Why is Retirement such a dirty word in Singapore? Deborah Tan discusses why the idea of being a retiree living in Singapore is one of her worst nightmares.
The most dreaded R-word of my life is Retirement. When Vanessa wrote about retirement mistakes to avoid last week, her post included a retirement calculator. I avoided it like I would avoid Orchard Road on a weekend.
The reality of retiring in a country like Singapore is heartbreaking. We toil for some 30, 40 years of our lives, afraid to be ever out of a job, afraid to be unemployed in a city where many things are beyond what an average Singaporean lifestyle can afford. Every month, we put in a certain sum of money into an account called the CPF. It is supposedly for our own good because, you know, it seems like we Singaporeans have no idea what to do with our money. One of the benefits of having a CPF account is that you can use it to service your home loan. As your monthly paycheques come in, so does your CPF account as it receives a monthly contribution. With this, your home loan can get serviced without you actually shelling out cold, hard cash.
This is all fine. After all, this form of enforced saving will come in handy when we are buying our first property.
But come retirement, what happens?
1. You can withdraw your money from your CPF provided you have the Minimum Sum in your Retirement Account. As of now, it’s $120,000 BEFORE adjustments for inflation. For example, if you have $150,000 at age 55, you can withdraw $30,000 to be used as you please … that is if the Minimum Sum at OUR retirement age is still $120,000.
2. But wait … there is one more thing you need to remember. On the Minimum Sum Scheme, you will get a monthly payout until it is EXHAUSTED. So, if at 55, you think you’ll live to 85, $120,000 isn’t going to last you for very long. So you may opt to postpone your withdrawal a much later age, say 70. What do you do from 55 to 70? You work your ass off to earn a living.
3. There is now this thing called the Medisave Minimum Sum. When you withdraw, you will also need to make sure your Medisave Account has a minimum sum set aside. If it doesn’t, you’ll need to top that up with all or part of your balances inside your Special Account or Ordinary Account. As of this date, this Medisave Minimum Sum is more than $40,500.
Of course there are many FAQs that you will need to read through if you want to get your head around these CPF rules and regulations. There are also FAQs regarding your property – when you sell it, you have to pay back into YOUR CPF account YOUR money you have used to buy YOUR property.
But beyond these pages upon pages of FAQs, I want to talk about what I want for my retirement from MY CPF account. And, if you agree with me, I really do hope you can tell me so that I know I’m not alone in my fears about retiring in Singapore.
1. If my CPF is MY money, shouldn’t I be able to decide how and when I want to use it
Meaning, if I were to find myself without a job or stricken with a terminal illness, I would like to be able to call upon my CPF money to help tide me through this difficult period of my life. As with a normal savings account, if I want to close this account, I shouldn’t have to (1) beg for it (2) struggle with why I can’t use the money in it and (3) suffer because of some inflexible rules about it being a retirement plan. If I slit my wrists tonight because life in Singapore is just too much to bear, what good will a “retirement plan” be to me?
2. If after toiling for 40 years, I don’t get the right to decide what I want to do, WHAT IS THE MEANING OF LIFE?!?
Say I have $150,000 in my CPF account at 55. If I were to withdraw EVERY cent of it and start a muffin shop, I am trying to be financially independent ON MY TERMS. You don’t get the right to tell me I should live on monthly payouts. You don’t get the right to tell me that this is the BEST way to plan my retirement. For me, my retirement plan is to be an entrepreneur – a small one but nonetheless one with dignity and independence. If it works well, I can hand my muffin shop over to my kids. If it doesn’t, I have benefited from being purposeful at this late stage of my life. What I don’t want is to LANGUISH in the background and have society deem me as someone with no use at all. And no, I don’t want to work in McDonald’s. I want to be my own boss!
3. I want to be treated with respect, I want to be treated as an INTELLIGENT person
Perhaps the older generation had no in-depth understanding of “retirement planning” but I think it’s time we change the perception that we don’t know what to do with our money. I don’t want to be hand-held and told how to live out the rest of my life. I certainly don’t appreciate the assumption that just because I earn below a certain amount, I have no idea what retirement planning is. Best intentions can work against us and if we are never given the chance to learn how to manage our own money, we will always be a people unable to think for ourselves.
4. Stop pretending it’s for my own good
If you are doing this for my own good, how is that I have to pay my CPF account an interest for the money I’ve used to pay my mortgage? How is this vicious cycle of using my money to pay back into my own CPF account helpful for me? Maybe there is a greater economic consideration here that my small brain cannot comprehend, but if I took $100 from my wallet to buy a Zara dress, it doesn’t ask me to put $108 back! True. You may say that money inside a CPF account earns interest. But the money that I am using to pay back my mortgage is (1) not earning interest from CPF and (2) paying interest back to the bank. I’m being struck doubly hard here! And while you may say I will earn “profit” from selling my house, this “profit” is technically MINE. So why should I have to pay an interest back to ME?!?
5. Help me understand you better
Every time I want to understand how CPF works, I have to dedicate a morning to comb through the FAQs. I have to clear my calendar, clear my head, clear my life just so I can work out what is it the website telling me. One can only imagine how hard dealing with all these facts must be for someone who is desperate for a lifeline, for an answer. For an elderly person who has no idea how to use the Internet? Where is he/she going to find the answers? For a person who can’t pay for a laptop and WiFi connection, what other resource can he/she turn to? I am trying to understand the rules and regulations at my leisure and even then I find myself having to double back to read some sections again. How frustrating it must be for someone who is just trying to see if he/she can use his/her CPF to pay the bills!
You know, I have to admit that my knowledge of CPF is rudimentary at best. But therein lies the most obvious frustration many of us are feeling about it – we don’t understand why it works the way it does. As far as we can remember, we have only ever played by ITS rules. When it says our Minimum Sum has to be X amount, we have to meet it. When it says we have to pay this much every month into our CPF account, we have to do it. In fact, we don’t get a choice whether we want to be a CPF member or not. So help us all out here – make our lives count, not our money.
Q: Do you think you’ll ever have enough in your CPF account for the Minimum Sum? What is your biggest worry about retiring in Singapore? Share your views in the Comments section with us or tweet me at @debtantweets with the hashtag #cpfworries.
About The Author: Deborah Tan is a founder of Material World. After 10 years of working in magazines Cleo and Cosmopolitan Singapore, she is now a freelance writer/editor who works on this website full-time. She likes liquid eyeliners, bright red lipsticks, tattoos, rock & roll, Mad Men, and Suits. One of her dreams is to start a series of courses educating would-be retirees on living a full and happy retired life in Singapore. Follow her on Twitter @DebTanTweets.