CPF savings 'may not be enough for old age'

> Here's another (radical) suggestion that I've also made before, give every Singapore citizen a cash
> grant to buy any housing of his choice, but sell HDB flats at market prices or exit the housing market
> for the middle class and up. Continue to provide really cheap and basic housing (2/3 room flats) for
> the truly low income.

This is an entirely workable suggestion, something I had wanted to write to my MP, but was so busy with work. Question is the grant, who is entitled to it... an equitable formula is very hard to determine... 2 Singaporeans getting married? 1 Singaporean, 1 PR? Which level income???

(29-02-2012, 10:02 PM)tanjm Wrote: Think of how ironic and circular this is. People claim CPF is not enough for retirement, yet go on to maximize their CPF usage to buy the biggest house(s) they can get because it doesn't cut into their free cash flow so they don't feel the pain (not realizing this is deferring the pain). Access to CPF savings for housing simply encourages asset inflation by stoking demand.

The usage of CPF needs to be curtailed in order to boost retirement savings. Currently, the ratio is 5% cash + 15% CPF which is not right.
5% of 500,000 is $25,000 while 15% of 500,000 is $75,000. If the cash upfront is high, most buyers will think twice before they commit a bigger flat.
Due to low cash upfront, buyers are more than willing to pay a higher COV.

"What the wise do in the beginning, fools do in the end."

There was a time when retirees could count on CPF for retirement.
That was the time when THEY started CPF for retirement.
Now, the street knows that CPF is NOT for retirement.
But THEY are the one who want to insist that CPF is for retirement.

(01-03-2012, 10:19 AM)yeokiwi Wrote: The usage of CPF needs to be curtailed in order to boost retirement savings. Currently, the ratio is 5% cash + 15% CPF which is not right.
5% of 500,000 is $25,000 while 15% of 500,000 is $75,000. If the cash upfront is high, most buyers will think twice before they commit a bigger flat.
Due to low cash upfront, buyers are more than willing to pay a higher COV.

Good idea! This suggestion should work to reduce the COV further.

According to Mercer 2010 global index on pensions, Singapore is rated C; while no countries in the world got an A grade.

http://www.businessinsider.com/best-nati...-rated-c-9

One of the recommendation to get a higher grading was to limit the access to funds BEFORE retirement. Hmm...

http://www.businessinsider.com/best-nati...ms-2010-10#

Originally, CPF can only be accessed for housing prior to retirement. The access to CPF for tertiary education and self investment were hard fought and won.

If we limit the access to CPF for housing, would there be the same call to also take away the access of CPF funds for self investment and tertiary education? CPF is for old age - period?

It's a hard call. Should we encourage personal responsibility and choice; or do we go back to big daddy knows what best for you?

I prefer choice.

(01-03-2012, 10:48 AM)cif5000 Wrote: "What the wise do in the beginning, fools do in the end."

There was a time when retirees could count on CPF for retirement.
That was the time when THEY started CPF for retirement.
Now, the street knows that CPF is NOT for retirement.
But THEY are the one who want to insist that CPF is for retirement.

I thought it's pretty obvious that the government have realised this and must have done some brainstorming internally to come out with a work around to their self created problem.

It started with their idea of Reverse Mortgage some years back. This time round (Budget 2012), we get to hear about their latest brainwave, namely, $20k Silver Housing Bonus and Enhanced Lease Back Scheme. As a last backup plan, they're giving more incentives for oldies to work longer (those who can get a job) with higher CPF rates and Tax Relief. Yup, we must really give them credit for trying their best to ensure all of us don't end up as their burden when we get old.

Come to think of it. It may actually be a good idea to allow everyone to use up the bulk of their CPF for housing as Property Prices seems to be outpacing both inflation / CPF rates!

> This time round (Budget 2012), we get to hear about their latest brainwave, namely, $20k Silver
> Housing Bonus and Enhanced Lease Back Scheme. As a last backup plan, they're giving more
> incentives for oldies to work longer (those who can get a job) with higher CPF rates and Tax Relief.
> Yup, we must really give them credit for trying their best to ensure all of us don't end up as their
> burden when we get old.

My mum bought her Bishan retirement studio at $80K few years back. Then it went up to $110K for the prata seller, and then >$120K+ for the next buyer. What is the point of an extra $10K when the retirement studio is again calibrated to resale market prices...

$40K can last the old people 3-4 years if they live frugally...

(01-03-2012, 03:42 PM)Contrarian Wrote: > This time round (Budget 2012), we get to hear about their latest brainwave, namely, $20k Silver
> Housing Bonus and Enhanced Lease Back Scheme. As a last backup plan, they're giving more
> incentives for oldies to work longer (those who can get a job) with higher CPF rates and Tax Relief.
> Yup, we must really give them credit for trying their best to ensure all of us don't end up as their
> burden when we get old.

My mum bought her Bishan retirement studio at $80K few years back. Then it went up to $110K for the prata seller, and then >$120K+ for the next buyer. What is the point of an extra $10K when the retirement studio is again calibrated to resale market prices...

$40K can last the old people 3-4 years if they live frugally...

The key is not the extra $10k (that's the carrot or cheese depending on how you look at it). The key is your original flat that they are trying to get you to downgrade from. Assuming you'd slogged for at least 30 years and paid off most of the Housing Loan, I'm assuming you'll be able to free up at least $100k free cash/CPF (even after paying off any balance loans as Property Prices had gone up a lot over the past 30 years).

There's of course the danger that the above may not be true for the next 30 years (if property prices don't inflate). But, that'd be the problem of the next person running Singapore.

> The key is not the extra $10k (that's the carrot or cheese depending on how you look at it).

You dont' get my point. I am saying they piss the elderly and me off, in trying to extract more $ from the subsequent sale of the flats.

> The key is your original flat that they are trying to get you to downgrade from.

Their solution is for hard up cases. We are informed investors. Dont have to follow them. Just rent the spare rooms to people and keep the flat.
But our SIngaporean elderly can be very stubborn. In this case, they should stay hungry, don't deserve pity.

(01-03-2012, 09:00 PM)Contrarian Wrote: > The key is not the extra $10k (that's the carrot or cheese depending on how you look at it).

You dont' get my point. I am saying they piss the elderly and me off, in trying to extract more $ from the subsequent sale of the flats.

> The key is your original flat that they are trying to get you to downgrade from.

Their solution is for hard up cases. We are informed investors. Dont have to follow them. Just rent the spare rooms to people and keep the flat.
But our SIngaporean elderly can be very stubborn. In this case, they should stay hungry, don't deserve pity.

My original post in this thread was to explain what I think the govt is doing to solve the problem of 'Money No Enough' in CPF for retirement. For retirees whose CPF money were used to buy a house, they have introduced 'incentives' for them to 'monetised' it, from Reverse Mortgage to the latest schemes announced in Budget 2012.

Most of us here in this forum are very unlikely going to be in that kind of situation of 'Money No Enough' for retirement. Many here will likely be Finanically Free even before they reach the original retirement age of 55. I don't think we need to be concerned for them.

As for your opinion on Singapore elderly, I can only quote some infamous person, "I really don't know what to say!".