(Image source: flickr.com, 401(K) 2012)
Out of those that have started saving for retirement, only 37 percent are doing so through direct investments such as bonds and shares while 28 percent are doing it through property.
Another interesting result from the survey was that, while not a majority, a large proportion of people do not understand savings and pension policies, read personal finance pages in the papers, magazines or websites and wish that someone else would sort out their financial affairs, while 21 percent of people see no point in investing for the future since they will never know what those investments will be worth.
Considering that retirement in Singapore is going to need a lot of money, more than a million for our passive income to comfortably cover our expenses, we have to start saving early for retirement in order to take advantage of compound interest. But we also have to take some risk in the younger part of our lives when we are able to take on more risk due to our longer time horizon rather than rely solely on the much safer CPF and bank savings due to their low returns, which can lead to real losses after inflation has been taken into account
Hiding from our financial problems won't help to resolve or reduce them, but instead help them larger. As we get closer to retirement, it will take a larger amount for us to be able to reach our passive income goals, while loans that we have taken will only increase due to interest. So, we should take control of our finances before they get out of hand and start to control us, with time, even a modest amount can grow substantially if we are able to earn a reasonable return over a long period of time.
Spending time to learn about managing our finances and investing would be a good start to taking control of our finances and helping our money to grow with the help of investments and compound interest. But we also need to cut down our own expenses in order to start saving for retirement, so instead of spending on enjoyments now, we should save up for our future.
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Considering that retirement in Singapore is going to need a lot of money, more than a million for our passive income to comfortably cover our expenses, we have to start saving early for retirement in order to take advantage of compound interest. But we also have to take some risk in the younger part of our lives when we are able to take on more risk due to our longer time horizon rather than rely solely on the much safer CPF and bank savings due to their low returns, which can lead to real losses after inflation has been taken into account
Hiding from our financial problems won't help to resolve or reduce them, but instead help them larger. As we get closer to retirement, it will take a larger amount for us to be able to reach our passive income goals, while loans that we have taken will only increase due to interest. So, we should take control of our finances before they get out of hand and start to control us, with time, even a modest amount can grow substantially if we are able to earn a reasonable return over a long period of time.
Spending time to learn about managing our finances and investing would be a good start to taking control of our finances and helping our money to grow with the help of investments and compound interest. But we also need to cut down our own expenses in order to start saving for retirement, so instead of spending on enjoyments now, we should save up for our future.
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I think the surveyor may have miss out something. It seems that the surveyor has a mindset(alien?)with regards to retirement for a typical Singaporean. A Singaporean through the courtesy of our Singapore Govt has factored in retirement planning when it builds HDB flats for Singaporeans. A young Singaporean couple buys a subsidised BTO 4-room flat at today's $300k using only their CPF to pay. In less than twenty years, after many pay increments will fully pay off, while the price of the flat remains fixed at $300k. The couple has another 25 years to save for his retirement. Alternatively, the couple may again upgrade to 5-room/executive flat, again through subsidised scheme to enhance his retirement. By the time the couple retires, their children would have grown up to apply their own flats, the couple can downgrade and monetize their flats. Together with their savings, the accumulated sum would fully fund their retirement - Singapore style!
ReplyDeleteHi,
DeleteAgreed, one of the largest investments for Singaporeans is in their own homes so unlike other countries, part of our wealth is in our primary residence which we can sell in order to fund our retirement. But other than the amount that we can get from downsizing our flats, we would need a much larger sum in order to retire comfortably and need to have our own savings to fund our retirement
Cannot blame those who do not save. Reasons could include living from pay check to pay check. Furthermore, Singapore may not survive come 2030 or may not be the Singapore we know as the core population shrinks drastically.
ReplyDeleteHi,
DeleteSingapore may or may not be around in 2030, but we most likely will be (depending on our age), so we should still plan for the future. And yes, it can be hard to save with our high cost of living, but following the survey results, it seems that many people aren't making the effort to start learning about saving for their retirement, which is something I'm trying to highlight in the blog post