Financial Planning is not about long-term planning, it’s about understanding FUTURE CONSEQUENCES of TODAY’S decision.
A director of a Financial Institution once told me, “I don’t think there would be anyone who would be able to achieve Financial Independence at age 55 in Singapore.”
I do not agree or disagree with the statement that he made. The journey to Financial Independence is personal and subjective, because Financial independence means different things to different people.
To me, Financial independence is a journey towards having control of my life; in areas of Health, Relationship and Wealth. As I age, I want to be healthy and happy. I want to cherish precious relationships. And I want to be financially stress-free.
After that encounter, I pondered on how I can assist myself and my clients to achieve what we want in our lives.
The economic freedom score of Singapore is 89.4%, that makes its economy the 2nd most free in the 2019 index. It is the most pro-business country, having lowest rates of taxes compared to other developed countries i.e. 14.2% of GDP. Singapore has the 3rd highest per capita GDP in the world with respect to PPP (Purchasing Power Parity). Undoubtedly, the economic conditions of Singapore are much better than many of the countries of world. These are a few factors which make Singapore an interesting, attractive, and suitable place, in which to live and invest.
And what does this mean to you?
There are always 2 sides to a coin. The greatness and goodness that we enjoy in Singapore has also made Singapore one of the countries with the highest living standards in the South East Asia. As much as we are prosperous, however, there are personal and financial crises that we are facing.
Crises like increasing medical bills, gambling and job woes, business troubles. And all of these have indirectly led to the increase of one of the most common health conditions in the world: depression. Almost 350,000 people living in Singapore are suffering from depression.
Here are the top 3 financial concerns in Singapore:
- Drowning in Debts
Singaporeans have a total outstanding debt of about S$70.4 billion on credit cards and personal loans, according to 2017 data from the Department of Statistics Singapore.
An increased threat to changing lifestyles of people are credit card debts and gambling. People are using their credit cards beyond the limits of their monthly or annually income, which leads to tight cash flow, high debt levels or even bankruptcy. This is probably due to high living standards, or lifestyle habits i.e. when purchasing things for personal use, they do not consider their income and go beyond it.
- Costly Healthcare and Lengthening of Life-Span of a person
According to a study by the University of Washington’s Institute for Health Metrics and Evaluation (IHME), Singaporeans will have the third-longest lifespans globally in 2040. The average life expectancy in Singapore will be 85.4 years. Increasing Life-Span is directly related to advanced technology in medication and a person’s physical health.
The threat of several deadly diseases grows with our increasing age and cancer is among the deadliest of diseases. On an average 15 cancer patients are dying every day in Singapore. The average cost of cancer treatment is also way above average income: the average salary in Singapore is approximately $4,000 per month, but the monthly cost of cancer treatment ranges from $8,000 to $17,000.
Diabetes is another life threatening disease on the rise in Singapore. Almost 10% of the population of Singapore is affected with diabetes and more than 400,000 people living in Singapore are unaware that they have diabetes. In 2010, it was estimated that every working-age diabetic spent $7,678 a year to treat the ailment. That sum, according to a National University of Singapore/University of California study, is expected to rise to $10,596 a year.
- Permanent Job Issues and Ability to Retire
According to MOM, the long-term unemployment rate increased in 2018. This long-term unemployment will inevitably cause individuals to use their savings before attaining Financial Independence. With the recently announced changes in the Retirement and Re-employment Act (RRA), retirement age increasing from 62 to 65 by the year 2030, people will either leave their existing job at the statutory retirement age which requires them to start living on their own savings or continue to work after till age 70 due to insufficient savings.
If the average lifespan of Singaporeans is 85 years old, it will be a challenge by then to find employment and to accumulate savings.
The above are the top few financial challenges currently facing Singaporeans that I have observed. I am sure the list is by no means exhaustive. The most important thing is not just knowing what our challenges are but what we do after identifying all these challenges. Speak to your Unicorn Financial Consultant today, and feel free to comment on what other challenges you feel that I may have missed out!
Tay Wei Lin, Audrey