A number of Singaporeans who are planning for their
retirement tend to rely on myths without even realizing it! It can
happen to you too. As believing in these retirement myths can be
detrimental to your financial future, it is important to scrap
these myths.
MYTH #1: THERE IS A CERTAIN PERCENTAGE
TO QUANTIFY YOUR RETIREMENT FUND
Some financial gurus have set a rule of thumb regarding
the percentage of income you need for your retirement. According to
them, you need to have 80% of your current salary in retirement.
This is utterly exaggerated! The actual amount of your retirement
fund depends on your pre-retirement and post-retirement lifestyle
choices.
For instance, if you choose to travel frequently during
the early months of retirement, you will need to spend more.
However, if you choose to live “kampong-style” for the rest of your
life, you will spend less. The amount of retirement fund you need
depends on what you want to do and how you want to live. It does
not rely on a magical percentage!
MYTH #2: YOUR CPF SAVINGS IS
ENOUGH
Contrary to the popular myth, your Central Provident
Fund (CPF) savings may not be enough to sustain the lifestyle you
desire during retirement. Keep in mind that your CPF savings
depends on how much you earn during your working years. If your
income is relatively low throughout the years then you can expect
to receive lesser payouts than your “higher earning” friends. Thus,
your CPF savings may not be enough. Also, if you exhaust your
account earlier on to pay for your HDB flat then you shall expect
to receive lesser payouts than those who bought flats within their
“means”.
MYTH #3: RETIREMENT ONLY HAPPENS AT AGE
62
Do you know that some people retire as early as 30?
Believing that 62 is the magical retirement age can harm your
finances. If you limit yourself to 62 then you may procrastinate on
growing your retirement fund, you may ignore the knowledge of bonds
and stocks, and you may panic at the last-minute. Retirement
actually happens when you have achieved financial freedom. Do not
limit yourself to a magical number and regret planning too
late.
MYTH #4: MY CHILDREN WILL SUPPORT ME IN
THE LONG-RUN
According to the law, your adult child has the
responsibility to support you in old age. Protected by the
Maintenance of Parents Act, senior citizens who are unable to
sustain their lifestyle can apply to the court in order for their
children to provide a monthly allowance.
Here are the exact statements from
the Maintenance of Parents Act:
“Any person domiciled and resident in Singapore who is
of or above 60 years of age and who is unable to maintain himself
adequately (referred to in this section as the parent) may apply to
the Tribunal for an order that one or more of his children pay him
a monthly allowance or any other periodical payment or a lump sum
for his maintenance.”
However, the court will consider several factors
including if your child is able to afford it. If your child has
started a family of his or her own, you can only hope that your
child is financially stable by then!
moneydigest