And many people may just save subconsciously or spend subconsciously.
I think usually many people get a wake up call at around 55 and they realize they can't be working forever and they start to rush to plan for their retirement. Or they hope that their CPF is enough for them to retire.
So I was thinking... What IF someone doesn't plan for retirement?
How much will he need to survive?
How much time will he need to turn the situation around?
Now... we're not talking about financial independence here.
I'm talking about someone who is approaching 65 years old and he's probably going to be out of a job.
Or maybe he doesn't want to work anymore, or whatever.
I'm going to calculate it based on a life expectancy of 85 years old.
So this person needs to live for another 20 years.
He's just a regular Singaporean who has worked his whole life without saving much, but he has been consistently contributing to his CPF and Medisave.
This person probably already has his HDB paid up and is receiving some money from CPF Life.
Unfortunately he didn't really save or plan for his retirement.
Ok so what expenses would he have?
Now, we can't look at this from our own spending here, cos the spending at 35 vs 65 is very different.
A 65 year old would probably eat less, may also not want to eat at restaurants as much, travel less, etc.
They may have some simpler hobbies which can be done around their estate.
He may not want to travel around the world as much cos this person has likely been traveling regularly his whole life cos he hasn't been saving much, like a lot of people out there.
So let's break it down into a table...
I would think... the above can be achieved for most people?
Food I calculated as $3 per meal, most older folk take a biscuit for breakfast or eat half their breakfast and half for lunch. So I took it as $3 per meal, lunch and dinner, x 30 days.
Which is $3 x2 x30 = $180.
I put it as $200 for the fun of it.
Toiletries at $50 is actually quite a lot.
Transport at $50 I think is also quite a lot, considering that most elder folk don't move around so much.
Handphone bills at $25 is pretty normal. That's what my wife uses with her SIM only plan.
Utilities we currently use around $80 per month as a couple.
But I think a single won't use proportionately less, cos if he turns on the aircon it's going to cool down the whole room anyway.
Town Council, property tax and home internet, I set it the same as my own.
The currently elderly tends to have cable subscription, but let's not add this in.
Cos if we add in cable subscription then I would conclude that this particular person isn't tech savvy and thus will not require a home internet subscription.
Of course no one eats simple food all the time, I put down $100 per person for special meals.
From my experience with the older folk within my family, most of them don't eat out much.
Maybe they go out to eat on weekends and probably at zi-char stalls, so at $100 per person, this is likely an over estimation.
I'm not sure how much the elderly spend on medical expenses. Some are healthier than others.
I set it at $100 per month, which I think is quite high.
Medical insurance isn't included cos I assume this is taken care by Medishield Life and paid out of the person's Medisave.
Maybe this person would like to give their grandchildren gifts, so I set aside $50 per month for that.
Once again, I think this is quite a lot, cos my mum doesn't spend this amount on her grandkids regularly.
And an additional $100 per month for travel, or $1200 per year.
Most older folk don't really travel overseas as much. Maybe short trips to the neighbouring countries. Or maybe to further countries every few years. So there's time to "save up".
So we come up to around $1000 per month for 1 person, but there's slight economies of scale, cos a couple will pay the same amount for some household expenses.
If we look at CPF Life payouts...
--https://www.cpf.gov.sg/Members/Schemes/schemes/retirement/cpf-life
So if this candidate is a normal Singaporean, he's likely to be able to retire without planning very much for his retirement.
That's assuming he doesn't take on excessive loan or expect a luxurious lifestyle in his later years.
This is actually not too shabby. Assuming the case of a regular Singaporean who lives a normal life, buys a 3/4 room HDB, works til 65 years old and doesn't save for retirement.
Many Singaporeans would be able to retire quite comfortably.
At an older age, most people will naturally be reducing their expenses anyway cos they will likely be going out less and spend less on entertainment.
So my conclusion on this is pretty much... many people over estimate what they need to retire.
When people say they don't have enough to retire, they are usually still working, so they haven't fully integrated into the retirement lifestyle yet.
So they MAY be commenting from a position that they don't know what it's like on the other side.
IF they expect to be spending the same way they are spending when they are still working, then probably it would be difficult to retire, but as one ages, there will be many lifestyle changes which will naturally result in a decrease in expenses.
In truth, I haven't seen many older folk who are actively going out regularly spending heavily on entertainment and regular travel. Most older retirees pretty much stay at home, hang around coffee shops, do morning exercises, watch TV, take care of grand kids.
They don't go around buying branded bags, traveling around the world, going to restaurants regularly eating rich heavy meals, etc. They pretty much, take life easy and live a simple life.
So it doesn't seem like there's a real big problem even if someone doesn't plan for retirement. As long as he/she lives a normal Singaporean life and works at a fair pay until 65 and contributes to CPF and doesn't overextend themselves on their property loan.
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