Singaporean worried he has no money for retirement after pay
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Singaporean worried he has no money for retirement after paying for over-priced HDB flats
A Singaporean by the name of Kang Choon Tian has written a letter to the Straits Times Forum today expressing the concerns, worries and fears of many Singaporeans on the sky-rocketing prices of HDB flats – that they may not have any money left in their CPF when the grow old.
Mr Kang revealed that he took a loan of $80,000 some 20 years back and the interest came up to $70,000 after he had finished paying for his flat.
He is concerned that many Singaporeans may end up with little in their CPF accounts at current prices of HDB flats:
“The Government should look into this or Singapore may end up with many retirees with little in their CPF account, assuming an average household income of $3,000 to $4,000. Since HDB flat buyers may use 30 per cent of household income, they may be able to service their loans, but little is left for retirement. Besides, along the way, husband or wife may lose their jobs.”
He added that though Singaporeans may well afford to pay for their flats now, their ability to do so may decrease as they grow older:
“Buyers are allowed to take up to a 30-year loan. By then, their earning power may also diminish when they reach 60, assuming they bought their flat in the early 30s.”
More than 85 per cent of Singapore’s population living in public housing built by government agency Housing Development Board or HDB.
While HDB flats used to be easily affordable by Singaporeans in the 1980s, prices have ballooned in recent years caused partly by a limited supply of new flats and rising demand fueled by the relentless influx of foreigners into Singapore.
The prices of HDB resale flats hit a record high last year and increase by 8.2 per cent with median Cash-over-Valuation (COVs) doubling from $12,000 to $24,000.
In contrast, the median monthly salary of Singaporeans remain stagnant at around $2,600.
Despite rising frustration, resentment and anger on the ground over the increase prices of public housing in Singapore, National Development Minister Mr Mah Bow Tan and other HDB officials continue to insist that they are “affordable” to ordinary Singaporeans.
Mr Mah even chided first time home buyers for being “choosy” and said that “the onus is on Singaporeans to play their part by buying a home within their means.”
Quoting the affordability benchmark of 30 per cent used frequently by HDB to show that HDB flats remain affordable to ordinary Singaporeans, Mr Mah said a family with a monthly income of $3,000 can buy a flat worth up to $250,000 and spend only 30 per cent of their income every month on the mortgage.
“Similarly, a family with a monthly income of $4,000 can afford to buy a new flat worth up to $333,000 without spending more than 30 per cent a month on the mortgage. This means they can comfortably buy any of the flats offered in the latest BTO projects this month,” he added.
However, Mr Mah fails to take into account the bank interest rates and inflation over the years which will lead eventually to the family spending more than 30 per cent of their monthly income on the mortgage as pointed out correctly by Mr Kang above.
Furthermore, after depleting their entire CPF for these over-priced 99-year leasehold HDB flats, they will have little or no savings left for their retirement.
Mr Kang ended his letter by urging financial experts to give their take on the issue:
“Since there are many in this income bracket, I hope some financial experts will be able give their take on this important issue or Singapore may end up with many retirees with little to live on. Many buyers are not aware of the final price of their flat, including the interest over 30 years.”
Singaporeans who need a roof over their heads now are stuck in a quandrary. On one hand, they are unwilling to make a purchase at the height of the property market, but they are also worried that prices may continue to go up.
Minister Mentor Lee Kuan Yew expressed optimism that HDB is an “asset” which will continue to appreciate in value so long the Singapore’s economy is doing well, but what if Singapore were to enter another protracted recession as a result of a global financial crisis?
One does not need to be an economist to realize that there are always ups and downs in any market and it is impossible to expect prices of HDB flats to continue to be increasing forever.
With wages lagging far behind the phenomenal increase in prices, they will have to come down one day when there are too few buyers in the market who can afford to buy them or worse, come crashing down if foreigners were to leave Singapore in the event of a recession.
At the rate the prices are going up, some Singaporeans may have to wait till their parents pass on to inherit a roof over their heads.
What's your view?
If you are in Kang Choon Tian shoe, what would you do.
Let's discuss.
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Here's a copy and paste from HDB website on eligibility.
"Each eligible Singaporean household can buy the following housing unit only twice:
- a flat from the HDB;
- a resale flat with the CPF Housing Grant;
- a DBSS flat from developer;
- an EC unit from developer.
If you have already bought two housing units, you will not be eligible to apply or be listed as an essential occupier in an application."First time home buyers are newly weds/new start up family with.. low savings, high expenses. They probably go for the low end flats. 2 bedrooms/3room flat.
Then sell it to get a bigger flat as the family grows. So they have to purchase a flat SECOND time.
