

I'm not talking about an annuity here where you whittle away your principal down to zero, leaving nothing for yourself or your family at the end. I'm talking about being able to live off the interest from what you have, while keeping what you have.

And I haven't yet mentioned how inflation is expected to eat away at what you have (even if it's worth $1.2 million now), such that $2000-$3000 per month might be worth only 1/10 of that 30 years down the road. Perhaps less. Ask your own parents how much a bowl of fish soup, a bus ride to school/work and back, or a plate of chicken rice used to cost 30 years ago. 20 cents, 30 cents maybe, compared to what, $2, $3 nowadays? "Honey, your government shrunk your money!"

Many financial planners have been calculating that you need at least $2 million in order to retire. After doing my own sums, I'd tend to agree with them.

"Prefer to retire later", huh. I don't think so.

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