Do We Have To Retire and Worry About Living to 100?
Into the final quarter of the year and we saw the 3rd US rate hike with Indonesia and Philippines tagging along as markets are gripped by disruptive politics, creating uncertainties in Brexit, Italy, Argentina, China vs US, US vs the world, etc.
Employee anxieties are riding high with fears for job security. Who’s to blame when there are bills to pay and millennials are wisely putting off family and marriage, choosing to stay home and prioritise looking after themselves because salad bowls cost $15 and Starbucks start at $5.
For us, it is doubly disruptive for us seeing two sides of Singapore each week, immersed in the young and beautiful week day world of the CBD and on weekends, witness a tide of wheelchairs in the heartlands when we do the weekly hawker fare fix.
Reality and realisation have hit us—there are a lot more old people around these days and we read that by 2030, 1 in 4 residents would be above 65 years of age.
Our eyes are not deceiving us—there are retirees everywhere these days, climbing Bukit Timah hill or thronging Changi T3’s Basement 3. You see retired folk milling about in cafes around town, the museums and even leading tour groups on the heritage trails around Fullerton hotel.
It starts getting interesting when we began picking up more of the buzzwords in the media on the prospects of living to 100 and realise that it is something we cannot say no to, or refuse, which was when we got suckered into a Ready for 100 Twitter survey by the EIU (commissioned by Prudential Insurance) and it was a downward spiral from there.
Living to 100?
Less than 3 out of 10 folks surveyed in the report, Ready for 100? Preparing for longevity in Singapore, said it’s a good idea.
Unfortunately, Singapore has the third longest life expectancy in the world, after Japan and Switzerland.
With the retirement age at 62, 100 is a long way to go after that.
The report presented findings and suggests preparations in the areas of relationships, health and wellness, financial wellness and work.
It would be easy to guess the report is not written for those who near retirement ages because it would too late to fix the main problem most kiasu Singaporeans have about growing old—financial readiness.
While it is easier to find a club to join tomorrow or group or start exercising immediately unless your health does not permit, most people who are not financially ready to live to 100 will not be able to start preparing at the end of their careers.
Source: The New Paper
That is not why Prudential is sponsoring the study, of course, although they do stand to benefit if younger Singaporeans start preparing for their retirement in some investment-linked policy which is obviously more profitable than if folks just stuck to term life policies and do their own investments on the side (and we are lucky to have a friend planning to launch a fund to do that soon).
Anyway, we will not go off tangent and get sucked into the migration debate (so that by 2030, just 1 in 5 instead of 4 Singaporeans would be over 65) and the foreign migrants we potentially need to supplement the lowest birthrate in the world (which we can possibly blame on the $15 salad bowls as the root of the problem, to be closely followed by those condo prices).
Retirement is out of reach for working Americans too, just 76.7% of them, and median retirement account balance among working individuals in America is zero because nearly 60% of all working-age Americans do not own assets in a retirement account.
It is a crisis growing out of proportions for the Americans especially when the average net worth of households in the US is $692,100 compared to the median net worth which is just $97,300.
Singaporeans have less problems with retiring, we guess, the main problem is that we are living for too long.
A counter argument to why people do not bother to save so much anymore is that savings has underperformed asset gains in the past decade and Millennials generally harbour the illusion that they will become rich in their lifetimes and thus, leave nothing in their retirement accounts in addition to the expectation of inheritances to buffer them in their retirements.
That could turn out to be a bad idea because the parents are going to live to a 100?
The Concept of Retirement
Why is there a retirement age of 62? Many PMET’s (Professionals, Managers, Executives and Technicians) get culled long before they hit 62 these days and the job attrition rate in finance is even more alarming as we hear from friends in financial markets, of people considered past shelf lives for their ages (and not ability) which is around 45-55 years.
Even more disturbing is the need to project the fintech image and the demand for fresh and young faces at the helm to give added credibility.
This is forced retirement as opposed to unforced and voluntary retirement.
In Japan, old job seekers do not stand a chance—“employers often equate experience with inflexibility, technophobia and unrealistic pay expectations”.
We do notice something else—some rich people never retire.
Warren Buffet, Donald Trump, George Soros and gang. To top it, Malaysian PM Dr Mahathir managed to win an election at 93.
Alibaba’s Jack Ma bucks the trend, announcing his intention to step down at 54 which is less than the average age of Singapore’s cabinet, at 55, and way much lower than the median average age of all the boards of directors of the S&P 500, standing at 62.4.
There is a little conundrum here, where folks who can well afford to retire work long past retirement, while there are 7.5 out of 10 people who are not prepared to live to 100 that need to work.
Older people can still contribute too—Warren Buffet earned 99% of his wealth after his 50th birthday, the first Walmart opened its door when Sam Walton was 44, Henry Ford created his first car when he was 45, Charles Darwin was 50 before he published his revolutionary book, Susan Boyle won Britain’s Got Talent when she was 47 and the list grows.
In Singapore, most job opportunities for those above 65 would be in the cleaning or hawker businesses and there will be little work to be found for the former banker or engineer who would be sitting on a tidy portfolio of assets, generating income for them as they try to outrival friends on Facebook in the number of cruises they can take to far-flung places.
Indeed, those are most of the retirees we know. Milling about cafes in town, clutching 2 smartphones with 6 Pokemon Go accounts between them, for Pokemon Go was suggested by the children as healthy past time with daily exercise (a true story).
They are a goldmine for the cafes, bespoke tour companies and of course, healthcare.
On the other hand, people who cannot afford to live to a 100 would have a higher probability of succumbing to some stress related illness along the way and plough part of their wealth back into the economy via the healthcare industry. Bless them.
What a horrid scenario.
No, We Do Not Need to Retire or Worry About Living to 100?
Retirement, for us, is not about having 6 Pokemon Go accounts.
We would rather be out, singing Coldplay at the karaoke and worrying about the inheritance we need to leave behind for the kids to make sure they will bring the distressing statistics down the next time Prudential commissions a survey.
We spoke to someone who voluntarily retired when she was 40 just for a couple of years before she went back to work for the reason that she got tired of singing too much Coldplay at the karaoke, as a warning to us.
The bigger problem for all people who retire is, as Sam Dogen of Financial Samurai fame who retired at 34 said, “You constantly wonder whether this is all there is to life”, which applies not just to people who retire early and not have to worry about finances.
Lucky Singaporeans have the government on their side with an Action Plan for Successful Aging, complete with support groups and activities.
And to be honest, we never really thought too much about living to 100 or 90 or 110. We do not think Warren Buffet does as well.
But we do see huge opportunities lying ahead as we approach 2030 and that would be enough to galvanise us into action to ensure we will never be forced to retire or worry about living to 100.