Like many Singaporean women of her generation, Madam Santhakumari Palani, 65, worries about not having enough money when she retires.
“I don’t want to have to depend on my children for my old age,” says the mother of three.
How did she find herself in this position?
When she was younger, she spent most of her salary from her various jobs as a senior nurse aide and relief security guard on tuition and other educational expenses for her children. Like most mothers, she wanted her children to have a better start in life.
When she lost her job as a home care nurse in March last year due to the Covid-19 pandemic, she knew she would have to keep working to bolster her savings.
Madam Santhakumari's story reflects the findings from a survey by insurer Great Eastern.
Wishing to shed light on the state of retirement in Singapore, the survey of 304 Singapore residents aged 63 and above in May this year found that women were less financially prepared for retirement compared to men.
Madam Santhakumari spent less than a month looking for a job, before deciding to take up a role as a part-time cleaner.
Today, she sets aside at least a few hundred dollars for her retirement from her monthly salary of $1,300.
Her husband, who is in his late sixties, works as a part-time cleaner and pays for the household expenses, while her three children — two of whom are married with families — give her a monthly allowance when possible though she does not ask for it. Her children work in the teaching, logistics, and the oil and gas sectors.
On what she would have done differently in terms of her financial planning, she says: “I wish I had bought a second property or made other investments when I was younger, but it was either that I didn’t have the money at the time or I didn’t think of it.”
About being prepared for retirement, she says: “It’s so important to have savings so that you don’t have to worry so much when you are older.”
Survey sheds light on preparedness
The Great Eastern survey found that, like Madam Santhakumari, women are often dependent on allowances from their children and family members later in life, with 45 per cent of the women respondents relying on such allowances compared to 39 per cent among men.
When it came to post-retirement finances, only 18 per cent of the women had investment income, compared to 31 per cent of the men.
Furthermore, just 31 per cent of the women surveyed were satisfied with their retirement planning, compared to 44 per cent of the men.
“These findings point to a lack of financial preparedness among women, affecting their self-sufficiency during their retirement years,” said Mr Colin Chan, Great Eastern’s managing director for group marketing.
What may compound such concerns is that more women are remaining single and childless, according to data from Singapore’s Census 2020.
The census found that singlehood has become more prevalent across multiple age groups in the last decade, with the proportion of single women in the 25 to 29 age group increasing the most, from 54 per cent in 2010 to 69 per cent in 2020.
“This means that more women are likely to be their own sole financial contributors later in life. It is thus important for them to prioritise retirement planning, especially as life expectancy is expected to reach 85.4 for women in Singapore by 2040,” said Mr Chan.
“While retirement planning might be a distant concern for many of us, the many uncertainties in recent times impacting people’s job security is a reality.
“We encourage people to get started early, no matter how small, so that they can have the freedom to make their own decisions to lead their desired retirement lifestyle with the help of professional advice.”
Seek professional advice early
For retirees Lilian Kong, 74 and Cindy Goh, 66, professional advice would have made a significant difference in their retirement plans.
Madam Kong, a widow who retired from her job as a secretary in 2009, would have made more investments for retirement income.
She currently relies on her savings, Central Provident Fund (CPF) payouts, dividends from a fund she invested in and allowances from her four adult children for her expenses.
On what she would have done differently, Madam Kong says she regrets not buying more private medical insurance in addition to the government health insurance schemes.
“I didn’t do much retirement planning. If there was one thing I could have planned better, it would have been to buy more medical insurance, especially if I have a serious illness. I think I should have spoken to financial advisers when I was younger.”
Future medical expenses are also at the top of Madam Goh’s mind.
“I have a life insurance policy, but I should have bought more insurance to cover sicknesses and hospital bills. I’m healthy now, but it’s very difficult to say about the future.
“I don’t have a lot in my MediSave account, and I’m afraid that what I have won’t be enough if I have huge medical expenses later.”
Madam Goh, who is married with two adult children, retired in 2009 after her sister's drinks stall where she worked was closed.
Now, she depends on her past savings from the sales proceeds from downgrading her flat, and her savings from working at her sister’s hawker stall.
Like many retirees today, she also gets pocket money from her children and CPF payouts.
To encourage retirees to become financially independent and empower them to make choices even after retirement, Great Eastern has launched a “Don’t Lose The Freedom To Make Your Own Choices” campaign, which emphasises the need for retirement planning.
The campaign comprises a financial storyboard tool which can be used to help develop a well-structured financial plan, and the launch of two retirement income products.
Speaking about the campaign, Mr Chan says: “Living well in retirement essentially means being self-sufficient and having a stream of income to draw on in our silver years.
“We want to help and educate people to plan holistically. This includes looking at their long-term care needs as part of their retirement plan and plugging financial planning gaps, to take care of unforeseen needs which may arise later in life.”
Review your retirement needs frequently
Q: Do I need a retirement income or can I rely on my savings?
Having an income stream in your golden years can bolster your savings and counter rising inflation rates.
The retirement income you need should take into account rising inflation and your desired retirement lifestyle needs.
For example, if you are 40 years old now and hope to have a $2,000 monthly retirement income, this amount will double to about $4,000 — assuming an annual inflation rate of 3 per cent — by the time you are 64 years old.
Review your desired retirement income every two years as financial goals and needs may change over time.
Q: What is the ideal balance between housing/car payments, children’s education and retirement savings?
While it depends on your needs and financial circumstances, a healthy total debt-to-servicing ratio is to keep it within 35 per cent of your monthly income.
This means that your housing, car and other loans should not exceed 35 per cent of your monthly income. Allocate at least 20 per cent for your retirement planning.
To further grow your retirement savings, you can look at retirement income plans and investments.
Q: I put aside money monthly and have hospitalisation insurance. Is that enough?
If you are putting your savings only in low yield savings accounts, the interest rates will not be enough to offset today’s inflation rate of between 1 and 2 per cent.
Besides having an emergency fund of at least six months of your monthly expenses, you should have the pillars of basic protection — hospitalisation and surgical coverage, disability income, income protection against critical illness coverage (early and late stages of critical illnesses), death and total permanent disability and personal accident protection.
If your investment horizon is medium- to long term, you can start with investment-linked plans (which offer wealth accumulation and insurance coverage) or endowment plans (which offer regular payouts or a lump-sum amount within the stipulated length of time).
Q: My children have grown up and are financially independent. What should I do to better plan for my retirement while I’m still working?
For a start, identify gaps based on your financial goals with our innovative Financial Storyboard tool and the help of a professional financial representative, who should provide a holistic view of your financial situation.
You can also supplement your CPF Life payouts with retirement income plans.
Depending on your risk appetite and life stage, you can invest in professionally-managed investment products such as bonds and unit trust funds, or choose investment-linked insurance plans that offer investment and protection components.
– Ms Corene Toh, financial services director, Great Eastern
This feature is brought to you by Great Eastern.