Hmm, Dad, do you have enough CPF?

By Wong Shiying

PHOTO: ETHAN TAY

When I think about retirement, the viral ad by insurer NTUC Income comes to mind. Scathingly critical and uncomfortable to watch, the bridegroom in the commercial calls his parents “the worst parents in the world” for not giving him piano lessons, holiday trips to distant destinations and proper tuition classes. However, it takes a heartwarming turn when the groom reveals that he is in fact grateful that his parents had used those funds to save for their retirement instead. Had they given him everything he had wanted back then, he and his wife would not be able to ‘focus on the steps [they’d] like to take” in starting their new family together.

The commercial struck a discordant note as my parents are certainly not a model of the “worst parents”. Instead they put me and my sister first, sparing no expense when it came to our education needs. I remember shuttling from one tuition centre to the next in my teenage years with weekends designated for piano and violin lessons. (To give me a better shot at music school if I wasn’t academically inclined.)

My parents weren’t the only ones. A Nielsen research commissioned by NTUC Income which covered more than 400 parents aged between 30 and 55 found that 66 per cent of the parents polled were concerned about having insufficient savings, yet 90 per cent of them were still willing to give up their retirement savings for their children’s education and development needs.

Hailing from a middle class family, my tuition and music classes must have constituted a significant portion of my father’s income over the years. (My mother quit her job as a nurse to become a housewife for 10 years while my sister and I were in primary school). However, I’ve never heard them talk about money, much less how spending on us might have affected their retirement plans. As much as I wanted to know about my parent’s retirement plans, it was a difficult topic to broach. I didn’t want them to think that I was questioning their financial decisions or worse, suggest that they weren’t doing a good job of planning for the future.

I broached the topic gingerly one evening when my parents were in good spirits and began by asking them when they were hoping to retire. My father answered matter-of-factly that they were hoping to continue working for as long as they could in order to maintain a steady monthly income. He admitted that they had not been able to set aside enough money for retirement (excluding CPF) over the years due to other financial commitments such as mortgage payments, funding a car and paying for our education. Keeping a job would allow them to continue saving for the future, delay having to tap on CPF payouts and avoid having to rely on my sister and I for financial support.

While turning 55 might be a celebratory year for those who wish to withdraw their CPF savings after setting aside a certain minimum sum in the Retirement Account, my father chose to leave the remaining funds left in the Ordinary and Special Accounts to chalk up risk-free interest rates that are relatively high. For the last quarter of 2019, OA monies earn an interest rate of up to 3.5 per cent a year and SA monies earn up to 5 per cent.

While I could tell that my parents are trying their utmost not to place any financial pressure on my sister and I, it is difficult for me to conceive of them working in their current jobs when they are well into their sixties, and perhaps even their seventies. My mother’s job as a clinical medical assistant requires her to stand for long hours, and she often works overtime when there are more walk-ins at the clinic. She recently asked me if the varicose veins that line the back of her knees were obvious and taking a hard look at them made me realize the toll her job has taken on her body. On the other hand, while my father’s workload as an auditor has eased a little after he took on a more managerial role in the company, he worries about being able to keep his job in the long run given the increasing saturation of the audit market.

A part of me wanted to tell my parents to quit their jobs whenever they’ve had enough of the working life, but I doubt my salary as a rookie journalist would inspire much confidence. A quiet understanding filled the room as it became clear that my parents still have a number of working years ahead of them before it is financially sustainable for them to retire.

In spite of the challenges, my parents pointed out that being able to continue working has its advantages. In addition to having an income, the increase in CPF contribution rates will allow them to save more money through the system. Those aged between 55 and 60 will see their CPF contribution rate gradually increased from 26 per cent to 37 per cent by 2030, on par with that of younger workers. Likewise, those aged between 60 and 65 will see an increase from 16.5 per cent to 26 per cent, and those between 65 and 70 will see a rise from 12.5 per cent to 16.5 per cent.

Furthermore, staying abreast of new medical treatments and technology is the most exciting aspect of my mother’s job and it encourages her to stay relevant. The multitude of drug names she has to remember also keeps her memory sharp, staving off dementia. My father meets many different clients in his line of work, some of whom he has built a strong rapport with and frequently meets for runs and drinks. He is glad to have found these like-minded friends through work and is motivated to stay active in his free time.

On that note, I think a key aspect of retirement that is often overshadowed by financial concerns is the importance of emotional support and companionship. According to the Singapore Longitudinal Ageing Study in 2012 by the National University of Singapore’s Yong Loo Lin School of Medicine, senior retirees living alone and feeling isolated were twice as likely as their peers to develop depressive symptoms as a result of loneliness. Interaction and emotional support from family and friends are thus crucial aspects of a healthy retirement. Admittedly, this can be tough given the pressures placed on the income-earning generation to make a living and support their own families, but I think it is imperative to have such a support system in place. While it is possible to hire a caregiver for caregiving support, the need for physical, emotional and psychological support cannot be delegated away.

I look to my grandmother for inspiration when it comes to what a happy retirement looks like. She volunteers weekly at a welfare organization that makes home visits to lonely seniors, cooks for my family and takes hanyupinyin lessons at a Silver Academy. And she’s 73. I always look forward to leaving campus on Fridays to enjoy her home-cooked dishes and listen to her talk about what she’s learnt that week, coupled with interesting tidbits from her conversations with friends. Above all, her financial situation is stable as she earns passive income from renting out a flat and receives monetary support from all four of her children.

While it might be too early to start thinking about my own retirement, there are valuable lessons I’ve taken away from this conversation with my parents. Firstly, as much as we want the best for our children, saving up for retirement is important and cannot be overlooked. Even if filial piety is alive and well in our society, taking charge of one’s retirement by saving diligently is far more secure and gives the younger generation more financial freedom to invest in their future. Secondly, it’s never too early to start saving - since people are living longer, we need to start saving for retirement earlier. Last but not least, I’m glad I found the courage to talk to my parents about their finances and retirement plans. Talking about it now gives us more time to prepare for the day they leave the workforce, and better informs the financial decisions I make in the future.

Read the buzz over retirement adequacy here.