Use S'pore's Census 2020 to plan your own retirement

Getting a peek at growing trends, such as the ageing population, should signal how older folk will need more help

HDB flats in Punggol, with yachts and boats berthed at Marina Country Club. The census noted that about 78.7 per cent of households here live in an HDB flat. However, not all HDB flats are equal, says the writer. Some are more valuable due to locatio
HDB flats in Punggol, with yachts and boats berthed at Marina Country Club. The census noted that about 78.7 per cent of households here live in an HDB flat. However, not all HDB flats are equal, says the writer. Some are more valuable due to location and you have the option to sell and downgrade to a cheaper one if you find yourself short of cash in old age. ST PHOTO: LIM YAOHUI

The latest Census of Population has not only uncovered new trends that policymakers will need to address, but also served as a timely reminder that we all need to take stock of how we should run our households.

Some of the statistics, especially on our ageing population, may seem distant if you are young and at the peak of your career. But you should take the once-in-a-decade survey as a peek into the future because if such trends persist, the findings related to senior citizens will apply to you too one day.

So you would do well to see how you can put in place longer-term financial planning strategies that will help you age gracefully and comfortably. Here are three census findings that you should heed.

Property ownership

If you have moved to a condominium in the past decade, congratulations for acquiring the most difficult of the "5Cs" and for increasing private apartment ownership from 11.5 per cent to 16 per cent of the 1.37 million resident households here.

But being a fairly new condominium owner, chances are you still have many years ahead before you pay off your home loan.

When it comes to paying your mortgage, watch your budget so that you can continue to save and plan for your retirement.

For instance, you should use cash as much as possible to pay the loan instead of relying on your Central Provident Fund (CPF) because the 2.5 per cent interest of the Ordinary Account is much higher than the prevailing mortgage interest of about 1 per cent.

In short, it makes no sense using the more valuable CPF to pay off a cheaper loan.

If you deplete this retirement kitty, you risk being an asset-rich and cash poor owner in old age.

A couple living in a private home who still own their Housing Board flat, which generates $2,100 a month in rent, recently wrote to say that they intend to sell the $600,000 flat.

This is because maintaining more than one property is leaving them with low retirement sums in their CPF. Selling the flat will allow them to use part of the proceeds to top up their CPF Life to the prevailing enhanced retirement sum that pays over $2,000 a month from 65.

So the couple stand to receive over $4,000 a month, or double the current rental income. Another big plus is that they no longer have to worry about paying taxes and repair costs for the flat as well as the hassle of finding good tenants.

If you also find yourself in the same asset-rich but low retirement sum scenario, meet CPF Board officials to discuss whether you can enjoy higher CPF Life payouts or whether you should continue to hold on to your investment properties and earn rental income.

What if you have only one home and that's your HDB flat - about 78.7 per cent of households here live in one, the census noted. Around 30 per cent of this group live in four-room units, making them the most common type of home over the past decade.

Not all HDB flats are equal - some are more valuable due to location and you have the option to sell and downgrade to a cheaper one if you find yourself short of cash in old age.

But if you like your neighbourhood and don't want to move, there is another option - sell part of your lease back to the HDB and then increase your CPF Life monthly payout. This allows you to keep living in your flat while having more money to spend every month, for life.

More double-income families

One of the more uplifting census findings is that most families saw their monthly household income increasing, across all the income groups.

While the pandemic has impacted some families, the saving grace is that there are more families with dual incomes that can cushion the blow.

Households with both spouses working have increased by around five percentage points to 52.5 per cent from a decade ago.

Indeed, women are carrying the flag for many families because those employed among married couples had risen from 52.9 per cent in 2010 to 60 per cent last year.

On the other hand, the proportion of households with only the husband employed dropped from 32.6 per cent to 24.9 per cent.

It is good to have both spouses working in a household because double the income means double the firepower for everything, including retirement planning.

It is not unusual for some couples, especially those with high salaries, to own more than one property since such assets are preferred over other investments.

Indeed, such folk have resulted in a uniquely Singapore investment term - de-coupling - which refers to couples removing one of their names from their first matrimonial home so that the other can buy another property without incurring the dreaded hefty stamp duties for buying second properties.

Property aside, when it comes to retirement planning, it is always prudent for married couples to plan as a team, especially when one spouse, usually the wife, is not working.

At the very least, the sole working spouse should make regular top-ups to the other's Special Account so that they can enjoy two sets of CPF accounts earning 4 per cent interest. This allows the working spouse to claim at least $7,000 worth of tax reliefs annually as well as ensuring both spouses have decent monthly payouts from their CPF Life.

This is a basic lifelong double-income plan that all married couples must strive to have for their retirement so that they no longer have to work after 65.

More elderly Singaporeans

That there are more people aged 65 and above here should not surprise you because you can see silver-haired folk regularly the moment you step out.

To put it even more starkly: 34.5 per cent of all households have at least one family member aged 65 or more.

What is even more worrying is that the number of seniors living alone has more than doubled in the past decade, from 27,900 in 2010 to 63,800 last year.

The census also revealed that nearly 98,000, or 2.5 per cent of residents aged five and above, were unable to carry out or struggled with at least one basic activity, which includes seeing, hearing, walking, concentrating, dressing or communicating. Most of those suffering from such conditions are aged 65 and above.

As the population ages, the burden falls on many of us as we must factor in the additional expenses of taking care of our elderly parents.

Many underestimate their needs for retirement, including seniors who used to earn decent salaries themselves. For instance, you may think it is enough to go on $3,000 a month at 65 and since you have $700,000 saved up, that's more than enough to last you through 85.

Chances are folk who think this way have not factored in other kinds of expenses, such as healthcare costs and medical insurance, which will be hefty as they age.

Last year, an HSBC poll noted that about 50 per cent of Singapore workers said their parents had difficulty coping with retirement due to insufficient savings. These include parents of families with high-income earners.

The survey also found that most of those earning under $40,000 annually could not afford to pay for most of their parents' needs because they have to take care of their own families.

Not surprisingly, it is common to see folk in their 70s and 80s rejoining the workforce as menial workers today.

This part of the census should be a wake-up call for all families - it is critical to plan for lifelong income in old age by ensuring you have sufficient savings to join the CPF Life annuity scheme that guarantees stable monthly payouts from 65.

If you have elderly parents, it may be a stretch to ensure they too have adequate CPF Life payouts now without affecting your own family's retirement needs later.

But do consider putting them on CareShield Life at least, when the scheme, which is affordable, opens to those aged 41 and older soon. This scheme aims to provide at least $600 a month to those needing help to perform at least three of the basic essential tasks of life such as showering and walking so their families can consider paying for caregivers.

The census has given you a peek at possible future trends and you would do well to be ready for it before you join the greying population too.

Correction note: An earlier version of the story mentioned the benefit of claiming up to $7,000 worth of tax rebates annually for topping up the Special Account. The story has been corrected to say that the benefit should be to claim tax relief. It has also been further edited for clarity.