Retirement Woes

Hi all, how's it going?

I came across this from the Straits Times Forum:

ST Forum


Jan 30, 2010

Housing prices: Worry over impact 

on retirement savings

WITH prices of new three- and four-room flats reaching between $250,000
and $330,000 in some areas, I wonder how much a buyer will have in his
CPF retirement account after paying for the flat in 20 to 30 years.

I took a loan of $80,000 some 20 years back and the interest came up to $70,000
 when I had finished paying for my flat.

The Government should look into this or Singapore may end up with many
 retirees with little in their CPF account, assuming an average household income
of $3,000 to $4,000. Since HDB flat buyers may use 30 per cent of household
income, they may be able to service their loans, but little is left for retirement.
Besides, along the way, husband or wife may lose their jobs.

Buyers are allowed to take up to a 30-year loan. By then, their earning power
may also diminish when they reach 60, assuming they bought their flat in the
early 30s.

Since there are many in this income bracket, I hope some financial experts will
be able give their take on this important issue or Singapore may end up with
many retirees with little to live on. Many buyers are not aware of the final price
of their flat, including the interest over 30 years.

Kang Choon Tian


What this reader pointed out made perfect sense, and has been 
what I've been sharing with my clients all the time.

Whenever I ask people how they are saving for their retirement, 
the answer will be "Oh, I've got CPF". 

Then when I ask them how they are saving to buy their dream 
homes, the same answer "I'm using my CPF" springs out.

Do you see a problem here?

Last week, during one of my client appointments, I worked out the 
amount of CPF funds (Ordinary Account only) that one typically 
accumulates over his/her working life. And guess what? It is not 
enough for both retirement and housing!

Which means one thing - we must save cash!

Assuming someone who's 30 years old starts accumulating for 
retirement. He'll work until 65 years old and leave this world at 85. 
(Note, these are just examples for illustration purposes only.) And 
let's assume he/she only needs $1,000 per month to cover for living expenses.

That'll work out to be: 

$1,000 × 12 months × 20 years of retirement = $240,000

This means he'll need $240,000 by the age of 65.

He/she has 35 years to accumulate this amount, so...

$240,000 ÷ 35 = $6,857
$6,857 ÷ 12 months = $571

He/she needs to save $571 per month, minimum!

Seems achievable? Remember one more important thing that we 
have not factored in our simple calculation - INFLATION!

35 years down the road, things aren't going to be of the same price 
as it is today! Which means we'll need MORE retirement funds, and 
we need to save MORE in cash today.

So, consult a qualified financial consultant today to work out how 
much you need to save every month, or contact me at .



  1. yups factor in tvm too

  2. You're right. Folks, TVM = Time Value of Money. It is the simple principle that $1 today may not be worth $1 in the future. Therefore money loses value over time.


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