How much are you earning per annum?

Average wealth of S’poreans, including assets, the highest in Asia: Credit Suisse

By Alison Jenner - 22 Nov 2016
todayonline.com

SINGAPORE — Despite a slowing economy and uncertain labour market, Singapore’s adult population has an average wealth of about US$276,885 (S$395,000) per person — up 1.4 per cent compared with the middle of last year, an annual wealth report by the Credit Suisse Research Institute found.

The Global Wealth Report ranked the Republic top in Asia and seventh globally among major economies.

Personal wealth per adult in Singapore is forecast to rise 2.2 per cent per annum to reach US$309,000 in 2021, the study added. It also noted that Singapore’s personal wealth per adult was “well ahead” of Hong Kong, which had US$185,281 average wealth per adult and was ranked above Singapore in 2000.

Financial assets — which include items such as currency, deposits and equities — accounted for more than half of the average wealth per adult in Singapore at US$180,414. Non-financial wealth, including assets such as housing, accounted for US$151,239. The average debt was US$54,768, or 17 per cent of total assets, moderate for a high-wealth country, the report said.

In terms of median wealth per adult, Singapore was placed ninth globally with US$101,000 — behind countries such as Switzerland (US$244,000), Australia (US$163,000), New Zealand (US$136,000) and Japan (US$120,000). The report noted that ranking by median wealth per adult “favours countries with lower levels of wealth inequality”.

The report found that wealth distribution in Singapore is “moderately unequal”: 18 per cent of its adult population has wealth below US$10,000, compared with 73 per cent globally. Half of its adults has wealth above US$100,000, compared with 21 per cent in 2000. Correspondingly, those with wealth below US$100,000 have declined from 79 per cent to 50 per cent over the same period.

On Monday, Prime Minister Lee Hsien Loong spoke about the distribution of wealth during an interview with the Singapore media to wrap up the Asia-Pacific Economic Cooperation Economic Leaders’ Meeting held in Peru. Mr Lee said Singapore’s emphasis is on giving people the skills to help them in the new economy, and giving those who are not doing well an extra leg-up. “If you’re in Singapore, not everybody is equally well off, but even if you’re not well off, you’re not badly off,” Mr Lee had said.

CIMB Private Banking economist Song Seng Wun said that Singapore’s government is very particular about making sure that, while the country is not the cheapest place to live in and while there are many wealthy individuals here, the middle- to lower-income groups are not left behind.

“The thing about the policies here are that they are very targeted. Not many countries can do that,” he added. “Recent years have seen policies targeting those at the higher end to give back more, whereas for the lower income, policies are deliberately targeted at household type.”

In its seventh year, the Global Wealth Report was compiled from data on the wealth holdings of 4.8 billion adults across more than 200 countries. It used data from household balance sheet, publicly available data on distribution of wealth as well as information from Forbes magazine’s rich lists.

In the latest report, Switzerland retained first place, with an average wealth per adult of US$562,000, down 4.5 per cent compared with the same period last year.

Australia (US$376,000) and the United States (US$345,000) came in second and third, respectively. Norway (US$312,000) and New Zealand (US$299,000) rounded up the top five.

Average wealth per adult in the United Kingdom tumbled more than 10 per cent to US$289,000. The UK was ranked sixth, one place ahead of Singapore. The report found that the UK is US$1.5 trillion poorer in dollar terms due to the fall in the pound since the vote to leave the European Union.

It also highlighted the growth of wealth in emerging economies since 2000. Back then, these economies accounted for a mere 12 per cent of global wealth. However, they have contributed nearly 25 per cent towards global growth since.

“Today, emerging nations are home to 18 per cent of the world’s ultra-high net-worth population. China alone accounts for 9 per cent of the top decile of global wealth holders, which is well above France, Germany, Italy, and the United Kingdom.”

Originally Posted by Unregistered

Nonsense. 80% live in HDB flats. Assuming most live in four room HDB flats worth $400k, at 55, a typical couple's net worth would be at most $1m. Just ask those staying in HDB flats.

