Family who earned $16k a month complained the most: Chan Chun Sing

Providing help, building families 

Mr Chan Chun Sing will never forget the three families who turned up to ask for help at his Meet-the-People Sessions.

One of them earned just $2,000 a month, but managed to raise three children. Another had double that income, of $4,000 to $5,000, and had no children.

But it was the third, a family that earned $16,000 and had two children, who complained the most, saying the Government was not doing enough to help them.

The incident, says Mr Chan, illustrates the rising expectations that Singaporeans have and the challenge that policymakers face as they try to work out who should get more help.

"It's not an easy question to answer and we will have to find the answer as a society going forward," he says.

It is also a challenge Mr Chan's new ministry, the Ministry of Social and Family Development (MSF), will have to grapple with as it streamlines its responsibilities to focus more on policies affecting Singaporean families.

On Thursday, the Ministry of Community Development, Youth and Sports (MCYS) will be renamed the MSF and pass on its youth and sports portfolios to the newly created Ministry of Culture, Community and Youth.

That will give Mr Chan's ministry more time and space to look at longer-term challenges such as meeting the needs of singles when they age in 20 years' time and finding ways to tap the energies of healthy elderly people to serve other senior citizens.

At an hour-long interview at the MCYS headquarters in Toa Payoh this week, the Acting Minister laid out the priorities for his new ministry.

One of them will be to strengthen the social safety net - which will require the ministry to factor in Singaporeans' changing expectations. Another is to improve the delivery of social services, and a third is to strengthen families.

Mr Chan notes that it is no longer only those at the bottom of the ladder who need help. Those in the middle are starting to feel unsettled by the growing income gap too.

"They wonder whether they can meet their aspirations because of the people at the top end," he says.

"The question for us is, as a society, to what extent we can actually help this group of people beyond the people at the bottom of the socio-economic scale."

As economic cycles become shorter and more volatile, people are also more likely to be in and out of jobs, he observes. They will have to relearn their skills at a much faster rate as well.

"If I use my mother as an example, she was a machine operator, stamping metal plates. She did that for at least 30 years."

With just one set of skills, notes Mr Chan, his mother, a divorcee, was able to raise him and his sister single-handedly.

But no longer.

The churn in jobs and the instability of people's incomes today pose a serious challenge and could even disrupt the way children are brought up and their education.

Another concern for Mr Chan is Singapore's changing demographics: More people are staying single, marrying later, having fewer children and living longer.

As he looks into the next 10 to 15 years, he foresees a shrinking of the support that extended families can now give in raising children and caring for sick relatives.

"So that is where you see us... not just building the nursing homes, which are institutional care, but growing the community care sector and the home care services," he says.

Strengthening elderly care services in the community and at home will allow people to grow old in familiar settings, he explains.

Longevity will pose another challenge as people in their 80s and 90s will be increasingly cared for by those in their 50s and 60s.

But Mr Chan also sees these healthy retirees as a source of volunteers and helpers to beef up the delivery of social services at the local level, as is being done in Japan.

Singapore is now trying out this idea: Lions Befrienders, for instance, is getting the old to befriend the old, while a seniors' activity centre in Choa Chu Kang pays elderly folk a stipend to run activities.

As for the larger challenge of strengthening families, Mr Chan thinks measures should be targeted at people's four life stages: when they are young, when they marry, when they have children and when they are maintaining a family.

He believes that a central plank of the efforts - besides helping couples with housing, health care, childcare and education - should be to inculcate from young values for marriage, parenthood and family.

"If we bring up our children appreciating the joy of a family, then I think when they grow up, chances are that they will also aspire to have their own family," he says.

It means getting people not to see their career as an obstacle to starting a family, helping them to appreciate the joy of parenthood, and maintaining healthy relationships between parents and teenagers.

Such values can be transmitted through schools and the media, he says, especially as children may not live with their grandparents and parents may be working. Positive role models are also needed, he adds.

The 43-year-old says his own values were shaped by his family and the people he met. Watching Hong Kong sword-fighting drama serials and movies helped, he quips.

The former army chief married his colleague in Mindef in 1997 at the age of 28 - the median age then. They have three children, aged 11, three and one.

Recalling their decision to wed and have children, he cites a senior's advice: "He told me that there's never a perfect time to get married or to have a child... The perfect time is when you have the commitment to overcome life's challenges with your partner.

"But through the whole journey, you find a new sense of joy and purpose beyond just the pursuit of material well-being for yourself."

