PM Lee delivered his National Day Rally 2019 on the 18 August 2019. He talked about many issues ranging from climate changes to Singapore economic changes. In Wealthdojo, we want to focus on the potential impacts on could happen to our retirement.
Here’s what we feel will affect our retirement and investing decisions as reflected in the rally.
Increase In Retirement Age And Re-Employment Age From 2022
Singapore’s mortality age has been increasing over the years due to advancement in medical technology. This means there are many Singaporeans who are living longer and maybe outliving their savings. Older Singaporeans whom have not adequately done their retirement planning in the past may welcome this change as this means they will be able to work until 65. (Many have their salary reduced and placed on contract basis when they reach the age of 62).
PM Lee announced that the statutory retirement age will be gradually increased from 62 to 65, while the re-employment age will be increased from 67 to 70. This increase will be done gradually starting in 2022, where both the employment and re-employment ages will be increased by one year, and the full increase will be completed in 2030.
Increase In CPF Contributions For Older Workers
CPF remains one of the most popular vehicle for retirement. While CPF has it’s own set of merits and demerits, it remains relevant to most people due to the nature of “forced saving”.
In July 2018, Mrs Josephine Teo, Minister for Manpower replied that about 53% of active members met their Full Retirement Sum in cash and pledge at age 55 in 2016. (Source: Parliamentary Question on CPF withdrawals at age 55) . We can interpret that there are 47% of Singaporeans/PR are unable to meet their FRS. There could be a number of reasons like property speculation, long period of joblessness or having a low paying job. I welcome the increase in CPF contribution for them as it is able to help them further fund their Retirement Account giving them a retirement sum at 65. That being said, everyone’s situation is different and this blanket policy will probably a certain group of people more than another.
(Read more: Make The Most Of Your CPF)
Property Investment Opportunities
About 9,000 housing units – both public and private – will be built on the site of Keppel Club as part of the future Greater Southern Waterfront (GSW), said Prime Minister Lee Hsien Loong.
We always want to look at the changes in the Singapore Landscape over the next 5 to 10 years. In this rally, we noticed the direction to be in the development of the GSW. (Read more: URA: Greater Southern Waterfront). We expect there will be a surge in interest in the properties in that area. There will be property investment opportunities. However, we also believe that a premium will be factored in for properties in that region.
Economic growth slowed significantly
Singapore’s economic growth may have slowed significantly this year but the current situation does not warrant stimulus measures just yet, Prime Minister Lee Hsien Loong.
To those that are investing in the Singapore economy, it will be best to remain defensive. This slow down is not new. Multiple economies around the world such as US, China, UK have reported reducing their economic growth projection and have been “repairing” their economies with respective stimulus. Being an small open economy and also a financial hub, Singapore will definitely be affected by slowdowns of global economies.
For the record, Singapore’s GDP projected to grow between 0% and 1% this year. (Source: Straits Times Singapore slashes growth forecast)
All opinions above are my own. Please view our disclaimer page to understand more.
Now that you’ve read about learnt about National Rally 2019: Retirement Impact, I challenge you to read this article (How can we be rich and succeed in the financial world?) to push your understanding further!