Tan Kin Lian's Blog: Survey - expenses of a retired couple

Tuesday, April 13, 2010

Survey - expenses of a retired couple

How much does a retired couple have to spend each month to live in Singapore? Give your views in this survey.

I estimate that the expenses for a retired couple with a home for an adequate lifestyle is $1,200 a month and the bare minimum is $800. What do you think?

26 comments:

Anonymous said...: For a couple at least $2000 in today's dollar is needed for a simple lifestyle with occasional dine out and a near by holidays and also assuming a roof over their heads, a medical plan.; April 11, 2010 2:37 PM
Anonymous said...: $1.2K for a couple is rather tight --- $600 per person per month -- $20 per day.

Cannot be sickly, thrifty with day-to-day spending, watch the utility usage especially electricity and air-con, minimise travelling even with public transport, 1 or 2 times holiday in Indonesia, M'sia, Thailand or Philippines, couple of times eating out each month and take advantage of cheaper weekday restaurant lunches.

Although I'm not a retiree, but almost like one -- 50+ retrenched PMET, working as security guard for past 2 years, home fully paid up, no car, no children, no debts. Take home pay of $1,200 per month is more than enough for myself. But still, I estimate my monthly expenses to be about $750-$800, if average out things like cheap holidays, CNY ang paos, once a year dental, couple of times see GP, once in a while eat at restaurant/hotel buffet.

I think $800 per retiree per month or $1,600 per couple will be more manageable. i.e. still can enjoy a "retirement lifestyle".; April 11, 2010 4:51 PM
Anonymous said...: If we factor in cost of medical bill, an adequate lifestyle is not cheap to come by. Unless the couple is reasonably healthy and do not drive own car, $1200 a month could still be possible. From observation, many so called basic needs are different from family to family, so setting a common baseline is quite impossible.

Loh; April 11, 2010 5:53 PM
Tan Kin Lian said...: I spoke to a nurse in her 50s. She also said that $1,200 is not sufficient and that $1,600 is more adequate for a retired couple.; April 11, 2010 10:37 PM
jamesneo said...: Let me calculate: if got cable TV(depend on packages)+cable internet= $111.28 per month

handphone= 24 per person

normal food= (1+3+3+2 drinks)*30=270 per person
electricity +water bill depending usage from $100-300
NO CAR use only public transport and only go out 3 times per week 1.50(for one bus plus one mrt and for senior citizen concession)*3*2=$9 per week $36 per month per person
My calculations give me 871.28-1071.28 total for two person. This does not include tv license, s@c charges and any insurance.

We can see that 800 will be a bit stretch. If want to take taxi like two times only per month then additional $20 at least. If want to eat at normal restaurant for twice a month then additional $60-80 total for two person

Hence i think 1300 might be minimal for me if the couple do exactly above with no holiday. But only spending like above with zero luxury like buying ice-cream or drinking coffee or going for movies etc seem sad. So $1500-1600 might be a better figure.; April 11, 2010 10:52 PM
Anonymous said...: Gosh, I must be a spendthrift single status retiree. i need around $3,000. I have a relatively high medical bill and supplements to foot, and need a part-time maid to help with housework as i have a lot of medical problems.; April 11, 2010 10:55 PM
Anonymous said...: I feel very sad living on S$1,600. If I want to continue my present standard of living, it would be around $7,000/-. Maid $1k, car $1k, Electricity etc $1k, food $1k, personal expense $1k ea, other misc exp $1k.; April 12, 2010 12:05 AM
Anonymous said...: Anon, April 12, 2010 12:05 AM,
Mr. Tan is talking about the other lower end and yours at the other upper end. It is not wrong to maintain your last life style before retirement if you can afford.
Remember the pest control buisness owner featured in Sunday Times , he needs $15000 to keep up his lifestyle.; April 12, 2010 8:33 AM
envious said...: Do not forget that as we age, we usually eat less, get uncomfortable with cold air-con, and buy less things.
You cannot be watching all 25 channels in your cable package! downsize!

So, requiring $15000 a month, I think is a bit "rich".. it either means there is still a high mortgage to service or there is a need for more than 2 helpers in your life.. maid & gardener or chauffeur. Well, if its within one's means, then you are very well prepared and do not need any help, financially.; April 12, 2010 11:43 AM
Anonymous said...: $1600 is probably just enough today, after factoring in insurance. However it will not be enough 10 years down the road due to inflation. I personally think $1600 today with 5% yearly inflation (or more) to just cover the expenses.; April 12, 2010 1:35 PM
Anonymous said...: "Live in Singapore" is not the same as "survive in Singapore".