Work, mahjong and tea: Hong Kong's secrets to longevity

HONG KONG: Covered in smog and cramped apartment towers, Hong Kong is not usually associated with a healthy lifestyle. But new figures show that Hong Kongers are the longest-living people in the world.

Hong Kong men have held the title for more than a decade and recent data show female Hong Kongers are overtaking their Japanese counterparts for the first time, according to the governments in Tokyo and Hong Kong.

Hong Kong women's life expectancy rose from an average 86 years in 2010 to 86.7 years in 2011, while Japanese women's longevity was hit by last year's earthquake and tsunami, falling to 85.9 years, census figures reveal.

So what is Hong Kong's secret to a long life?

Experts say there is no single elixir, but contributing factors include easy access to modern health care, keeping busy, traditional Cantonese cuisine and even the centuries-old Chinese tile game of mahjong.
Rolling stones gather no moss

"I love travelling, I like to see new things and I meet my friends for 'yum cha' every day," Mak Yin, an 80-year-old grandmother of six says as she practises the slow-motion martial art of tai chi in a park on a Sunday morning.

"Yum cha" is the Cantonese term to describe the tradition of drinking tea with bite-sized delicacies known as dim sum. The tea is free and served non-stop, delivering a healthy dose of antioxidants with the meal.

"My friends are in their 60s -- they think I'm around their age too, although I'm much older than them," Mak laughs.

Mak's favourite food is steamed vegetables, rice and fruit. Cantonese food is famous for steamed fish and vegetables -- dishes that use little or none of the cooking oils blamed for heart disease, obesity and high cholesterol.

But before Mak enjoys her afternoon tea, she joins a group of elderly people for her morning exercise of tai chi, an ancient Chinese practice said to have benefits including improving balance and boosting cardiovascular strength.

A study published in the New England Journal of Medicine in February found that tai chi reduces falls and "appears to reduce balance impairments" in people with mild-to-moderate Parkinson's disease.

Another factor behind Hong Kongers' longevity, experts say, is work. While others long for the day they can retire and kick up their heels, many people in Hong Kong work well into their 70s and even 80s.

Hong Kong does not have a statutory retirement age and it is common to see elderly people working in shops, markets and restaurants alongside younger staff.

"Many old people in our city remain working, that contributes to better psychological and mental health," Hong Kong Association of Gerontology president Edward Leung says.

"For older people, a lot of them are stressed because they have nothing to do and they develop 'emptiness syndrome'. This causes mental stress."

Fishmonger Lee Woo-hing, 67, says he could not bear to sit at home and do nothing. His inspiration is local tycoon Li Ka-shing, Asia's richest man, who still runs his vast business empire in his 80s.

"If Li Ka-shing continues working at the age of 84, why should I retire?" asks the father-of-four during a break from his 14-hour shift at a bustling market in central Hong Kong.

"If I just sit at home and stare at the walls, I'm worried that my brain will degenerate faster. I'm happy to chat with different people here in the market."
'Mahjong delays dementia'

Hong Kong's cramped living conditions are famously unhealthy, fuelling outbreaks of disease and viruses including bird flu and severe acute respiratory syndrome (SARS) which have killed dozens of people.

The city's reputation won it the dubious distinction of a starring role in director Steven Soderbergh's 2011 disaster thriller "Contagion", about a deadly virus that spreads from Hong Kong to the United States.

But in the day-to-day habits of ordinary people, experts say Hong Kong is a great place to grow old.

A popular local way of keeping busy and meeting friends is mahjong -- a mentally stimulating tile game which can help delay dementia, according to aging expert Alfred Chan, of Hong Kong's Lingnan University.

"It stimulates the parts that control memory and cognitive abilities. It helps old people with their retention of memory," he says.

The complex rules and calculation of scores make mahjong, also known as the Chinese version of dominoes, mentally demanding. But the social aspects of the four-player game are just as important.

"In mahjong you need to play with three other people. It is a very good social activity, you have to interact with each other constantly," says Chan, who has studied the game's effects on the well being of elderly people.

"It is also a self-fulfilling game because if you win -- whether you play with money or not -- it gives you a sense of empowerment."

Mahjong parlours are popular in Hong Kong, and mahjong tables are a must at Chinese wedding banquets.

"I'm in semi-retirement. I work in the morning and hang out with my friends by playing mahjong in the afternoon," says 67-year-old tailor Yeung Fook, on the sidelines of a game in his modest garment shop.

"I'm happier when I work. It's boring to just sit at home."

Parents without insurance top 50%

MORE than half (53 per cent) of Singapore parents do not have individual term life insurance.

