atans1

Got money to retire on after paying 30-yr HDB loan for 99-yr lease?

In Financial competency, Financial planning, Political governance on 06/03/2014 at 4:28 am

Further to this, I tot readers would be interested in the findings of a study commissioned by MoM and conducted by NUS academics. What do you think of the assumptions? Are they reasonable? Yes, I know they assume 30yrs (while 25 yrs is max period), but that make’s it more conservative when thinking of retirement funds.

About half of Singaporeans currently meet the minimum sum to qualify them for the above payout. But most young Singaporean wage earners today will be able to meet the minimum sum by the time they retire, provided they buy property within their means, the government has said.

An independent study on retirement was also commissioned by the Ministry of Manpower and conducted by National University of Singapore professors Chia Ngee Choon and Albert Tsui. It found that young workers today can replace their income upon retirement at rates similar to developed countries.

One major assumption is that a couple of the same income percentile marry, with the male at age 30 and female at age 28. They buy an HDB build-to-order (BTO) flat with a 30-year mortgage, with the 30th, 50th and 70th percentile members buying a three-room, four-room, and five-room BTO flat respectively. The couple do not upgrade to a larger home.

In the study, a male at the 50th percentile earns $2,500 a month at age 25 (or $3,300 at 70th percentile) and is assumed to reach his peak earnings close to age 55, at $3,860 (or $6,800 at 70th percentile). The 50th-percentile male can replace 70 per cent of his age-55 income after he retires at age 65, the study said (63 per cent for the 70th-percentile male). The numbers for females are slightly lower.

Upon retirement, the median male is thus assumed to get a monthly income of around $2,700, and the 70th percentile male, $4,300. This presumes the entire amount of their retirement savings in the CPF is converted into a life-long annuity, instead of up to the Minimum Sum, as is the current practice. Otherwise, income replacement rates fall drastically.

Thus, the study’s authors said that CPF members with savings above the minimum sum cannot withdraw the lump sum and spend extravagantly. If they want to be able to replace a higher proportion of their income, “they must invest their CPF savings above the minimum sum wisely so as to generate a stream of retirement income to supplement CPF Life payouts”.

http://www.cpf.gov.sg/imsavvy/infohub_article.asp?readid=157655219-19765-9502481817

Here’s the perspective of a flat buyer http://sgyounginvestment.blogspot.sg/2014/02/how-much-money-does-couple-need-to-earn.html

  1. Your writing seem to justify the political doings and policies of the PAP.
    You mentioned only the brighter side and the “almost perfect” path.
    If the PAP is such a competent and caring Government; how come in the last GE the PAP garnered the lowest votes received in their history of governance ???
    That shows … the PAP is losing the reality of life in Singapore.
    PAP’ flawed political and economical policies had made 42% of the citizens to vote for the opposition even though most of the opposition candidates are not a world class politician like the PAP ministers.

    • Might I suggest you take time to read before opening yr mouth. For starters, TRE regularly republishes my pieces. So TRE is PAP friendly.

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