Definitely can survive on $1,200 a month in Singapore. But forget about the luxuries like;
- dental care
- medical care
- holidays
- vitamin supplements

Why are we asking these questions?

Should it not be our elected officials (protectors of Singaporeans) who should be asking such questions?; April 13, 2010 9:41 AM
slo said...: The median seems to fall around 1600 in today's dollar, which is 19,200 per annum. 500,000 cash savings yield only 5,000 dollars based on 1 % interest rate. Some articles ago, you mentioned a rate of 5 as being reasonable. While bonds are issued by GLCs at around 4%, it is almost not available to the average Joe. We have to live with miserable rates while the Banks and Insurance companies earn the difference. When investors try to improve their yield via mini Bonds (which is not a Bond at all) , all our MM could say is that we went in with our eyes open. This state of affairs have left many retirees out in the cold. Your comments on this dilemma, please.....; April 13, 2010 10:16 AM
James said...: 1) Bare minimum (cannot afford to waste any money) - $800
2) Adequate (do not need to watch every cent) - $2000
3) Comfortable (can afford to have holidays and entertainment) - $4000
4) Luxurious (the envy of other people) - >$8000

Do not be distracted/fooled by those successful people featured in Sunday Strait Times. They are in the different class which do not apply to the average Singaporean. So far if i recall, they have not featured any average Singaporean.; April 13, 2010 10:32 AM
Anonymous said...: Maybe average Singaporean too shy and do not want to be featured.

So by default they had to feature those successful people. If not, how to fill the pages of Sunday Times?

Must understand lah.; April 13, 2010 2:11 PM
Ex-Con said...: Slo 10:16am,

The short answer to this dilemma is: get educated in finance and investing.

Slightly longer discussion:
The factor proposed by Mr Tan is 300. I.e. If the size of your retirement fund is at least 300 X (monthly expenses needed), then you can construct your own retirement pension using low-cost diversified funds. I would probably use a factor of 350 for greater assurance, otherwise lower your monthly expenses.

Why 300? Go and do your own research to find out why. Or buy Mr Tan's book to gain financial knowledge.

For myself, I would construct a 50:50 portfolio of diversified blue-chip equities and investment-grade bonds. For equities, you can either buy direct or use low-cost ETF like STI ETF. For bonds hard to buy direct due to large minimum lot size. Unfortunately, there is only 1 S'pore-centric bond ETF on SGX that is rather stagnant and illiquid. So my preference would be the ABF Asian Bond ETF listed on HKSE and/or some of the better investment-grade global and/or local bond UTs.

Unfortunately this can only work if you are DISCIPLINED. Must do rebalancing once a year no matter what. Cannot panic sell during market lows like Oct 2008 or Mar 2009. And in the first place, how many people are disciplined enough to accumulate retirement fund of at least 300 X (monthly expenses)?

Govt knows 90% of singaporeans cannot do this. That's why their solution: Work for as long as you can, and don't expect handouts.; April 13, 2010 2:48 PM
Anonymous said...: The Sunday Times only featured those very successful investors to the envy of the average Joe, where most Singaporeans are.; April 13, 2010 3:17 PM
Anonymous said...: We have retired not out of choice with 3 kids not financially independent yet abt going to university. For us we need 8k per month.; April 13, 2010 3:45 PM
prudence prevails.. said...: What is the definition of success?

For me, it would be able to live comfortably and with meaning.
Comfort would be $5000 per month per year for 30 years. That is 1.8 million. starting from 55years to 85years. it allows for inflation of 3% annually, and medical costs.

I believe at least 30% of people here have such assets already ( excluding the homes they live in )

The remaining 70% have yet to "arrive".. for various reasons, chiefly its the cost of cars and the locked up value of their HDB flats. These are the 2 most costly items on anyone's list.

The people featured in Sunday Times are exceptional but are not necessarily "successful" either.
Simple arithmetic will show how dangerously they have leveraged their homes, and banking on ever rising income from rent, without corresponding allowance for interest rate increases.

I subscribe to more prudent ways of wealth accumulation. Pay off loans quickly, stay invested in the stock market, save any excess. With sufficient savings, then perhaps begin to diversify into different asset classes.

Our homes must never ever be considered an asset.. its the biggest mistake, which will take many years to recover, if ever.