And of those who do have financial plans for their families, 24 per cent do not have any type of life insurance included in their plans. Worse still, eight in 10 parents do not have a will.

These were the sombre results of a HSBC global study on attitudes towards retirement and financial planning, with 1,000 participants from Singapore. 17,000 people in 17 countries were surveyed for 'The Future of Retirement' report.

'We are seeing a major protection gap where many Singapore families, especially those with dependent children, are failing to recognise the benefits of life insurance protection,' noted Walter de Oude, chief executive of HSBC Insurance Singapore.

'It is really advisable to review your financial situation at major moments in life, in particular when having children and planning for their future education expenditure.'

According to the study, nearly half (48 per cent) of respondents in Singapore aged between 30 and 39 say they have no short term savings.

Of those aged between 40 and 49, 30 per cent of those married or living together are protecting their assets. 34 per cent of those aged between 50 and 59 do not have retirement plans while only 12 per cent are undertaking tax planning.

The study also found that men in Singapore exercise more control than women when making financial decisions for both retirement planning and household budgets.

32 per cent of men in Singapore are more likely to make decisions on managing the household budget compared to women (28 per cent), bucking the global trend of 34 per cent and 37 per cent respectively.

In terms of household financial decisions, 70 per cent of men in Singapore (versus a global average of 65 per cent) make all or most household financial decisions compared to 52 per cent of women in Singapore (versus a global average of 53 per cent).

'A significant finding is that across Asia, women in Singapore are least likely to be responsible for making decisions on saving for retirement, deferring to their male partners,' the study noted.

In addition, the discrepancy between the sexes in planning for retirement is consistent across all age groups, suggesting that attitudes to this aspect of the family finances are not changing over time.

In contrast, East Asian countries such as China, Taiwan, and South Korea displayed the greatest gender equality in retirement planning.

72 per cent of Singapore respondents fund their retirement via cash savings accounts while 67 per cent hold insurance in the form of endowments and investment-linked insurance.

Globally, 44 per cent of respondents said they use cash savings accounts to help fund their retirement, with 22 per cent using mutual funds and investments, and a further 11 per cent using employee stock/share schemes.

Insurance a crucial building block

With markets swinging about as they do these days, it is natural for some investors to focus on spotting winners and try to pick the perfect entry and exit points. But growing your wealth is more than just a function of maximising stock returns in the shortest time possible. Managing outflows, especially unexpected ones, and steady wealth accumulation over the long term, are equally important to the planning and pursuit of any significant financial goal.

The increased market volatility that we are experiencing is reason for many investors to fret over their portfolios. Yet, while prudent management of these monies is essential, it would be a mistake to overlook a more basic building block for growing wealth. As much as you would hate to see the value of your portfolio fall by 20 per cent, the hospital bill resulting from an unexpected major illness or the loss of income due to an accident-caused disability can severely disrupt your financial goals.

For instance, you may have to liquidate your investments to pay for treatment and other basic needs. This is why it is critical to ensure that you have some basic insurance in place, which will allow you to continue working towards your investment goals even if something catastrophic happens to you.



Strengthen the backline

A simple term policy is an affordable way to begin. Those in their 20s, who have just started work, may find this option most palatable as desired cover can be obtained inexpensively. For some, a term plan may act as a liability cancellation policy so that the family is not saddled with the burden of repaying the outstanding mortgage on the family home in the case of the policyholder's demise.

While term plans can be bought with additional cover for critical and terminal illnesses, conventional whole life policies provide greater flexibility, offering optional protection for eventualities like disability and loss of income. These additional covers, called riders, can be added and removed at will.

Whole life plans may be constructed so that payments are accelerated during your working life to allow you to enjoy premium-free cover after retirement. Perhaps, the biggest advantage that whole life plans have over term plans is that they can serve also as a tool for wealth accumulation. Part of the higher premiums collected in whole life plans are invested in the insurer's participation fund, resulting in steady returns that can be cashed out as needed.

Consumers should note that whole life policies are designed to accumulate value over the long-term, so the cost of surrendering the policy early, particularly in the first few years, is very high as premiums mostly go towards paying for the cost of insurance.



Sure and steady progress

There are insurance products that go further towards the goal of wealth accumulation. Endowment policies may not be new, but unlike the 30-year tenures of old, durations these days can be much shorter if you haven't the patience or if you have started your retirement planning late.

