You have goals and dreams for your golden years – travel the world, buy a holiday home, purchase new wheels, start a business or even dedicate your time to volunteer work. The foremost question is: where do you start?
Most Singaporeans are far from ready
The quality of life you want in the future will depend on what you contribute in the present. Depending on the lifestyle you wish to maintain, you should consider building retirement income that is 60% to 80% of your current income.
According to the HSBC Future of Retirement Global Research Report 2009, an alarming 91% of Singaporeans do not know what their retirement income looks like.
In fact, only 9% of the survey respondents currently feel well-prepared for retirement. Their feeling of unpreparedness could be attributed to a lack of understanding about their long-term finances.
A recent HSBC survey reveals that 59% of Singaporeans believe retirement means being debt free while 41% believe it means taking vacations.
Despite this, a majority only plan to save $100 – S$200 each month for their retirement between the ages 30 – 70.
That means they will have less than $100,000 for their retirement (assuming they do not touch their savings at all).
Ignorance isn’t bliss
The survey also reveals that in the current economic climate, 31% felt that the most important measure to take during this financial crisis was cutting back on big ticket items and spending frivolously; while a mere 11% plan to increase their rainy-day/retirement savings.
48% see the need to purchase some form of savings account (high interest savings, cash savings, current/checking account), for their long term plans. One quarter does not believe in purchasing any form of insurance at any point of their lives.
While 61% said they are fairly well prepared about making decisions for their long-term finances, more than half (60%) have never had proper financial education.
Certainly, the future of retirement does not look bright for a nation facing the problem of an aging population. In this year, the number of dependent adults in Singapore is expected to surpass the number of dependent children.
The Pension Pillars
In view of the future of retirement, the World Bank has instituted three pillars that encompass a country’s total pension provision: the state, occupational and the individual.
There are no retirement payments by the state in Singapore. The presence of the Central Provident Fund has seen efforts focused on one occupational pillar.
The mandatory provident scheme provides coverage to 65% of workers through replacement income is low. However, the contribution rates have risen over time.
Added to that, there are no provisions for personal retirement savings.
Hence, the need to take charge of one’s financial future has never been more compelling.
Given the responsibilities people now face in planning for their retirement, the lack of financial education and guidance could become a major impediment.
That’s where you need a trusted advisor to help you look at the bigger picture and chart your future financial path.
Wednesday, January 20, 2010
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment