By Chuin Ting Weber, CFP, CFA, CAIA
CEO & CIO, MoneyOwl
The Straits Times reported two days ago, 23 Sep 2024, on the Government saying that by 2030, there could be more deaths than births.
This is not really new. Our Total Fertility Rate dipped to 0.97 in 2023, its lowest ever.
Every woman is having less than one child.
A healthy replacement ratio is over 2!
The other relevant data is that Singaporeans have some of the highest life expectancies in the world.
At the crux of the matter is whether we have enough of the working population to support the aging population.
The longer-term implications are serious for Singapore, from a system point of view – for economy, wealth accumulation and retirement.
Look at Japan. (Though there are other factors besides demographic ones.)
More recently, China has raised its retirement age.
On an individual level, it may or may not affect you immediately, depending on your age and wealth. One risk you have is that you might live longer than you expect.
It will definitely affect the next generation, from anything ranging from how much taxes they have to pay, to how they grow their wealth.
And matters related to the human connection, such as being with and taking care of parents.
Some suggestions:
- For those in middle age, let’s sort out our medical (MediShield Life-like) and long-term care (CareShield Life-type) insurance.
So the kids don’t have to worry, or be burdened.
If you are a young person, sorting our your insurance – it doesn’t have to cost a lot – while you are young (it’s cheap and you have the good health) is one of the best things you can do for yourself and your loved ones – present and future.
- Plan for a longer retirement. Utilise CPF LIFE more fully, as a safe retirement income floor.
CPF hedges against longevity best, because it pays out for life, and at good interest rates with virtually no risk. Full Retirement Sum in cash should be a minimum to aim for. Don’t need to buy fancy products that promise too much.
- Learn, and help working and young people under our employment or care, how to invest in companies around the world – through globally diversified stock (and bond) portfolios; and not just put everything into housing.
Buying property has helped many in Singapore grow wealth and as a result created many a property dream, but whether this may not hold true for every generation, given the demographics.
Furthermore, there are limitations to how one can monetise property, so until we figure out how to eat the bricks, let’s be aware of other tried-and-tested ways to grow wealth with less lumpy risk.
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Disclaimer:
While every reasonable care is taken to ensure the accuracy of information provided, no responsibility can be accepted for any loss or inconvenience caused by any error or omission. The information and opinions expressed herein are made in good faith and are based on sources believed to be reliable but no representation or warranty, express or implied, is made as to their accuracy, completeness or correctness. The author and publisher shall have no liability for any loss or expense whatsoever relating to investment decisions made by the reader.