Hey, what happened to all the posters who have many properties and multi-millions ? Come out and provide back up to the post # 11169.

Surely the info provided in the post reflect some reality as we have seen many posters to this forum sharing their multi million net-worth and ownership of multiple properties.

The post is applicable to Degree graduates who work continuously for 30 to 40 years and achieve typical progression in their careers. Exceptional performers would earn even more! Much more!

So yes, while the majority of Singaporeans may be staying in HDBs, these are the older and less educated generation and the younger generation who are just starting off their careers and their families. In time to come, you will see more and more of the younger families mature and move into condos and landed properties.

Retirement planning: How much is enough?

Finance experts break down the growing range of possible means to save for retirement in Singapore.

By Nicole Tan
Channelnewsasia, 27 Mar 2016

SINGAPORE: Retirement means different things to different people and industry observers say retirement aspirations of Singaporeans have evolved over time.

Mr Edwin Ooi is 27 this year and he is already planning ahead. He intends to stop working full-time by the age of 45 and said that as a financial adviser, his work experience helps him manage his own money.

"On a month to month basis, I'll try to save up to about 30 per cent of my income and that goes into various portfolios of investments," said Mr Ooi. "50 per cent is more of expenses, but I do have surpluses here and there, so that eventually goes into savings or are parked to my investments."

He said he started thinking about early retirement at the age of 16 as he aspired to have more freedom with his time: "Retiring early would mean that I would have more time to spend with family and to do things that really matter in life."

"One thing unique about the industry I'm in is that there's no actual retirement, but more financial freedom. So working towards financial freedom would mean that I can still work on an ad-hoc basis, but I would have more time to spend doing things that really matter to me," he added.

EVOLVING ATTITUDES TOWARDS RETIREMENT

Finance industry experts said there is a growing number of individuals like Mr Ooi, whose attitudes towards retirement stray from the conventional.

"(Retirement) used to be (about working) for a company for 20 to 30 years and then stopping, and that was it - you didn't work again," said Mr Mark Surgenor, Head of Wealth Sales for at HSBC Singapore's Retail Banking and Wealth Management. "Now people are thinking in a much more active way about retirement."

He added: "They're thinking about moving into retirement, by perhaps doing a bit less of their day job, and picking up some other work that's close to what they do, or something that's close to what they really enjoy.

"They might plan to do that for five to 15 years. Ultimately, they may eventually want to completely stop but it's much more of a phased approach now."

According to a recent survey by HSBC, seven in 10 people working in Singapore above the age of 45 would like to retire within the next five years.

The study showed that top reasons for wanting to retire include having the freedom to travel and pursue other interests (62 per cent), spending more time with family (42 per cent) and switching to another career or voluntary work (25 per cent).

However, half of them said they would not be able to retire within five years mainly due to financial constraints.

"Let's be realistic about this, life gets in the way of these things," said Mr Surgenor. "People get married, people go on holiday, buy a new house or perhaps want their children to study abroad. These are great expenses that come up - sometimes they're planned, sometimes they're not planned. So that does get in the way."

HOW MUCH IS ENOUGH?

Market polls like the DBS-Manulife Retirement Wellness Study done in November 2015 showed that people living in Singapore start planning for their retirement at an average age of 38.

The surveys also showed that about four out of five people in Singapore are not fully aware of how much they will need to put aside. Some observers cite industry benchmarks that suggest how much is enough.

Said DBS Bank's regional head of Bancassurance Richard Vargo: "It really depends on a person's current lifestyle and their aspirations to maintain that lifestyle - to increase or reduce that lifestyle or modify it during retirement years.

"Industry benchmarks throughout the world say roughly 60 to 70 per cent of a person's current monthly income should be adequate during retirement years, recognising certain expenses will be reduced during your retirement years."

Finance experts said the needs vary widely across different income groups. However, they are able to estimate the monthly expenditure for a basic lifestyle by breaking it down to some daily essentials, though this is still a far cry from a one-size-fits-all formula.

