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6 Interesting Insights From NTUC Income’s Study On Retirement In Singapore

Your parents’ decisions decades ago is impacting you today, and your decisions today will impact your children decades in the future.

In case any of you have been living in a cave for the past couple of weeks, you would have noticed NTUC Income’s viral advertisement “THE WORST PARENTS IN THE WORLD”. Interestingly, that isn’t the title of the video – even we thought it was! The actual title on its YouTube channel is “The Best Gift For Your Child”.

After getting well over five million views across multiple platforms, the advertisement has naturally sparked much debate online and offline, got people discussing the important financial decisions they have to make in their lives and even inspired DollarsAndSense Managing Editor, Timothy Ho, to write about the impact his parents’ decisions have had on his life.

Many also commented that it was one of the few advertisements they didn’t skip after the first few seconds. If you haven’t seen it yet, you can check it out here:

The Video Is Actually Part Of A Much More Important Message – Planning For Your Retirement

After the buzz dies down, the thing people should take away from the entire campaign is that your parents’ decisions years ago are having a great impact on you today, and likewise, your decisions today will have a great impact on your child decades in the future.

The beauty about this marketing campaign is that it didn’t just come out of nowhere. NTUC Income commissioned a research on the topic on retirement planning in Singapore and used some of its key findings in a creative advertisement.

Here are six interesting things we learnt from NTUC Income’s findings.

Read Also: Retirement Planning In Singapore: How Much Do I Need To Save And Invest To Retire At Age 55?

# 1 15% Of Youths Believe Their Parents Have Already Planned For Their Retirement

One of the first and most surprising finding was that only 15% of youths thought their parents already have a retirement plan. Let’s put it another way – 85% of youths think that their parents do not have a retirement plan in place.

This is quite surprising given that Singaporeans are generally a financially savvy bunch. Perhaps, this also explains why the government has taken such heavy-handed approach to our retirement needs via the CPF and CPF LIFE payouts.

# 2 66% Of Youths Factored In The Costs Of Looking After Their Retired Parents

Seeing this figure, we were slightly taken aback.

Firstly, this was because in the same research, only 20% of youths thought their parents could rely on personal savings for their retirement. Put another way, 80% of them thought their parents could not rely on their own savings for retirement.

If only 66% factored in looking after their parents after they retire, it means that at least 14% of youths knew their parents couldn’t rely on personal savings but did not factor this cost in their plans. This may be bad planning on their part, especially if they can foresee their parents not having enough in retirement.

# 3 44% of Youths Expected To Make Career-Related Sacrifices To Support Their Parents’ Retirement Needs

That’s a really large percentage of youths willing to make sacrifices in their career, and ultimately earning capacity, to support their parents in retirement.

This is where the message in the advertisement really comes out – if parents were more “selfish” while bringing up their children, their children may not have to be concerned with having to financially support them, and worse, making sacrifices in their careers to do so.

# 4 67% Of Parents Surveyed Expected To Outlive Their Savings

This is quite consistent with the percentage of youths factoring in the need to financially support their parents in retirement.

However, we had assumed many youths might not have had full information about their parents’ wealth, investments and retirement plans. We were wrong – it looks like youths of today have a good sense of whether they needed to fund their parents’ retirement.

# 5 Parents Believe They Needed To Spend $3,314 Monthly For Retirement

Based on the latest figures, which are slightly outdated since it was collected in 2012, The Singapore Department of Statistics put the average monthly household expenditure per household member, in the 41st or 60th quintile, in retiree households, at $720.

That was a long sentence. It simply means each retired person in the middle 20% of households in Singapore spent $720 monthly. This would be $1,440 as a couple, and half the figure quoted in the study.

Another interesting thing to note is that if retirees manage to hit the Full Retirement Sum (FRS) in their Retirement Account (RA), they stand to receive between $1,320 and $1,410 in monthly CPF LIFE payouts on the Standard Plan. This works out to close to $2,820 a couple. This isn’t too far away from what couples in the NTUC Income research expected to spend a month.

Couples could also work towards contributing a higher sum to CPF LIFE, up to the Enhanced Retirement Sum (ERS), to pocket even more in retirement.

So, it would seem the government has a good gauge on what people would consider suitable to live on in retirement.

# 6 90% Of Parents Would Give Up Their Retirement Savings For Their Children’s Education And Developmental Needs

This is the big one.

It’s only natural that parents would be willing to give up everything for their children to receive a better life – and in Singapore, this usually entails education and development needs as children.

However, while parents feel this way, 80% of the youths surveyed agreed that their parents should prioritise their own retirement savings over their tuition and enrichment fees.

While there’s a clear differentiation in what the two generations prefer the money to be spent on, it’s difficult for schooling children or even those in university to fully appreciate retirement planning before they’ve started working.

Don’t Neglect Retirement Planning

While we do not foresee one research changing parents’ inclination to favour their children’s needs and wants over their own, we should definitely heed what children actually think is more important after they’ve matured.

Having a retirement plan for ourselves will save our children from having to make debilitating decisions such as making career-related sacrifices, give up their personal hobbies and downgrade their lifestyles. Are these any better than having less tuition and enrichment classes, forgoing an overseas exchange and not getting expensive sneakers when the children were younger.

What we’ve gleaned from this research is that youths may prefer not having some these things when they were younger to enjoy greater freedom and less stress over their parents’ financial security when they are older.

Read Also: How Much Should I Have In Savings And CPF To Have A Comfortable Retirement?

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