Endowment plans are gaining wider acceptance here as more Singaporeans realise the place of steady, low-risk investments when it comes to their retirement savings. In deciding on an endowment plan, it is usually helpful to link it to an objective, which will help determine what the most appropriate tenure is. For example, a 25-year-old executive may find a 10-year plan appropriate if he is planning to use the payout to help pay for a condominium at age 35.

For investors who prefer the convenience of an all-in-one solution, investment-linked policies cover both wealth protection and accumulation needs. You get to decide the balance between protection and investment, and you get more say about how your money is invested. Potential returns are higher, as you may choose to invest in unit trusts that adopt a more aggressive stance than the insurer's typically conservative participation fund. But along with that is a higher chance of incurring losses should your investment strategy prove unsound or unbalanced.



Pass it on

Finally, insurance can help in legacy planning. A universal life plan is a single premium policy that can help you pass on wealth to your children, with a guaranteed rate of return on the money invested. If you plan to leave S$3 million to your children, you can take out a universal life plan with a sum assured of S$3 million for a fraction of the amount. The sum assured of the universal life plan is guaranteed, so you can be assured that your children will receive the bequest you intended for them even if you pass on early.

If you choose to manage and invest your funds on your own instead of buying a universal life plan, there is a risk that your bequest to your loved ones will fall short of the S$3 million you intended for them, as the amount will be dependent on the market value of your investments when the bequest is made.

There is no denying the allure of taking a punt on the market, but neglect not the basic foundations of financial planning. Insurance is a crucial building block in achieving your financial goals and with recent innovations, it can even offer solutions for more advanced needs.



Shrikant Bhat is head of wealth management at Citibank Singapore.

BG Tan urges Singaporeans to plan for retirement early

Instead of sipping coffee at their favourite breakfast joints, more than 500 Singaporeans spent their Sunday morning getting tips on how to plan for retirement.

The audience, many of whom were reaching 55 years of age, were attending talks organised by the Central Provident Fund (CPF). Topics covered included managing healthcare and housing costs.

Minister of State for Manpower and National Development Tan Chuan-Jin was the guest of honour at the event, which was held at the NTUC auditorium at Marina Boulevard.

Many among the audience nodded and listened intently as BG (NS) Tan urged them not to overstretch their finances and to prepare for uncertainties such as changes in income levels.

The minister also launched two initiatives: The 'Are You Ready' website (www.areyouready.com.sg) to help people assess their readiness to retire; and the Minimum Sum Topping-Up campaign, where Singaporeans who top up their or their loved ones' CPF accounts before December 15 stand to win prizes worth up to $4,000.

"Are You Ready" to retire?

SINGAPORE: The Central Provident Fund (CPF) Board has launched a campaign "Are You Ready" to help Singaporeans kickstart their retirement planning.

It will help to educate them on financial literacy with a checklist of four themes - cash flow, heath care, housing and retirement.

Speaking at the launch of the campaign on Sunday, Minister of State for Manpower and National Development Tan Chuan-Jin noted that some Singaporeans are already ensuring that they have enough savings.

He said records from the CPF Board showed that about 60 per cent of members do not make withdrawals when they reach the age of 55.

Brigadier-General Tan also said that many CPF members have been voluntarily making top-ups for their loved ones through the Minimum Sum Topping-up Scheme.

Over the past five years, the number of these transactions has gone up by 36 per cent while the top-up amount has grown by 33 per cent.

Last year, there were about 30,000 minimum sum top-up transactions, amounting to S$250 million.

CPF interest rate for Ordinary Account stays at 2.5%

SINGAPORE: The Central Provident Fund (CPF) Board said members will continue to receive an interest rate of 2.5 per cent on their Ordinary Account savings from 1 October 2011 to 31 December 2011.

This is despite the computed CPF interest rate, derived from the major local banks' interest rates from 1 May 2011 to 31 July 2011, working out to 0.36 per cent per annum.

Members will also continue to receive an extra 1 per cent interest on the first $60,000 of their combined balances, with up to $20,000 from the Ordinary Account.

The extra interest from the Ordinary Account will go into the member's Special or Retirement Account to enhance retirement savings.

Please check if it is as accordance to your retirement plan through this article.

How Long Will My Retirement Savings Last?

I'm 64 and plan to retire next April. I have $160,000 saved. How much lifetime income can I expect to draw from my savings? -- Mike W.
 

Have you ever heard the joke about the accountant who is asked how much two plus two is? His response: "How much do you want it to be?"

Well, there are many possible answers to your question, too.