According to advisers, utility and phone bills would cost up to S$300 a month. Meanwhile, food expenses could be as little as S$400 a month, but higher if one preferred more luxurious dining.

Getting around could cost as low as S$200 for public transport, but it could cost up to thousands of dollars to maintain a car. As for entertainment, industry observers budgeted about S$300 a month.

Based on these back of the envelope calculations, it can be gauged that monthly expenditure for basic daily needs would be about S$1,200.

Said former retirement ambassador at Fundsupermart Wong Sui Jau: "We can put a certain 'x' dollar amount which is probably adequate for most cases. If you want to expand on that, you probably want a more luxurious kind of lifestyle.

"Now S$1,500 is on a more basic level which allows S$300 to S$500 for entertainment per month. Of course this doesn't include housing, but we made certain assumptions, most of the time by the age of 60 plus, most of the house should be paid for."

He added: "It doesn't factor in things like medical. Some people are in very good health and don't need to spend much, if any, on medical and some people who are in poorer health need to spend much more on a per year basis."

RIDING ON CPF LIFE

Amid changing retirement needs, the Government implemented enhancements to the Central Provident Fund (CPF) system this year.

Rather than the previous "Minimum Sum", Singaporeans now have three retirement sums to choose from - Basic, Full and Enhanced Retirement Sum.

Depending on the amount saved in their retirement account, monthly CPF LIFE payouts range from S$660 to S$1,920.

Said Mr Wong: "If you were to look at the ballpark numbers of what we were looking at just now, at S$1,500, even if you take the standard one, which is S$1,200 per month paid out from CPF Life, you probably need to make up about S$300 per month from your cash and savings and such. S$300 is not that difficult to make up on a per month basis from your cash and savings and investments.

"Now if you're taking the highest one which is $1,700 to $1,900, it covers a lot of the basics and of course makes certain assumptions. One very important assumption we have to make is inflation is not a big issue."

OPTIONS FOR ADDED INCOME

Observers said CPF Life is a good starting point, but if individuals want additional funds on top of that, there is an increasing range of options available to ensure a sustainable stream of income post-retirement.

From insurance and savings plans, to investing in capital markets and property, experts said that how individuals choose to save and invest will depend on factors such as risk appetite, which will also change over time.

"When you talk about retirement planning or investing, it's not a one-size-fits all type of solution," said Associate Professor Jeremy Goh from the Singapore Management University's Lee Kong Chian School of Business. "At the end of the day, it's all about asset allocation.

"When you're young, you tend to tilt your portfolio towards equity, because when you're younger you can afford to take risks. As you get to pre-retirement, (you reach a) point where you cannot afford to take risk and you shouldn't be taking any risk."

He added that at this point a person's portfolio will mainly be in fixed income security, a "very safe type of instrument".

He added: "You would also want to buy some annuities. Convert some of the valuation in your portfolio into annuities to split all the cashflow from one lump sum into monthly cashflow to sustain day to day needs."

Associate Professor Goh talked about the effect of compounding, which is interest earned on interest being paid.

"Compounding gets even bigger if you're looking at a portfolio where the expected returns are higher," he said. "So if you're looking at 8 per cent return on a portfolio, if one starts 10 years earlier, the numbers are just staggering."

Experts said it pays to start young and not just because of financial reasons. Ultimately, they said to plan early is to be better prepared for future spending needs, especially the unexpected.

You don't actually need much to retire. Assuming you have a paid up home, debt free and no dependants, you just need $1200 pm to retire.

If you want to eat at restaurants every day, drive a luxury car, travel on first class for holidays every month, party all night, drink, smoke, gamble, womanise, etc ... then $100k pm will also not be enough.

Btw, you don't have to save up so much to leave behind for your children when you pass away. Let them work hard for their own retirement. Don't spoil them.

You don't need millions to retire. Just $1200 pm. For a couple, $2400 pm or lesser. Of course, you must also have some extra savings to take care of inflation.

