CNBC just published an article titled "A Wealthy Nation That Can't Afford to Retire" a few hours ago. Instead of cutting and pasting the entire article which some have done, I would like to pick out a few paragraphs and make some comments.
"According to a latest study by HSBC, the citizens of this country, which has one of the highest per capita incomes in the world, face the grim prospect of running out of their savings almost halfway through retirement as the high cost of living and increased life expectancy eats into their nest egg."
It was not stated how HSBC measured "nest egg". Was it just money in our CPF accounts?
Now, I believe that anyone who is preparing to retire with just money from his CPF accounts need to be shaken by the shoulders (quite firmly). Of course, the money wouldn't be enough.
"More than half of the 1,000 Singaporeans interviewed for the survey said that either they were not adequately prepared or not prepared at all for retirement as they expected to continue working beyond the age of 65 to be able to afford their desired lifestyle."
So, more than 50% were not adequately prepared or not prepared for retirement. The rest were adequately prepared? This was just a measurement of sentiments on the street, wasn't it?
What people feel is one thing. What is the reality? How many are actually adequately prepared for retirement? How do we measure this?
Further on in the article, I believe there was a chance to do something more constructive when they interviewed a Mdm Janice Tan. However, it didn't happen. Let me try here:
"Tan and her husband are currently paying for the education of their two children, including a 21-year-old daughter studying in Perth, Australia. While Tan, an administration professional, hopes to retire soon, she says she knows it might be another 10 years before that happens."
Mdm Tan, if you hope to retire earlier, why did you send your 21 year old daughter to Perth to study? I do not know which course your daughter is doing but a quick check revealed that the annual tuition fee for Economics is A$22,500 in Murdoch University. Over a three year period, if fees stay constant, you would have spent A$67,500 on school fees alone for her!
Would it be too much to assume that a three years stay in Australia for your daughter could cost some S$160,000 to S$200,000 in total? That is a significant amount of money. (A$1.00 = S$1.28)
"With retirement savings drying up at a time when Singaporeans are most vulnerable to health problems, funding medical bills could become a big burden, HSBC said. Tan backed that sentiment, saying that medical bills from a motorcycle accident that her husband was involved in last year have been a drain on their finances."
Mdm Tan, did you and your husband get a good H&S insurance policy with a rider? I hope you have policies that pay out in case of critical illnesses. I also hope that you have policies that protect your earned incomes too as you seem to need them still.
Articles such as this one from CNBC do little other than to sensationalise issues. Unfortunately, few would bother to ask the questions which matter. Some would instead use such articles to fan the fear and resentment on the ground.
Yes, costs are rising and this is not about to change. Is complaining about rising costs going to change anything? Is fearing rising costs going to change anything?
We should, instead, ask if we are doing enough to prepare for retirement in the face of such challenges.
I would suggest a critical look at our lives and to examine ways to increase income and reduce expenses. While we are at it, look into getting good insurance policies to safeguard our earned incomes (if we still need them) and to take care of expenses related to H&S as well as critical illnesses.
1. Millionaire or not, plan for retirement.
2. Enhanced incomeshield for my mom.
Read CNBC article: here.