ST - Let’s retire the word ‘retirement’

‘Do nothing’ no longer works as shorthand for retirement with the many variations out there.

Lee Su Shyan

Associate Editor & Senior Columnist

30 May 2023

Kids often get asked : “What do you want to be when you grow up?” At the other end of the spectrum, the question should be “What do you want to do when you retire?” 

I used to think that the answer would be: ‘Nothing!’.  I yearned for the day when I would retire on my Central Provident Fund income and other savings, with vague notions of pleasant twilight years. But reality is setting in. Can I even afford to retire? Others might wonder, why wait till retirement age? Why not save hard and quit early? Some might point out, after the “nothing”, what are you going to do when the novelty wears off? 

The fact is, life expectancy nowadays means you might well live to over 80 years. A 40-year working life - from the age of 23 to the age of 63 - could well be followed by a 25-year retirement. This suggests you may need to put almost as much effort into planning for that 25-year retirement “career” as you did searching for that first job.

Goodbye colleagues - oh, hello again 

Retirement used to be: hit your 55th year - a watershed time to withdraw CPF funds - get that farewell lunch and a token of appreciation, clear your desk, go home. Next day, you are officially retired.

Now, while CPF withdrawals are still permitted at 55, most people keep some funds intact to fund regular payouts that start at 65 or even 70, via CPF Life.

Meanwhile, the retirement age keeps going up and it’s now 63. There’s even the possibility of re-employment, provided certain conditions have been fulfilled. 

These days, even after that retirement lunch, you might hop on a plane the next day for that long-awaited vacation -  but you are soon back. You could well be re-employed for an additional year, or your former employer might ask you to help on an ad-hoc project. 

Or you might already have nailed down a gig or two, helping a friend out with their business. If you actively volunteered and travelled extensively, would that still constitute a relaxing retirement?  

Playing with FIRE   

The lifestyle concept of FIRE - financial independence, retire early - has caught on with many.   

FIRE, which originated in the United States, is a movement based on the idea that people lead a frugal lifestyle and save hard so they can stop work early and do more meaningful things. However, to retire early, say in one’s 40s, could require saving as much as 70 per cent of one’s annual income and then in retirement, drawing down only 3-4 per cent of savings each year.  

In practice, it is challenging to sustain such a lean lifestyle right from the word go of our working lives through retirement. Most of us, I suspect, would be happier with more financial leeway.

To achieve the full, quit-the-job version of FIRE - known as Fat Fire -  one would need to be a high-flyer, combining high pay with aggressive investment and savings strategies, which come with a high degree of risk. Because even if there is CPF Life, this kicks in only at 65, so imagine the extra income you need to generate to stop work 20 years earlier.  

Barista FIRE is supposed to be somewhere in the middle, where one quits the job but still takes on part-time work to achieve a more comfortable lifestyle. 

In the US, a FIRE-aspirant can always move to a cheaper state, but in Singapore that’s not feasible. Still, one can trim living expenses substantially,  “For example, buy a non-mature BTO to keep housing costs low, take public transport and cut down on restaurant visits,” says financial coach Dave Wu who runs the blog Minimalist in the City with his wife Kate. 

As for another aspect of FIRE, extensive travelling, this is again possible with say, the US. But there are fewer leisure activities in Singapore. Mr Wu adds that “people do travel a lot for the first few years and then get bored of it.”

FIRE in Singapore is not impossible, but far easier for those who are single or married with no kids. If you do pull off early retirement, the fact is that extensive long-haul travel when the kids are still in school is impossible. Alternatively, it could mean having to eschew the Singapore school system and homeschool the kids. Even without kids, such a lifestyle may suit only digital nomads like bloggers or social media marketers.

A cheaper ‘do nothing’ abroad  

Not just when you retire, what you do in retirement, but even where you retire could be a topic for discussion too. The world has become a lot smaller and many countries offer visas to support people who wish to move to get a change of scenery. 

Some people opt for places where costs are lower. Mr Wu says: “A lot of younger people and even older people are exploring retiring in Malaysia, Indonesia or Thailand due to their lower cost of living. I know people who rent out their homes in Singapore and use it to fund their lifestyle overseas. They could even have some surplus to fund additional activities and domestic travel.”