Sounds reasonable. I went to many retirement and investment talks and the first thing the speakers always talked about is sacring the wits out of you saying you are very poor now and you need to invest this and that and buy their products which will give you a x% of return so as to give you a comfoftable life. They are no different from the tupperware and vacuum cleaner salesman!! They are mostly located at Shenton Way and Raffles City. Be very careful with your money.

Originally Posted by Unregistered

Sounds reasonable. I went to many retirement and investment talks and the first thing the speakers always talked about is sacring the wits out of you saying you are very poor now and you need to invest this and that and buy their products which will give you a x% of return so as to give you a comfoftable life. They are no different from the tupperware and vacuum cleaner salesman!! They are mostly located at Shenton Way and Raffles City. Be very careful with your money.

I used think it was just a tactic by insurance agents to scare people to invest in their products.

But then I find the numbers (projected expenses, inflation) they threw up are actually factual numbers based on simple mathematics. The numbers are also purely based on your inputs - ie, how much you expect you will need to maintain your desired lifestyle in retirement, how long you expect to live in retirement, inflation rate and what buffer you want to factor in for emergencies or unexpected expenses.

Lets use the couple who think that they only need $2400 pm at today's dollars. Thats $28,800 pa. Now the couple also think they want to retire at 50 and expect to live to 85 years old (35 years in retirement). Lets use inflation rate of 3%. This is what the couple will need over the years. For simplicity, lets say the couple is 50 yo and retire now.

Age______year_____Annual amt($)____Cumulative($)
50_______1________$28,800_________$28,800
55_______5________$33,390_________$155,475
60_______10_______$38,700_________$335,700
65_______15_______$48,870_________$554,625
70_______20_______$52,016_________$806,840
75_______25_______$60,300_________$1,087,630
80_______30_______$69,900_________$1,413,130
85_______35_______$81,040_________$1,790,480

The annual expense increases because of inflation assumed at 3% pa. The $1.79M should not include their home otherwise they will have to sell off their home at some point in their retirement.

As you can see, even for a very basic bare minimum lifestyle of $2,400 pm, you still need at least $1.79M to last 35 years. One solution is what the gahmen has been advocating - dont retire too early. Work as long as you can.

If you need $5,000 per month in retirement and want to retire at 50, you can straight away know it will cost you $3.6M for 35 years in retirement.

It is all simple mathematics. No special ingredient, no magic. If you are scared, you should start looking at how to boost your savings instead of bluffing yourself that it is not real!

Crap. You dont need $1.7m cash.

Originally Posted by Unregistered

I used think it was just a tactic by insurance agents to scare people to invest in their products.

But then I find the numbers (projected expenses, inflation) they threw up are actually factual numbers based on simple mathematics. The numbers are also purely based on your inputs - ie, how much you expect you will need to maintain your desired lifestyle in retirement, how long you expect to live in retirement, inflation rate and what buffer you want to factor in for emergencies or unexpected expenses.

Lets use the couple who think that they only need $2400 pm at today's dollars. Thats $28,800 pa. Now the couple also think they want to retire at 50 and expect to live to 85 years old (35 years in retirement). Lets use inflation rate of 3%. This is what the couple will need over the years. For simplicity, lets say the couple is 50 yo and retire now.

Age______year_____Annual amt($)____Cumulative($)
50_______1________$28,800_________$28,800
55_______5________$33,390_________$155,475
60_______10_______$38,700_________$335,700
65_______15_______$48,870_________$554,625
70_______20_______$52,016_________$806,840
75_______25_______$60,300_________$1,087,630
80_______30_______$69,900_________$1,413,130
85_______35_______$81,040_________$1,790,480

The annual expense increases because of inflation assumed at 3% pa. The $1.79M should not include their home otherwise they will have to sell off their home at some point in their retirement.

As you can see, even for a very basic bare minimum lifestyle of $2,400 pm, you still need at least $1.79M to last 35 years. One solution is what the gahmen has been advocating - dont retire too early. Work as long as you can.

If you need $5,000 per month in retirement and want to retire at 50, you can straight away know it will cost you $3.6M for 35 years in retirement.