After children grows up.. the couple become empty nesters. Children no longer living with them.
Should they sell their bigger home to downgrade to a smaller one ? Will they be eligible to apply another flat directly from HDB ?
OR, are they forced to purchase a smaller RESALE flat from market ?
With the current exhorbitant RESALE prices.. is that even feasible ? Will empty nesters be forced to live in a bigger flat or risk paying through their nose for a smaller unit during retirement ?
Isn't it time HDB review it's two strikes policy ?
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Hopefully gahment will deal with the issues that you have mentioned, and gave us a positive outcome!!!
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Originally posted by jojobeach:
Here's a copy and paste from HDB website on eligibility.
"Each eligible Singaporean household can buy the following housing unit only twice:
- a flat from the HDB;
- a resale flat with the CPF Housing Grant;
- a DBSS flat from developer;
- an EC unit from developer.
If you have already bought two housing units, you will not be eligible to apply or be listed as an essential occupier in an application."First time home buyers are newly weds/new start up family with.. low savings, high expenses. They probably go for the low end flats. 2 bedrooms/3room flat.
Then sell it to get a bigger flat as the family grows. So they have to purchase a flat SECOND time.
After children grows up.. the couple become empty nesters. Children no longer living with them.
Should they sell their bigger home to downgrade to a smaller one ? Will they be eligible to apply another flat directly from HDB ?
OR, are they forced to purchase a smaller RESALE flat from market ?
With the current exhorbitant RESALE prices.. is that even feasible ? Will empty nesters be forced to live in a bigger flat or risk paying through their nose for a smaller unit during retirement ?
Isn't it time HDB review it's two strikes policy ?
After children grows up.. the couple become empty nesters. Children no longer living with them.
Should they sell their bigger home to downgrade to a smaller one ? Will they be eligible to apply another flat directly from HDB ?
By then, they should already pay off their 2nd flat. there's no reason for them to buy another flat either from HDB or resale market.OR, are they forced to purchase a smaller RESALE flat from market ?
With the current exhorbitant RESALE prices.. is that even feasible ? Will empty nesters be forced to live in a bigger flat or risk paying through their nose for a smaller unit during retirement ?
Again, by then they should already paid off their current flat, if is 4rm flat, it worth ard 350k to 400k (on arrange base on today market). 5rm flat worth ard 400k to 500k.
even they will to down grade & buy a 3rm from open market which is worth ard 250k, it is enough to 100% paid off & with some extra cash on hand for retirement.
I dont kn where's the problem
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Originally posted by baby hunter:
After children grows up.. the couple become empty nesters. Children no longer living with them.
Should they sell their bigger home to downgrade to a smaller one ? Will they be eligible to apply another flat directly from HDB ?
By then, they should already pay off their 2nd flat. there's no reason for them to buy another flat either from HDB or resale market.OR, are they forced to purchase a smaller RESALE flat from market ?
With the current exhorbitant RESALE prices.. is that even feasible ? Will empty nesters be forced to live in a bigger flat or risk paying through their nose for a smaller unit during retirement ?
Again, by then they should already paid off their current flat, if is 4rm flat, it worth ard 350k to 400k (on arrange base on today market). 5rm flat worth ard 400k to 500k.
even they will to down grade & buy a 3rm from open market which is worth ard 250k, it is enough to 100% paid off & with some extra cash on hand for retirement.
I dont kn where's the problem
have a look at cpf/hdb rules and regulation firstbetter still check with them first or their website
it would surprise you!
don't forget COV, misc expenses, etc
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he don't have to worry.............becoz confirm no money to retire...............also countless S'poreans will be like him...................
GOVT's plan................retire at your children's expense.................if children can't support the old folks............then these old people............early die, early good...............
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whatever the HDB rules and overpricing, either govt and women will gain the upper hand...men will lose all in the end eventually...
FCUKPAP - lopsided policies .your albino grandson will suffer
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Albino grandson....................Old Man lucky liao lor..............could have been a ZEBRA..............
so any chance of Albino grandson into politics ? Men in White mah.............he can bullshit grandson is so ''pure'', he's totally white.................LOL
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Remember someone ask sporean to go jb to stay at old folks home?
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Originally posted by baby hunter:
After children grows up.. the couple become empty nesters. Children no longer living with them.
Should they sell their bigger home to downgrade to a smaller one ? Will they be eligible to apply another flat directly from HDB ?
By then, they should already pay off their 2nd flat. there's no reason for them to buy another flat either from HDB or resale market.OR, are they forced to purchase a smaller RESALE flat from market ?
With the current exhorbitant RESALE prices.. is that even feasible ? Will empty nesters be forced to live in a bigger flat or risk paying through their nose for a smaller unit during retirement ?
