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I am a Practitioner of 'The 7e Way of Leaders' where a Leader will Envision, Enable (ASK for TOP D), Empower, Execute, Energize, and Evolve grounded on ETHICS!

Monday, November 30, 2015

Daily Lessons from Life 30 November 2015 - Singapore’s retirement system increasingly sustainable: Study

Well, it is the LAST day of November 2015! 11/12th of 2015 is GONE! One more month to catch up with whatever NEW YEAR Resolutions we had made on 1 January 2015! Hopefully, some are still possible to catch up. Otherwise, leave it for 2016!! :-)

"Singapore’s retirement system increasingly sustainable: Study - CNA 30 Nov 2015

SINGAPORE: The Republic's retirement system is becoming increasingly sustainable - according to a study released by insurance and asset manager Allianz on Monday (Nov 30).

However, the study also showed that existing schemes are not enough to maintain the same standard of living after retirement.

Allianz said that adjustments to the CPF system in recent years have improved the level of income for retirees. This can help reduce the number of elderly falling below the poverty line and relying on other forms of social benefits, thus making the retirement system more sustainable in the long run.

But it noted that that existing annuity schemes, such as the Retirement Sum Scheme, are not enough to maintain the same standard of living post-retirement. Allianz said that if only the retirement sum is annuitised, people run a considerable risk of having too low income later in life.
Allianz added that a large share of wealth in Singapore is tied up in real estate, with local home ownership at 90 per cent, and said that Singaporeans should diversify their investments.
Said Ms Brigitte Miksa, head of international pensions at Allianz: "The question here is if that is sufficient if in case there is a real estate market bubble. You have no risk diversification. Also the question is if you can turn this rich asset into a cash pool, liquidity, so you can contribute to a retirement income stream."
“Those are factors that contribute to the lack of adequacy," she added. "You have to save more into those assets that can be diversified - new types of products that provide you with a higher income, and also with income streams that combine these kind of investments with annuities.""

Mis Miksa hit the nail on the head that: a large share of 'wealth' in Singapore is tied up in real estate. The question that had been bugging me is: for those who had bought their real estate many years ago, this seems true BUT what about those who just bought their real estate in recent years? Will their real estate value continue to go up like those of the baby boomers? Can the income level be sustainable to create an appreciating real estate for the Gen Y and Gen Z?

Lessons for me for retirement is:

1. keep yourself as healthy as possible by adopting and practising healthy living as much as possible. You are what you eat, think and exercise. Of course, the curve ball that life throws at you with unexpected illness we just have to accept;

2. live within your mean. Less is more as you ages gracefully. Eat less, spend less and keep active with lots of friends as much as possible. If you have an appreciating real estate, sell it and lock up the capital gain with safe investments and keep away from prying and begging hands from your kids and relatives and 'friends'. What seems like a 'fortune' can be withered away in double-quick time if you are not careful about how you spend or give your money away!;

3. if you do fall sick, touch woods, at least the MediShieldLife will help with the medical care expenses. Forget about expecting the kids to take care of us. They have their lives to live, their family to take care of. Since we signed up to get married, have kids, it is just our duties to care for them till they are of 21-year of age. Thereafter, if they can and want to take care of us, fine and well. If not, they are not ungrateful or whatever. Just that they could not even take care of them own families, how can they take care of us?  When we are in that dire situation, hopefully the state will take over. That is the nature of government. To take care of those who could not take care of themselves. This is easier if the government realised that we HAD, during our prime, contributed to the accumulated wealth of the nature and tax coffer!

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