SINGAPORE (June 17): Researchers in Singapore have determined that $1,379, down to the dollar, is what an elderly person living alone would need every month to thrive in today’s Singapore. The sum covers an annual $500 holiday, budgets for one restaurant meal a month, and allows the person to buy clothes and accessories for special occasions, as well as gifts for friends.
The figure was derived from conversations with 103 people about what would be enough for a basic standard of living. For these participants, that went beyond the essential needs of housing, food and clothing, but to opportunities and access to education, employment, work-life balance and healthcare. More importantly, “it enables a sense of belonging, respect, security, and independence. It also includes choices to participate in social activities, and the freedom to engage in one’s cultural and religious practices”.
Crucially, the $1,379 figure assumes good health. It does not take into account expenses on chronic health conditions, which afflict many older people in Singapore. Also, this figure will only grow with successive generations of elderly, owing to inflation and lifestyles that are likely to be quite different from today’s.
But, how will they — and the rest of the ageing population — pay for it?
For now, those who continue to work can just about meet this $1,379 sum. The three most common occupations among the elderly pay a median income of $1,200 to $1,600. Others, who have retired or have very low incomes, have government schemes to rely on. Many rely on allowances from their children. A 2016 study by Lien Foundation and NTUC Income found that one in three senior citizens relies on government subsidies or support from their children and/or spouse.
A 2011 report on older people co-authored by National University of Singapore sociologist Tan Ern Ser found that one in four people aged 55 or older reported “perceived current financial inadequacy”, whereas a third reported “perceived future financial inadequacy”.
Last year, the Central Provident Fund (CPF), meant to provide an income for people in retirement, paid out an average of $450 a month to those aged 65 to 69, $290 to those aged 70 to 79, and just $220 to those aged 80 to 87.
The good news is that as incomes have increased through the years, more people would be able to meet their basic retirement sum in their CPF accounts and have higher payouts than the current generation of elderly citizens receives. Already, among people who turned 55 in 2017, six in 10 have met that minimum sum requirement and will get $700 to $750 a month in payouts for life.
But that still does not reach $1,379 — a figure that stands to rise when healthcare costs are included, and further, after inflation is taken into account.
Dr Jamie Phang, Cluster Director of Community Eldercare Services at Methodist Welfare Services, says for a 25-year-old who has just started working to have $1,400 upon retirement, he would have to “save no less than $1,500 a month and be in continuous employment until the CPF payout age of 65”.
For this 25-year-old to also pay for his parents’ treatment for chronic illnesses, on top of saving for his retirement and supporting the family he has in future, is a tall order. The burden on him and his peers is likely to be even greater as family sizes shrink and there are few or no siblings to split the costs with.
“I doubt that having only CPF payouts is enough,” says sociologist Tan. “We would have to assume that they have other incomes, savings and assets, in addition to being able to pay for health insurance premiums and costs of long-term care.
“The issue is more about whether the ‘not so poor’ adult children are capable of supporting the elderly parents’ healthcare, medical or long-term care costs.”
Christopher Gee, who researches retirement adequacy at the National University of Singapore’s Institute of Policy Studies, believes there are already a good number of government policies to help support the elderly. The question, instead, is how to fund them in bigger ways.
Gee says: “The reality is, if you don’t have money yourself and your family can’t provide for you, society or the government needs to step in. If we rely on society, you’re talking about charity. If you’re expecting government to pay, it is transfers and redistribution.”
That will mean higher taxes, whether personal or corporate, or goods and services tax. Singapore is set to hike GST by two percentage points between 2021 and 2025 to bring an additional revenue of almost 0.7 per cent of Singapore’s annual GDP.
Singapore Management University law don Eugene Tan thinks the CPF is “ripe for a massive overhaul if it is to maintain its raison d’être of providing for Singaporeans’ retirement needs”. In his view, higher taxes are to be the last resort, even as the state has to play a bigger role.
“It needs to be borne in mind that, with smaller families and low birth rates, the tax base is shrinking and the tax burden will increasingly be borne disproportionately by younger Singaporeans,” he says.
“Given the demographic changes and our communitarian ethos, the notions of self-reliance and family as the first port of call for assistance, while ideal, may not be appropriate. What is clearly needed is the recognition that the state has to see how it can do more in a sustainable way and for the individual not to abandon the principle of self-reliance.”
Instead, Tan says people need to start preparing for their retirement needs sooner rather than later. One way is to incentivise them to do so through higher returns on their savings based on their age. Another important initiative would be to make healthcare and healthcare insurance more affordable to cope with the needs of longer lifespans.
Otherwise, as Gee says, “How do we as a society pay for somebody’s inadequacy? Are we as Singaporeans willing to pay for somebody’s lack of financial adequacy later in life?”