Again, by then they should already paid off their current flat, if is 4rm flat, it worth ard 350k to 400k (on arrange base on today market). 5rm flat worth ard 400k to 500k.
even they will to down grade & buy a 3rm from open market which is worth ard 250k, it is enough to 100% paid off & with some extra cash on hand for retirement.
I dont kn where's the problem
Ofcors no problem ASSUMING we live in a perfect world..
where... all senior citizens are cash rich.
Nobody in the family requires emergency/long term medical care.
People remains youthful forever. No old age problems.
Everyone remains gainfully employed their whole life.
All the profits from the sale of flat are in cash.. no need put back into CPF.
Unfortunately, reality ain't this perfect way.
By the time you are retired, it's just illogical to be sitting on fixed assets that's worth 300K-400K. What you need is more cash/liquidity, less fixed assets ( 250,000 worth for a smaller flat? that's a lot for old people).
Then there's the minimum sum, mandatory life plan... etc etc...
HDB claims there's few hundreds empty units no Singaporean wants to buy. Then release them for rentals to old folks. Remove the 2 strike restrictions for HDB rentals. Don't force old folks to havta buy from the OVERPRICED RESALE market.
There's a lot government policy can help to ease retirement stress. Yet old people need to work till their death, and we claim to be Swiss standard... ??? The irony...
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Agreed that old pple needs cash/liquid more than assets.
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If you are the middle class, you cant retire in Singapore. Either you die on your job (which is the most fortunate), or sell you assets and retire in a cheaper country.
If you are the lower class and dont have assets, hopefully, some old folks could let you live with them and you probably end with picking leftovers in China town and hoping that you dont live too long before you die.
If you are lucky and have children that are willing to take you in, than you are ok.
For me, I have already brough a 400m2 apt in PRC by the sea, brough a small chinese car, start a Singapore fool stall in PRC, travels back twice a years for CNY and summer holidays....
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In 4 months, and another 4 years time, I will be exactly in his state.
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Originally posted by AH TRUTH:
have a look at cpf/hdb rules and regulation firstbetter still check with them first or their website
it would surprise you!
don't forget COV, misc expenses, etc
I'm very familiar wif HDB & CPF ruling....
handling almost everyday
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Originally posted by baby hunter:
I'm very familiar wif HDB & CPF ruling....
handling almost everyday
You are HDB or CPF staff?
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Originally posted by Samuel Lee:
You are HDB or CPF staff?
No....Housing agent
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Originally posted by Wmyongj:
If you are the middle class, you cant retire in Singapore. Either you die on your job (which is the most fortunate), or sell you assets and retire in a cheaper country.
If you are the lower class and dont have assets, hopefully, some old folks could let you live with them and you probably end with picking leftovers in China town and hoping that you dont live too long before you die.
If you are lucky and have children that are willing to take you in, than you are ok.
For me, I have already brough a 400m2 apt in PRC by the sea, brough a small chinese car, start a Singapore fool stall in PRC, travels back twice a years for CNY and summer holidays....
Wow, yr future looks fantastic.
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Originally posted by baby hunter:
No....Housing agent
oh, housing agent has no CPF contribution yeah
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I can't imagine how our next generation is going to cope with their housing commitment, why are we so suffering staying in our own country whereby the HDB property prices can be kept in control initially. We have to stop this before our flats start to reach a million dollars.
MBT always say HDB is affordable does he really look into it or he is judging based on his salary. I’m really sad and disappointed by our government. Why took us as money machine and yet you lose billions on investment. If only this billions can use to subsidies our housing benefits.
Singaporeans, we need to united, that crucial time is coming and hopefully we can see some light at the end of the tunnel.
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Sell off your expensive flat and move across to neighbouring countries to retire lor.
Never mind you spent your whole life contributing to country.
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Originally posted by Fantagf:
oh, housing agent has no CPF contribution yeah
hv.....medisave lor... -
Originally posted by baby hunter:
hv.....medisave lor...
hmm medisave.. -
Originally posted by noahnoah:
hmm medisave..dun tell me u did contribute hor.....later they ask u go drink kopi
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Originally posted by charlize:
Sell off your expensive flat and move across to neighbouring countries to retire lor.
Never mind you spent your whole life contributing to country.
what make you so sure you can pull out your money??? do you not think they are one step ahead? -
Originally posted by Arapahoe:
what make you so sure you can pull out your money??? do you not think they are one step ahead?You are right, with loan tenors stretched to 30 years, likely you will still need to repay the bank tons of principal plus interest if you choose to sell off your flat midway through your loan.
Haiz.
Times are bad.