And, yes, buy term insurance only! ha! ha!; April 13, 2010 4:52 PM
slo said...: ex-con 2:48 PM
The short answer to this dilemma is: get educated in finance and investing.

the dilemma is about not getting a fair rate because the offerings go to banks and distributors. Even if you have handle the size, the banks take a haircut. I wonder what has that got to do with an education. Citizens abroad can partake in fixed income instruments fairly easily, but our financial hub have no space for the retailers.; April 13, 2010 5:28 PM
Anonymous said...: One warning to all consumers.Don't let the insurance agents be your 'advisers' becuase they don't advise but they con you with a product which purportedly is a saving plan.
You can see many are struggling with the bare minimum. Many are talking about $800, $1200, $1600 to support a couple. Where got enough? Financial planners advise that you must continue to maintain your lifestyle or 70% of your last drawn salary and NOT down grade. It is a pity. You deserve to live in style in your GOLDEN years and not rotten years after 40 years working very hard.
Let me tell you why you guys are having problems becuase you trusted the insurance agents who know Fxxx about retirement planning.Look at what they have done for you. 30 years ago instead of advising you to accumulate and invest in a product or products that can accumulate for your retirement they sold and pushed you 'safe' products that gave you return marginally over inflation at best if not below inflation like many of the endowment and wholelife products.. Eg like pushing you ntuc product Growth. Growth is 'safe' but it can't do much for you.You should have invested in ntuc products like Prime Fund which worked hard for you and would have more than doubled or tripled your money.The problem is ntuc agents are dumb, want to play safe, unqualified and worse, pushed product Growth as safe to save their own ass.Worse , customers are also dumb and wanted only safe products . This made things easier for the product pushing agents who don't have to do much but to sell what the customers wanted. Can these customers retire comfortably?
No!! the money invested in the 'safe' product has not gained much, some might even lose in real term. Insurance agents don't know about retirement planning.They plan their own retirement with your money from the high commission they got from pushing you Growth or endowment or wholelife ..
In investment term, if a product doesn't meet your goal it is considered RISKY. Is Growth risky?
Yes, if it doesn't grow for you to meet your goals.
Please engage qualified advisers who are retirement and investment planners and NOT insurance salesmen masqueraded as financial consultants. You already kenna conned. Too bad if you don't have fund . You have to work a few more years as toilet cleaners. More importantly advise your children NEVeR to be like you ,trusted the insurance agents because you are a good example and the result of having trusted insurance agents.

The Watchman; April 13, 2010 6:43 PM
Anonymous said...: Do you know that ntuc is promoting Revosave as saving product for your retirement?
If you get conned into buying it your retirement is doomed and I can see smoke oozing out from your plan.
Can you see they are not interested to plan for you? How can a product that gives less than 2% be a good product for retirement? Indeed, it is conjob. No wonder their victims are old folks, aunties and ignorant gullible trusting policyholders of theirs.
MAS, if you are concerned for the people of Singapore future do something about these conman and women.Do something. The baby boomers are already played out by insurance agents. Do you want the future generation to fall into the same trap?; April 13, 2010 9:23 PM
Average Joe said...: Thank you all for sharing. That is why I like about this blog, the true blue average Singaporean reflecting the real life situation un- like those feature in newspaper which does not make sense or create any financal awareness to the average Singaporean. Eg. The amount which they spend Or required to retire per month ie $5000 is equivalent to a typical Singaporean houshold income.; April 13, 2010 10:12 PM
Anonymous said...: My wife and I (no kids) combined income is more than S$11,000+ per month but we still live frugally in a hdb flat :); April 13, 2010 11:18 PM
Anonymous said...: To Anonymous 11:18pm

I support your decision. Many couples who earn less have grand ideas of condominium living and having a car.

Save enough to acquire good company shares, buy when the market dips and buy again when it crashes. Keep them for their dividends and capital appreciation. Go and enjoy long meaningful vacations.

Nothing to worry, such as endless loans and if your job is safe.; April 14, 2010 11:35 AM
Anonymous said...: Read this article by a reader urging the govt to build retirees village. I agreed with the reader. This will prompt Singaporeans to stay & retire in our own country then pondering about migration all the time.

http://www.straitstimes.com/STForum/OnlineStory/STIStory_516148.html; April 19, 2010 11:13 AM
Anonymous said...: These articles on successful people should be feature in Business Times not Sunday Times. Our media probably wants to project positive moods. Exactly how many rich and successful people are there in Singapore?; April 19, 2010 11:19 AM

Tuesday, April 13, 2010

Survey - expenses of a retired couple

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