With budget flights, it does not cost much to live nearby in the region and commute back regularly to do some work, see friends or family or even come for medical appointments. 

Farther afield, Australia remains a popular choice. For those whose children are based overseas, including the US, Canada and the United Kingdom, spending a few months there every year may be a possibility. Stopping full-time employment allows them to spend time with their children and grandchildren who are no longer in Singapore.

In any case, retirement could be bad for your health 

In 2018, the Centre for Ageing Research and Education and the Duke-NUS Medical School released their study of around 5,000 Singaporeans, 60 years and older. After studying them for six years, one conclusion was that retirees developed poorer psychological, physical and functional health over time compared with individuals who remained in the workforce. For example, they felt more depressed and lonelier, suggesting that there are major benefits to continued employment in old age.

In January 2022, the CPF Board released the latest results of its Retirement and Healthy Study done in 2020. A nationally representative sample of 15,103 individuals between ages 45 to 85 are tracked to understand the retirement and healthcare needs of Singapore residents over time. Among the some 7,900 who were over 55, there was an increase in polyclinic costs, in particular for the male retirees. While it could have been respondents having more time to seek healthcare post-retirement, it could also suggest deteriorating health.

Having a Plan B

Essentially, the decision should be how to segue seamlessly into this next stage, call it retirement or what you will. 

Senior financial services manager at PhillipCapital Elijah Lee sees retirement as being able to do what you like without having to worry about the financial consequences, like taking an extra month to travel because you can afford to. 

He cautions that longevity can multiply your problems. Assuming that a period of high inflation hits every 20 years, if you retire early and have 30-40 years ahead of you, this raises the chances of encountering two bad bouts of inflation that may affect the adequacy of your income streams. 

Having a plan B is useful. Managing director of NeXT Career Consulting Paul Heng proudly proclaims that he has “various activities that keep me busy, such as lecturing, writing, career coaching, a travel blog, some giving back activities like volunteering with Dementia Singapore. At last count, I have 14-15 portfolios.”

He adds: “We should retire the word ‘retirement’ from our vocabulary,” and have a mindset on staying active. 

To me, that means continuing to work, even if it’s just a few hours a week. Not only will it supplement the income stream from CPF Life, it’s also because I don’t have many other activities to keep me busy.

Travelling doesn’t excite me. Gone are the days when I could do a long-haul flight and still be up bright and cheery the next day. I’m certainly not yearning to be part of the “special forces” travel craze that is sweeping China, where young adults sleep in trains and restaurants, to cram the maximum number of tourist attractions into the shortest possible time. 

And although I’m no ESG (environment, social and governance) fanatic, I do have the odd twinge about the carbon emissions from flights.  

Neither am I one for new hobbies and skills. How many of us have vowed to take up cooking, a musical instrument, dancing and so on after retirement? Months later, the path of good intentions is littered with brand-new untouched cooking equipment.

While I plan to learn a new language and improve my Mandarin, I’m realistic enough to accept that I’ll likely stay fluently monolingual. And I have no such musical leanings that I could be talent-spotted like singer Susan Boyle, who hit fame nearing 50 after appearing on the Britain’s Got Talent show. 

Sport and keeping fit are a given, but they will not be able to fill my days.

So some form of work will have to feature in my retirement. For Mr Heng, “working can be defined as involvement in activities and being paid” and does not necessarily mean it has to be fulltime. 

Financial adviser Mr Wu adds “Work still forms an important part of your life in terms of having an identity, being relevant and productive as well as contributing back to society. So do keep a side-hustle, volunteer, and work on some passion projects to keep yourself active and make yourself relevant to this world.”

Being a fulfilled older worker in retirement 

Mr Heng is confident that hiring habits will change as many hiring managers are in the same age group as the older job seekers, making the managers more open to hiring the workers. “Over the past eight to 10 years, I see older job-seekers getting a chance to talk to recruiters and hiring managers. This augurs well. Some are eventually hired. The message has gotten out – we have a very limited pool of talent.”

Still, workers should continue to stay relevant and keep themselves updated by having a portfolio of skills. Mr Heng advises older workers to read voraciously and know what is blockchain, web 3.0 and keep up with the latest developments. 

Employers can do their part too. Mr Heng suggests that companies offer career counselling to prepare those who are about to retire, to provide the appropriate mindset, knowledge and skills to make the transition.