It is all simple mathematics. No special ingredient, no magic. If you are scared, you should start looking at how to boost your savings instead of bluffing yourself that it is not real!

How to retire at 55 assuming a retired couple needs $2400 pm. Assume they have a PAID UP HDB flat, NO debt, NO dependents and choose CPF Life ERS.

Between age 55 to 65, assuming an inflation rate of 3% pa, they will need $368,865 in total over the 10 years.

Between age 65 to 85, assuming an inflation rate of 3% pa, they will need $1,071,213 in total over the 20 years.

Between age 65 to 85, if they choose the CPF Life ERS, they will get $960,000 (i.e. $2000x2x12x20) in total over the 20 years (assuming they both pass away at 85). So, shortfall of $111,213 cash.

So, the couple will need $480,078 cash (i.e. $368,865 + $112,213) in total to retire at 55. Each of them must also have $249,000 in their CPF SA to choose the CPF Life (ERS).

So the amount of assets they must have (not including their home) is $978,078 (i.e. $480,078 + $249,000 + $249,000).

If they want more cash, at some point in their retirement, they can sell their current HDB flat and then buy a 2 room flexi flat for the elderly. For example, they can sell their 4 room HDB flat for $400,000 and then buy an elderly flat for $100,000.

Originally Posted by Unregistered

How to retire at 55 assuming a retired couple needs $2400 pm. Assume they have a PAID UP HDB flat, NO debt, NO dependents and choose CPF Life ERS.

Between age 55 to 65, assuming an inflation rate of 3% pa, they will need $368,865 in total over the 10 years.

Between age 65 to 85, assuming an inflation rate of 3% pa, they will need $1,071,213 in total over the 20 years.

Between age 65 to 85, if they choose the CPF Life ERS, they will get $960,000 (i.e. $2000x2x12x20) in total over the 20 years (assuming they both pass away at 85). So, shortfall of $111,213 cash.

So, the couple will need $480,078 cash (i.e. $368,865 + $112,213) in total to retire at 55. Each of them must also have $249,000 in their CPF SA to choose the CPF Life (ERS).

So the amount of assets they must have (not including their home) is $978,078 (i.e. $480,078 + $249,000 + $249,000).

If they want more cash, at some point in their retirement, they can sell their current HDB flat and then buy a 2 room flexi flat for the elderly. For example, they can sell their 4 room HDB flat for $400,000 and then buy an elderly flat for $100,000.

Too simplistic lah.

You must also look at cashflow, not just the absolute amount.

Lets say the couple has $370,000 cash and this lasts them from 55 to 65.
From 65, their CPF Life payout kicks in. Each happily receives $2k pm or a total of $4kpm or $48K total pa.

At 65, to have the same purchasing power of $28,800 when they were 55, they would need $48,870. This is already above the payout they received from their CPF Life.

With every progressive year, they will need more and more to keep up with inflation and just to maintain their standard of living equal to when they were 55.

For eg. at 70, they will need $52,016 pa while their CPF Life payout remains at $48K pa. They will need to downgrade liao. In fact, by 65, they will already feel the need to downgrade as the cash inflow is lower than their cash outflow.

Honestly with a budget of $2400 pm, there is really not much room to play around.

You're not paying attention. Whatever you mentioned has been calculated in the above example.

Originally Posted by Unregistered

Too simplistic lah.

You must also look at cashflow, not just the absolute amount.

Lets say the couple has $370,000 cash and this lasts them from 55 to 65.
From 65, their CPF Life payout kicks in. Each happily receives $2k pm or a total of $4kpm or $48K total pa.

At 65, to have the same purchasing power of $28,800 when they were 55, they would need $48,870. This is already above the payout they received from their CPF Life.

With every progressive year, they will need more and more to keep up with inflation and just to maintain their standard of living equal to when they were 55.

For eg. at 70, they will need $52,016 pa while their CPF Life payout remains at $48K pa. They will need to downgrade liao. In fact, by 65, they will already feel the need to downgrade as the cash inflow is lower than their cash outflow.

Honestly with a budget of $2400 pm, there is really not much room to play around.