Longer healthy lifespan, more time to grow nest egg

There is a catch-22 in ageing where the longer one lives, the more savings one needs ("'Healthy lifespan' gets longer in S'pore" and "Plan early for retirement to ensure sufficient savings" by Mr Francis Cheng; both published on Monday).

Central Provident Fund (CPF) savings will never be adequate for the average retiree.

When CPF was set up, the average lifespan was 72 years, and the savings interest rate was around 6 per cent to 7 per cent.

Now, life expectancy has increased by a whole decade and the interest rate is 4 per cent.

Hence, the accumulation period and amount will render CPF savings less than sufficient for the average retirement period.

Thus, it is unlikely that low-income earners can rely on CPF payouts for retirement income.

Inflation has to be taken into account.

Furthermore, low-income earners need a higher relative percentage of pre-retirement income because their base pre-retirement income is smaller.

Nevertheless, with a longer healthy lifespan, retirees have the chance to have a longer accumulation period.

Dr Amy Khor, Senior Minister of State for Health, said that the Government wants to turn the longer lives of people here into an advantage.

To do this requires a total mindset shift, not only for the Government but also the commercial sector and workers themselves.

There must be job redesign and new systems to support a senior workforce.

Otherwise, to subject retirees to post-retirement stress by making them work under pressure in non-challenging jobs will only reduce their healthy lifespan.

Let Singapore ensure that the longer healthy years will not become longer unproductive and boring time for our seniors.

Geoffrey Kung Kuo-Woo

A version of this article appeared in the print edition of The Straits Times on December 10, 2015, with the headline 'Longer healthy lifespan, more time to grow nest egg'. Print Edition | Subscribe