Will Your Financial Freedom Journey Be Sacrificed In An Aging Population?

In the recent National Day rally 2019, it was mentioned that Singaporean's life expectancy at birth is now the longest in the world, at nearly 85 years old, longer than that of Japan.

We are going to be growing old faster than any society in the world.” Source from gov.sg.

Look at the figures below, 900,000 people above age65 in year2030! Even with immigration, the population pyramid will be inverted.

That has to be like 15% of population or 1 in 6 people!

Wait, let's talk about today's expenses for an elderly first!

There's this survey that a Singaporean senior citizen aged 65 and above and living alone needs about $1,379 a month to meet basic standards of living. (Source from CNA)

Personal care items as well as leisure and cultural activities were included and agreed on in addition to household budgets from the participants. So don't doubt the figures.

The monthly payouts from one’s Central Provident Fund (CPF) savings is estimated at between S$730 and S$790 if the person has enough to meet the Basic Retirement Sum (BRS) when he or she turns 55 years old.

If the $1,379 is true, this amount from BRS is not enough to cover for their basic needs. 

Hence, most working adults give their parent's an allowance.

Maybe it's filial piety, maybe it's to cover for this shortfall...

And the consequences are in the next part.

How much do you give your elderly parents?

From forums, the general rule of thumb is 10-20% of the salary.

If you earn $5,000, that would be $500-$1,000/m

I've a friend who is single and gives $1,000 and it has not been easy for him to save much yet. 

But this is a situational or personal decision so there is no right or wrong.

It is no wonder all parents wish for their children to have good and stable careers.

What about “sandwiched generation” families, where two or fewer working adults are supporting both younger and elderly dependants!

This 10% or 20% of income given to parents is SIGNIFICANT!

There's ever increasing childcare and tuition cost for a sandwich generation family to already deal with.

According to a HSBC report,

54% of respondents expected their children to support them during retirement,

but only 36% of retirees were getting financial support from their children.

What about the 18% who expect support but do not actually get it?

Another concern is of the 36% who have children supporting them, how many of these children are behind on their own savings?

What is $1,000/m to your financial freedom journey?

For someone supporting an elderly father (assuming at age 63) what are the calculations? 

As an average man's lifespan in Singapore is 83, 20 years of $1,000/m for supporting parents must be provided for.

Now, if that $1,000/month belongs to you and you invest it for 20 years at 5% return, do you know that in 20years you'd have in future value $411,033!! WOW!!

This amount will go a long way for your own retirement.

If you are saving now $1,000/m on top of giving your parent's an allowance now, that's pretty good.

But don't assume you'd be able to save it perpetually! Here's why....

Back to the point on aging population

At the start, I mentioned 900,000 people will be above age65 in year2030! 

That has to be like 15% of population or 1 in 6 people!

But wait... based on projections from the United Nations (UN), 47% of Singapore's total population will be aged 65 years or older in 2050! That is way more than 15%!

If you too are aged 34 and above TODAY, you are one of them too!

Now, that got me thinking. 

1) Healthcare cost per person is going to rise

2) Generation subsidy packages like Merdeka and Pioneer can't keep continuing

3) Tax payers pool is going to strink

1) Healthcare cost is going to rise with demand

First, enrolling in a privately run activity centre can cost from $250 to $1,200/month.

As 47% of people in 2050 are above the age65, many will need medical help.

Fees for day rehabilitation centres, dementia daycare centres, psychiatric daycare centres and rehabilitation homes currently range from $6 to $160 per session before subsidies.

A part-time caregiver costs $20 to $25/hour.

Source: Touch Community Service

On the other hand, for nursing homes or old folks' homes, which currently costs between $1,200 to $3,500/month will certainly become oversubscribed.

That is why Careshield Life is such an important piece to each and everyone of us.

It is going to provide long term care cashflow and with inflation factored in.

If you would like to read more, click here: Careshield Life New Changes And Incentives

What you need to do now is to encourage your entire family to become MORE HEALTHY.

Do more walks and exercise more. In any case, there are lots of healthy living incentives nowadays.

If you would like to read more, click here: AIA Vitality and Manulife MOVE

2) Generation subsidy packages like Merdeka and Pioneer can't keep continuing

This is pretty straightforward. 

Don't expect subsidies to be given to you when you're old. 47% of people is old. 53% can't subsidies everything.

If you would like to read more on current Merdeka Package, click here

3) Tax payers pool is going to shrink

It is logical for the government to rise taxes ahead of year 2050 where 47% of people is old.

Where is tax raise going to come?

Will GST increase? If it does, it will affect your entire savings budget, think about it!

A 2% increment in GST means your savings budget drops 2%.

Hence, you'd need to save more today. 

Taxes are almost certainly going to rise in the future!

This leads to the next point, EXPECT TO WORK BEYOND AGE 65!

We can't have everyone financially free and on the beach!

Think about this, if Singapore doesn't raise retirement age, 47% of people may not be working.

Of the 53% remaining, perhaps 20% are babies and children.

Only 33% working adults? It is not going to sustainable.

Logically, government has to raise retirement age or inflate cost so high that more citizens are working.

Makes sense?

While FIRE (financial freedom retire early) is growing in popularity, the truth is Singapore needs an older workforce. 47% of people lying on the beach retired at age65 is not going to happen.

If you would like to read more, click here: Financial Independence Retire Early (FIRE)


It does not mean you do not strive for your own financial freedom.

The realisation of this post is that we should all be working at an older age whether we are financial free already or not. The society needs it.

Last updated on December 22nd, 2019 at 06:11 am

The Astute Parent: A parent who has a sharp acumen on sieving through 'alien' financial jargon to dish out bite size financial tips from a parent's perspective.
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