The 5 Pillars of Life

Whether we are happy or not, the day of our retirement will come. It may come earlier or later than we expect, depending on our luck and strategy to stay ahead in our senior years. It will be fortunate if we are able to work like our MM Lee at a ripe old age of 85 earning $3million a year and enjoying what he is doing. But I don’t think everyone of us will be that lucky under a highly competitive and intense environment like Singapore where talents from every corner of the world are completing with us.

As a Financial Planner in my early 30s, I’d met many people of around my age and get the privilege to understand how they feel about retirement. I also get to see the challenges faced by Singaporeans in accumulating this nest egg when there are always so many other things in life that grab away our retirement monies.

I am far from retirement age but I always believe that that we have to plan for it as young as from our first pay-cheque regardless how little we may start out with. Failing to start early and consciously will mean more challenges as we get older. Today, I will also like to share my views on these challenges towards retirement planning.

Let us take our income productive years to be from 25 to 60, assuming graduation at age 25 and stop work at 60.
Age 25 – 30 – Youthhood and Romances
* This is the time we probably started out in our career and not earning much and much of our salary are used to repay our parents or bank for the tuition fees we spent in Universities. (If take 3 years to pay, we will need to fork out around $1.2k/mth)
* This is also the time we enjoy our Youth-hood where we spend money for leisure and enjoy life such as partying and long holidays. Time to have a boyfriend or girlfriend and enjoy the sweetest and romantic moments of life.

Age 30 – 33 – Marriage, First Property and Honeymoon
* Its time to settle down and to get the first property. Our CPF monies are wiped out and we may need to spend nearly all savings accumulated during the Youthhood period for renovations, electricals and furnitures which is probably $40k-$50k, etc… 
* Marriage is next on the line. If your partner is not going to go for a super duper simple wedding without a banquet or photoshoot, you must be ready to set aside at least $10k for a photoshoot package and the losses incurred after banquet itself. (don’t expect to make money in banquet nowadays).
* Honeymoon may cost us another $5k to $10k

Age 33 - 37 – Time for Babies
* Time for babies. (Assume 2-3 children with 2 years apart)
* Pregnancy related expenses such as Gynae packages and if unlucky pregnancy complications that requires C-section, etc. Be ready to incur up to $10k for each child. We can use part of it from Medisave account.

37 – 42 – Early Childhood years
* New born babies are expensive to take care. Parent nowadays choose the best milk powder and infant care services
* Unless husband is earning at least like $8k to $10k/mth, then wife may choose not to work
* Else, if both parents work, they may need to get a car to bring children to and fro infant/child care centres. With COE at all time high, be ready to fork out $1.5k a month just for a car.
* We may need to spend money to engage a domestic worker. Lucky to those who can get parental support to take care of their kids. Be ready to fork out extra $800 just for the domestic worker and $1,000/mth for Childcare expenses for two.

42 – 58 – Children growing up years
* This is the time where we get to spend lesser on childcare, infant cares and that domestic workers may not be necessary.
* In the earlier years, we may have to spend on enrichment courses, tuition classes, etc for the Child. In a competitve environment like Singapore, most parents will be very willing to spend money tons of money to enrich their children.
* It is also the time where the parents work hard just to save for the child’s education expenses, etc…

58 and above… – Work or Retire?
* Oh no, the children grew up and the parents realise that they did not plan well for retirement. they hope to work as long as possible but they face challenges at work against cheaper and more productive workers from China, India or probably Iraq in future. They may be stressed if they will be asked to go anytime…

At different life stages, there will always be things that demand from our retirement fund. We must take a conscious effort to save and to protect this fund that is specifically meant for retirement. If we do not take the conscious effort to separate this set of fund from other uses, we will always have a reason to spend that money away.

In Singapore, its can be very stressful to have children due to the “Everyone Kia Su” environment. Most couples, I believe will like to have 2 kids as they may feel that one is too lonely but the decision to have that 2nd one take a lot of conviction. They must be ready to feel the heat and pressure in the next 10-15 years. Many decided to have one eventually or not even one because they probably passed the child-bearing age, not forgetting that most are getting married after 30.

The low birth rate, in my view is a mixture of social and financial problem. I’m in the category of hoping to have a child but worried about the affordability. I always have a mixed feeling whenever I realised that the kid is not coming for that month probably because I will not have parental support and I worry that I’m not able to cope with the additional expenses coupled with the lifestyle changes that will likely reduce my income.