The amount of income you can expect to receive from your $160,000 stash can vary significantly depending on a number of factors, many of which you can control and many of which you can't. Indeed, how long you'll live and what sort of gains you'll earn on your savings are beyond your control.

Even if you knew the average return you would earn on your savings throughout retirement, you still couldn't know exactly how much lifetime income you could get. When you're drawing money from a portfolio, the pattern of returns, not the average, determines how long your savings will last.

So if you draw the same amount of money each month from two portfolios that earn an identical annualized return of, say 6%, over the next 30 years, but one suffers big losses early in retirement and recovers down the road while the other zooms to big gains at first and stumbles later on, the portfolio with the early losses will run out of money sooner.

The reason is that the combination of lousy initial returns plus withdrawals can deplete your nest egg so badly that there's not enough capital remaining for the portfolio to adequately recover — even when the markets turn around.

Given this sort of inherent uncertainty, how can a retiree arrive at a balance between pulling enough dough out of savings to live on without taking too much risk too soon?

You've got a number of choices. One is to manage the process yourself.

The key to this strategy is to start with a withdrawal rate that gives you a high level of confidence that you'll be able to increase your withdrawal amount annually based on inflation for at least 30 or so years — in your case, into your mid-90s.

Toward that end, many advisers recommend that you follow the "4% rule." For you, that would mean withdrawing 4% of your $160,000, or $6,400, the first year of retirement and then boosting it each year.

If inflation runs at say, 3% a year, your second withdrawal would be roughly $6,600, the third about $6,800 and so on. The advantage to this approach is that research shows you have roughly 80% to 90% odds of your money lasting 30 or more years.

But the 4% rule also has its downsides. One is that you can still run out of money, especially if you get hit with losses early in retirement. Another is that you might find it difficult to live on just 4% of your savings (although, of course, you'll also have CPF and possibly a pension if you're expecting one from an old employer).

A less obvious risk is that if the financial markets perform decently, limiting yourself to an inflation-adjusted 4% could leave you with a big pile of savings late in life, which means you could have lived larger earlier in retirement.

The way to avoid these issues is to adjust the amount you withdraw along the way, taking less if your portfolio has taken a hit and more if it's ballooning in value.

Of course, you could also consider other withdrawal rates. For example, Maryland financial planner Michael Kitces has done research showing that you may be able to safely go to a higher initial withdrawal rate, say, 5% or more, if you're starting out when the stock market is undervalued and thus more likely to earn above-average returns going ahead.

Similarly, Minneapolis financial planner Jonathan Guyton and retirement-planning software developer William Klinger have done computerized simulations showing that a retirement portfolio has a high probability of lasting 40 years even with an inflation-adjusted initial withdrawal rate of just over 5%, provided you strictly follow a series of "decision rules" that call for you to adjust your withdrawals throughout retirement based on your investment performance.

If you want to take some of the guesswork out of the process, a good way to generate guaranteed income in retirement is to buy an immediate annuity.

To set up an immediate annuity, you hand over a portion of your savings to an insurer (or, far more common, to an investment firm selling annuities for the insurer) that then issues you a monthly check for life, the size of which depends on your age and the prevailing level of interest rates. Today, for example, a 65-year-old man might receive roughly $580 a month.

If you want income that will rise with inflation, you can get an immediate annuity that is linked with the consumer price index, or CPI. But you'll start with a payment closer to $400. (To see how much you might receive at different ages and for different sums, click here. and contact me now)

A couple words of caution about annuities, however. When you buy an annuity you are betting that the insurer will be able to make payments for many years into the future. There is no 100% guarantee that insurer will be able to meet those obligations, but there are ways to protect yourself.

Also, I strongly recommend that you don't put your entire retirement stash into an annuity, as you are typically giving up access to the money you invest. That means the cash won't be available for emergencies or other expenses, which is why I think it's a good idea to consider a hybrid strategy that combines the assured income of an annuity with draws from a portfolio of stocks and bond funds that can provide liquidity and some long-term growth.

Whichever way you decide to go, it's important that you monitor your progress and be prepared to make adjustments to stay on track.

Online tools can help. With my Retirement Calculator, for example, you can estimate how long your savings might last with different withdrawal rates and investing strategies.

If you feel as if all of this is a bit much for you, consult an adviser. Just try to find one with an open mind — not someone whose main mission is to sell annuities nor someone so ideologically opposed to annuities that he wouldn't even consider including one in a retirement income plan.

The bottom line, though, is that if you start making withdrawals at a sensible level and remain willing to make occasional adjustments, you'll be doing everything you need to do to make that $160,000 go as far as it can.