Being financially free is the dream of anyone hoping to retire but many Singaporeans do not know how to plan for their golden years, and some fear they are not earning enough to even start building a nest egg.
These were among the replies that came in when The Sunday Times Invest, in conjunction with DBS Bank, asked readers to respond to four questions on retirement last week.
The good news is that 60 per cent of those who replied said they are already planning for retirement.
Of those who said they had not started planning, the main reason is that they do not have enough money to do so.
Worryingly, many also said they did not know where to start, while those with families said they wanted to take care of their children first.
The bad news is that 46.4 per cent of those who replied believed they would not have enough money saved up for retirement.
Sunday Times Invest will pose more questions on retirement to readers today and again next week, with prizes sponsored by DBS Bank. Here, we take a look at some of the biggest retirement concerns.
In Singapore, the basic form of retirement planning is done through national schemes.
The national annuity scheme, CPF Life, allows older members to get a monthly income for life, which is enough to cover basic needs.
But most people agree this is simply not enough.
Mr Christopher Bek, chief executive of private ambulance operator Medic Ambulance, feels that people cannot rely on this monthly payout, saying: “You must increase your capacity of work during your prime years.”
Mr Bek, 59, says he is lucky to be where he is today, and did not have to specifically plan for saving at an early age just to retire.
“It’s just that as I grow ‘matured’, I’m sought after, that’s where they value me and where I get my money.”
For others, however, it would be unwise to leave planning too late. This is likely to result in less than adequate funds for retirement.
Apart from CPF savings, insurance, stock investments and annuity plans are likely to be the main income sources during retirement for many.
But people also tend to underestimate what they need for their lifestyle after they stop work.
A recent DBS survey discovered a gap between the amount people think they needed for retirement, and what they actually require.
It found that 73 per cent of the people polled plan to retire with an average savings amount of $571,715.
At the same time, more than 85 per cent of those polled expect to live on a retirement income of $3,500 per month for the next 15 to 20 years and more.
But DBS said there is a big gap between both sets of numbers as the average savings would last only 13 years and not 15 to 20 years.
Source: The Sunday Times © Singapore Press Holdings Limited. Reproduced with permission.
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