Singaporeans will work as long as possible (till 85?)

I read the following news "CPF savings insufficient for retirement: survey" with a tinge of sadness:


Quote:

According to the survey, seven in 10 believe their CPF savings will provide only some or little of their retirement income.

In response to that, Singaporeans are turning to alternative means to take them through their silver years.

Citibank said that the alternatives could include proceeds from investment and insurance products.

Out of these products, the survey found that the most popular is whole life insurance.

Some 86 per cent of respondents currently hold or intend to purchase whole life insurance.

It added that the next most popular products are endowment plans.

Overall, 52 per cent of respondents said they would continue to work for as long as possible.

Whole life insurance is not meant to be a retirement income supplement. It's primary intention is to provide income for the beneficiaries upon the insured person's demise (or TPD/medically certified terminal illness). Trying to convert whole life into a retirement income supplement would not be financially prudent.

Retirement income supplement should consist of regular payouts over a long period of time. Good examples would be annuities or the CPF Life schemes. Dividend payouts from equities are passive income but should be considered as a bonus due to the high risk of fluctuations.

Endowment plans would probably give higher returns than the local savings account, but do take note that these plans are not meant for protection. Generally, term plans provide maximal protection and zero (-100%) savings, whole life provides some protection and slightly negative savings (after factoring in inflation), endowment plans provide minimal protection and slightly positive savings (after factoring in inflation).

Considering that most of the respondents considers whole life insurance and endowment plans as an alternative for retirement income supplementation, it would not be surprising that most of them will have to work for as long as possible. For whole life insurance that requires one to pay till age 85, I wonder if they can really work that long...

Everybody has a different financial situation so it would be prudent to go through your needs before deciding what to get. If you are not convinced that you need a product, please do not buy it. Personally, I have an insurance portfolio to cover me in a wholesome manner. I am still looking to see how I can better cover myself in the light of change in family size, hence the wife selling insurance.

The news article can be found here.