Forum: Prescribing retirement sum can have unintended consequences
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Financial experts often come up with a specific amount of retirement savings deemed adequate to retire well in Singapore.
A recent DBS report suggested that a 60-year-old retiree in 2030 will need $550,000 to cover his monthly basic living expenses (How Gen Zs and millennials can build their retirement nest eggs, Feb 23).
The required sum is raised to $1.3 million if one also wishes to cover other activities such as travelling for holidays.
While such projections can be helpful for retirement planning in Singapore, it can cause unnecessary distress for many knowing their savings are nowhere near the $550,000 mark.
The recent Global Wealth Report published by UBS indicated the median wealth per Singapore adult was US$104,959 (about S$141,500), a far cry from the $550,000 mark. Tellingly, the figure also means half of the Singapore adult population have less wealth than that.
Beyond material possessions such as cars and houses, the prescribed retired sum provides another avenue for comparison among peers.
This further intensifies social comparison, causing some to feel inadequate about oneself in achieving success in Singapore.
Also, with many Singaporeans already perceiving Singapore as a high-cost country to live in, the need to set aside a substantial sum for old age can only reinforce this perception. As a result, many will hold on to the idea of having fewer children or relocating elsewhere with a lower cost of living.
The recommendation on how much is needed to retire is usually followed by financial advice on how to achieve the required sum.
Often, Singaporeans are urged to go beyond the traditional means of savings and invest in financial assets that provide better returns.
Many Singaporeans hence deem financial investing as necessary.
Unfortunately, such a mentality causes some to fall prey easily to investment scams and lose their hard-earned life savings.
The point here is not to disregard the benefits of having a recommended level of retirement savings. But, we need to consider that not everyone is fortunate enough to achieve that.
Investing requires capital and an appetite for risk-taking. Many have neither, especially when financial resources are limited and need to be set aside for rainy days.
Perhaps those armed with financial knowledge can come up with more viable financial solutions apart from setting a specific sum deemed adequate for retirement.
Wong Wan Hoong