Are women as prepared as men for retirement?
Planning for retirement tends to be low on the priority list when we believe we still have a long way to go before having to cross that bridge. This is a perfectly normal thing to do.
Warren Buffett seems to have decided around the age of 8, that he would become exceedingly rich when he got older; his intelligence (and enormous wealth) suggests that he is not really what we would call normal…
To be realistic, we are not getting any younger. As we enter adulthood and we take on more responsibilities, like buying a property or having children, retirement draws one step closer.
Planning for retirement in Singapore is becoming increasingly important because of the ageing demographic. Like many countries in East Asia, Singapore is seeing very low population growth, and 2015 was the lowest in a decade.
Since 2014, over 10% of the population is 65+, and this will reach nearly 20% by 2030. The average Singaporean lives until they are 82 (80 for men, 85 for women), so with the retirement age set at 62, this is over 20 years, or a full quarter of his or her life to be spent in retirement.
And when it comes to gender and retirement, there are stark differences.
According to Central Provident Fund (CPF) statistics, older Singapore women do not accumulate as much in CPF savings as older men.
In 2013, the median CPF savings for women aged 51 to 54 was about $90,000, and for males, $130,000. This is considering the fact that almost a quarter of women would have left the labour force in their prime working age for caregiving reasons, further affecting CPF savings.
And for many working women, having a domestic helper helps them to continue in the work force, so this will necessarily again effect CPF savings. Hence, retirement planning is even more essential for women than men.
Irrespective of gender, however, retirement planning starts with thinking how you plan to spend your retirement. When you give this subject some serious consideration, it will become clearer whether or not you want to, or indeed can, continue working past the retirement age.
Perhaps you will be caring for children in education or parents, and full time work is not an option. Maybe you have substantial savings in your CPF, and plan to do a lot of travelling and take up some new interests.
With Singaporeans leading much healthier lives than in the past, the legal retirement age of 62 nowadays is somewhat arbitrary.
While many people initially think they want to retire as early as possible, some change their minds, and there is a realization that keeping mentally stimulated through some kind of remunerated work, may in fact be the preferable option.
Whatever your decision about how you plan to spend your retirement, the next issue of how much you will need to fund your retirement, will become easier to plan after the decision is made.
For those who have taken on a distinctly traditional trajectory over the course of their working life, they will almost certainly have saved quite enough for retirement.
Even if you are not the classic model employee who has worked 9 ~ 5 (with some regular overtime) since graduation and saved continuously into the CPF, or in the C-suite, or inherited a fortune from your family, this does not mean that you cannot have a good retirement.
The key to happy retirement lies in careful advance planning and it is never too late to start planning!