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SINGAPORE: Many Singaporeans are unclear how much is needed for their retirement, taking for granted that their CPF savings will be enough for their old age when they may not be.
Four in 10 have the misconception that when they retire, their savings in the Central Provident Fund (CPF) will give them a monthly income equivalent to their last drawn monthly salary.
This is according to the first National Financial Literacy Survey commissioned by the Monetary Authority of Singapore in 2005.
But for Adam Ong and his wife, they started planning early for their golden years.
The 70-year-old couple started buying insurance policies, single premium policies and endowment plans when they were in their mid-30s.
And when these savings plans mature, the couple get lump-sum payments of tens of thousands of dollars every five years or so.
Ten years ago, when they were 60 years old, they even set aside $40,000 each in their own CPF accounts to buy an annuity plan.
And it has been paying each of them $300 a month.
Mr Ong said: "At that time, I came to understand that annuity plans are such that when you put in a lump sum of money, the year after that you draw on your annuity monthly payment. It continues as long as you live. I think that's good. If the person who takes up the annuity should die halfway, the balance of the money will be given to the beneficiary. So I think that's advantageous."
The couple have two daughters and six grandchildren, but they live on their own.
Mr Ong and Madam Yee Swee Fong could well afford to retire comfortably.
But they choose to keep on working - albeit at a more relaxed pace - so as to stretch their retirement funds.
Mdm Yee, a former primary school Chinese teacher, still gives private tuition and helps out at a nursery every weekday morning.
Mr Ong still works full-time as a real estate manager.
With his retirement needs well taken care of, Mr Ong has even found spare time and money to study for a translation and interpretation degree course at UNISIM.
He hopes to use the skill he learnt from the course for his third career.
To help Singaporeans generate retirement income from their HDB flat, the government has in recent years relaxed various rules.
Housing policies have been relaxed to allow older Singaporeans to move to a studio apartment, rent or downgrade to a cheaper flat, take up a reverse mortgage loan on their flat, or sublet their homes.
Since the relaxation of the subletting policy in March this year, there are now some 658,000 flats eligible for sublettting.
But the take-up has been slow.
Between March and September, there were only 6,600 approved applicants.
Of these, slightly 27% are households with elderly persons aged 55 and above.
The Housing and Development Board says most of those who sublet their flats moved out to stay with their children or siblings and other relatives.
But most Singaporeans still prefer to live in their own home and community.
So the HDB is now working out a Lease Buyback Scheme.
When the scheme is finalised next year, older Singaporeans will have more options to unlock the value of their flats for their retirements needs.
For the Ongs, they are prepared to downgrade and move to a smaller house.
Mr Ong said: "As you can see, the house is too big for the two of us. When the market is good, I'll find a buyer prepared to pay the kind of price I ask for, and very likely, I will downgrade so that with the extra money I can purchase another commercial property and rent it out.....gives an income that's continuous for the rest of my life."
For more tips on retirement financing, you can log on to the Monetary Authority of Singapore's MoneySense website at www.moneysense.gov.sg.
MoneySense is conducting talks on retirement on 18 November and 1 December. - CNA/ir
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