Many in Singapore view retirement as the time to do a different job
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Published on
08 Aug 2021
Published by
The Straits Times
SINGAPORE - For many folks here, retirement does not mean it is time to stop working.
Half of them view it as a stage in life when they leave their full-time jobs to take on something less permanent, such as working as a part-timer or a freelancer for specific projects. About 10 per cent of the people polled in the AIA Singapore retirement survey even said that to retire means a chance to change to a totally new career that they have always yearned for.
Only about 40 per cent said that they want to stop working when they retire.
This may surprise you - most of those who said they don't want to work post-retirement age were those in the youngest age group of 25 to 34.
In comparison, those who want to keep working are up to 55 years old, and some even earn monthly incomes of more than $8,000.
Does this mean that younger Singaporeans are more confident in their ability to save and earn more than the older cohorts, since they view retirement as a time to enjoy themselves?
Unfortunately, other findings in the same survey reveal otherwise: They show that the financial planning methods of younger people do not support their goal of wanting to stop working totally at around 60 - the median age of preferred retirement for those polled.
Most younger folks focus on saving and investing to achieve near-term goals such as setting up a home. As a result, some of them allocate as little as $250 a month to longer-term retirement planning.
There is nothing wrong with wanting to meet more urgent needs first. After all, this is how life's journey is supposed to pan out: After you start working, you want to start saving for your dream home.
While doing so, however, it is prudent to keep an eye on longer-term planning, especially if you want to stop working earlier than most people.
If this is your goal, then it is better to start doing the sums, because many people are blissfully ignorant about their retirement needs.
Not knowing what the good life costs
The term "retirement" is often misused in the financial literacy context; it does not mean the start of a carefree lifelong holiday of doing nothing except to enjoy watching the sun go down every evening.
It merely means that you stop working the same job that you have been doing all these years, and along with it, your salary will also end. Other than that, nothing else changes - you still need to pay your usual household bills.
This is where people stumble, because when you are still working, you don't have to worry about your savings account as your salary goes into it every month.
But once your income stops, every item that you buy will feel expensive because it will reduce the money in your account.
For instance, those polled estimated that they would need an average of $1,500 a month for retirement, or $3,000 for a couple. So add up all your current household expenses and see whether the sum is within this amount.
Chances are that $3,000 will not be enough, especially if you have housing and car loans to pay. While your home should be fully paid up when you retire, are you prepared to give up driving once you stop working?
If your answer is no, you would do better to find out how much your intended lifestyle is going to cost. Don't be among the 20 per cent polled who confess that they have no idea how much retirement is going to cost.
Planning for retirement can be as challenging as doing well in your career - you need to put a lot of effort and time into it. The earlier you can start planning for it, the easier it will be for you.
You should aim to do better than what many people are facing now - a retirement kitty that will be depleted in 10 years, as the AIA survey found, which means that if they stop working at 65, they are likely to run out of money by 75.
How so? If your household needs $3,000 a month, do you have access to $360,000 for 10 years or $720,000 for 20 years?
Again, don't be like the 33 per cent polled who said they don't know how long their money will last.
Don't fail to plan
What happens if, despite your best efforts, you still end up short in old age?
About 45 per cent of those polled said they would slash their expenses so that they can still live on what they have. This is a prudent move; while you cannot increase your savings then, you can certainly try to spend within your means.
It may mean giving up some of the things you enjoy, such as dining at more expensive restaurants, but it is better than not having enough money.
About a third of those polled said that if they find themselves short, they will try to find jobs that will help them to pay their monthly expenses.
Finally, about 12 per cent said they had not really thought about this matter and have no plans for it.
You should know by now that there are no free lunches in this world. There is only one outcome if you fail to plan for anything, and that is to fail.
Source: The Straits Times © Singapore Press Holdings Limited. Reproduced with permission.
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