Boon Or Bane Of Longevity

I recently came across an article titled "Top 10 Hotspots For Human Longevity" and realized that our sunny island of Singapore is in that top 10 list. I followed up with a google on "Singapore life expectancy", google amazingly showed the statistics of 81.3 years according to the World bank source in 2009.

As I am at less than the half way mark of the average, I kind of had mixed feelings towards this result. On one hand, many would celebrate this, especially the Chinese, as it is the culture to emphasize a lot on longevity. However, on the other hand, we have to face the practical and realistic issues.

Looking at the progress of the local economy and society, high inflation seems to be the new normal. 20 years from now when I start considering retirement, it is not difficult to imagine a plate of chicken rice at the market will cost $20 from the usual $2 20 years ago. Conversely, it is difficult to imagine my income growing exponentially from $2,000 to $20,000. Therefore, what will be considered sufficient to live the next 20 years of retirement with no income?

There is the national savings scheme of CPF. However, with housing prices nowadays hitting new highs, a 20 to 30 years loan duration has also become the new normal. This translates to most, if not all, of the CPF-OA funds being wiped out for servicing the loan before retirement. The CPF-RA will be mainly from the CPF-SA and locked in due to the minimum sum requirement before translating to CPF Life that pays, in my opinion, the bare minimum for basic daily living.

This achievement of longevity also comes with a hefty price tag, in the form of advanced medical science. With the availability of new breakthrough technology, this has brought medical treatment cost to higher and higher levels. As the use of this medical help usually comes at the later stages in life, if one is not able to afford it, it becomes a burden on the next generation.

Back to the topic: Longevity, is it a blessing or a curse?

I suppose for those who can afford it and enjoy good health, it is a blessing to carry on enjoying the quality of a long life. However, for those who are ill prepared or have chronic health conditions, the suffering will continue for a longer period of time.

Blessed is the healthy & wealthy! So, live healthy, stay wealthy! Cheers!

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Simpler CPF Life

I am often asked about this new scheme by those who are affected by this implementation when doing financial planning for them. It took me quite a while to navigate my way through all the terms and understand the 4 choices.

However, after all the effort, eventually I realized that many still did not fully comprehend and more importantly did not bother to make an effort to understand.

With this change to only 2 choices and a default option. It is a very much welcome move that should have been done in the first place. I always believe things should be made simple, KISS, as it is often known as.

The default is the standard plan. Higher monthly payout and lower bequest. Probably now, 80% would just leave it and the majority will be here. The alternative is the basic plan. Lower monthly payout and higher bequest. Only the few who insist on making some effort to select this, will switch to this option.

End of the day, it is a good initiative to have such a plan for all Singaporeans and I applaud CPF for it. However, it is compulsory, so like it or not, we fellow Singaporeans have to live with it.

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1k Income For House

After the mention of this fact at parliament by our DPM, it has caused quite the uproar from Singaporean netizens. Some interesting comments I came across include:

- "If so, I should be owning 5 properties already. How come I have difficulty having even one!"
- "I have a friend who earns $1,200 and his housing loan is not approved."

In general, most are in disbelief over this statement. However, this reflects how poorly informed people are of the various housing schemes and loan approval criterias.

My personal opinion is that the statement is not false but people's perception that is the issue here. And their view is not entirely wrong as well.

First let us put the truth to rest. The housing minister has also produced evidence that it is indeed a fact. It is indisputable, a $1k income can purchase a hdb flat. However, and it is a big however, subject to all the terms and conditions like qualifying for all the grants and taking up a 2 room hdb unit (it is not "easy" to qualify).

So, back to why the uproar. This is due to the sandwich class effect in Singapore. I will break up the combine salary class into 4 general types, namely less than $5k, between $5k to $10k, between $10k to $15k and more than $15k.

For the less than $5k, they are the subsidized class that is well taken care off and that is why $1k can afford a simple, no frills unit with all the available grants.

For between $5k to $10k, they usually are young graduates and expect a 5 room hdb flat. Resale is ridiculously priced and out of reach, BTO has competition from the rest of the majority of the population and no grants are available for them.

For between $10k to $15k, they usually are the slightly more well off. They could well afford a hdb but they exceed the income requirement. Hence, considering between resale hdb and condo, they would prefer and expect to stay in the condo. Furthermore, they definitely do not qualify for any grants at all.

For those above $15k, good for them. They have jumped out of the sandwich class and can afford their choices.

Therefore, bottom line in my opinion, it all boils down to expectations vis a vis affordability and availability of grant. And since majority, perhaps 80% of the population resides in the sandwich class, what the DPM said strikes a note to them as someone earning $1k can own a house but they themselves can't have what they expect.

Some consolation is that the personal income tax rate has been revised and it does help the sandwich class. However, I suppose this is quite a one off event but a property is normally equivalent to life time.

Well, few options available. Hope the government starts taking care of the sandwich class. Reinvent myself to jump out of the sandwich class. Live below my means by reviewing my expectations.

Cheers to all fellow Singaporeans in this caught in between class!

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