Medical Bills, Bills, Bills

 Hospital Bill for my mom has arrived. Without some subsidies, we would be in serious trouble. But our problems are far from over as at now. We have a monthly bill to pay for the nursing home. I wonder how we will pull through and if she'll ever get better at all. It would be nice to have her home again. I hope for miracles. I really do. I shall make this as short as possible. I"m tired. Till my next update.

More on AWS and other woes

So this is an update of the AWS thingy that I wrote about in my previous post. Based on the votes, the company has gone ahead to let us know that we will go ahead to incorporate the AWS to our monthly salaries. In a way this would be good for my CPF contributions because I would be able to earn the interest at a faster rate rather than wait till then end of the year. But it will be mean that there will be no extra payment to enjoy in December anymore. Is this good or bad? 

It might look like we are getting a higher salary for now. I did the math and found that I would be getting an increment of $11 per month based on what HR would be giving me. I took the figure and worked back to 13 months of pay and got this $11 increment. I hope they would consider increasing our pay even more soon. I'm really looking forward to getting posted to a new role with new colleagues and a new boss. I am already feeling very drained. My colleague on other hand is planing to resign to become a housewife. She sold off her house to downgrade to a smaller flat and says 'the government is controlling her money'. I tried to explain to her about trying target the full retirement sum but she is one of those anti CPF people out there. There is nothing I can do about her thoughts. This is her life, her decision.

Meanwhile I'm still lamenting how fast my parents have used up their CPF funds and how have to struggle to think of their upcoming medical bills. The cost of nursing home is not cheap. We manage to get some subsidies but it is still a lot to us. I had really wanted to buy a home with my sibling to help our parents but if the other party doesn't want to, i can't do anything too. 

Houses in Singapore are so expensive. I can't buy a flat by myself. They have so many rules that prevent singles for having a decent home other than a 2 room BTO flat. If you want a resale flat, we have to pay through our noses and it is so expensive. My CPF is not enough. Getting married at this age is really impossible for me. It's not like we can just marry any Tom, Dick or Harry out there. Anyway, I shall let things be for now. I can only pray.

AWS Musing

So recently our organization made a proposal to pay AWS as part of the normal monthly salary. There were some cost implications to consider such as taxes and if there is any short change of CPF contributions. Those earning below $6000 will stand to benefit but the difference is really not a lot. However, those earning above $6000 would lose a substantial portion of CPF contributions. We therefore concluded the fact that the company was willing to do this was that a large portion of our employees were probably earning more than $6000 and only a small number of us minions earn less than $6000. So would I vote for getting the AWS by the month? Most likely. 

Other than paying slightly more taxes, I would be able to generate more interest for my CPF accounts as I'm dying to quickly reach the full retirement sum amount ASAP. However, it looks like a lot of high income earners will be voting against it. 

What is the definition of being rich?

Recently a colleague of mine showed me a few online articles In each article, a person wrote in to a forum  wondering why he is not rich with a salary of above $10,000 or more. One of them has a monthly income of $30,000. For some, the spouse earns an even higher amount. They are lamenting about not being able to be granted government subsidies and they are not able to afford a better life. Some of them live in condominiums and 5 room flats. Then I opened the comments and had a good laugh. There were a lot of sarcastic and funny comments from the online netizens in general. 

I wasn't laughing at those 'poor' people whom are so much richer than me. The comments online can be so funny. But seriously, after reading like the third article, I was wondering why in the world do these people feel so poor? I thought I was even poorer. We've got elderly parents who don't have medical insurance and the job doesn't offer much prospects. It's so hard to find another job at this age and employers prefer younger candidates in general.  Their monthly income is equivalent to our yearly income. We also do not qualify for subsides. My colleague was fuming over these articles. Am I considered a very poor citizen here?

I guess their definition of being rich is different from ours. For those who earn 12 times more than us, they feel they want even more. Comparing lifestyle with one another can only make life even more miserable. I am already feeling so sad even though I am a simple person and I do not buy branded goods or live in a private property. 

And recently our government announced that they are issuing a special workpass to top talent with a pay of $30,000 or more. Aren't they going to issue special grants to train local talents instead? Maybe it would be good to find a job in another country instead. We don't seem to have a place in our own home. Firstly it's so hard for singles to own a BTO and then the job doesn't pay so well. We do face a certain amount of biasness at the workplace too. Everyday and everything is a challenge. 

Medical Costs can be a killer in Singapore

These days there is so much talk about inflation. The prices of everything is going up. The cost of living is going up. First we have a pandemic and we're still in it. Then there is the war in Ukraine that made things worse as this affects supplies and costs of things. 

Medical Costs have gone up. It doesn't help that we have a family member who has fallen ill and will be under long term critical care. After the roller coaster ride of going through ICU, we learn that we might have to put our love one in a nursing home. To qualify for subsidies, we have to go through a means testing thingy. What it simply means is that they will take the total income of the household divided by the total number of family members in the household. Because of us, our parents cannot qualify for the full amount of medical subsidies. It is expected that we the kids should be able to afford to pay for their medical expenses. However the strain is really there. Firstly my parents CPF accounts have already depleted and they do not have much health insurance coverage. And it also doesn't help to know that my one and only sibling can be so irresponsible with savings. We simply do not enough money to fund our parents medical costs. Then there is the worry about how we are going to fund our own medical costs in future after spending on our parents.

I also want to rant about the housing situation in Singapore. It's so expensive to buy a home. We end up living with our parents because of this. Singles cannot buy BTOs in mature estates and prime estates. We can only buy a BTO 2 room flat which are located in some inaccessible corner of Singapore and there are not many such flats available. Although they have no restrictions on what resale flat we can buy, it so expensive to even buy a resale flat. 

In short Singles are badly shortchanged in Singapore. We are being punished for not being able to contribute to growing the Singapore population by giving birth But we are still contributing to the workforce. We also help to cover those on maternity leave. We are not recognized for our contribution to the economy at all. Does this mean they won't care if we leave the country and find jobs elsewhere? Singapore is my home but we don't really have much a place in Singapore.

Woes on buying a home at this time

I'm seriously finding it so expensive to buy a home. Actually I had not planned to even buy a home this year. But due to unexpected circumstances, I might be forced to buy a home. The housing market is so expensive. But it seems like we can never save enough to get there. Each time I save to get to the target, the price of homes have also increased even further. Inflation will always be there. I read from a website that we can never save enough for a house. Just go ahead and buy that home to lock in the price now as inflation will always drive prices of homes up. Perhaps I would be smiling in a few years time.

The fear of taking a mortgage or housing loan is there. It's a huge liability. What if I can't pay at all? What if something happens that I won't be able to pay for the installments? But on the other hand, I also googled what if I want to pay off the loan before a certain timeframe if I have accumulated enough cash? The answer is that we have to pay the bank a penalty fee. (What?) Yeah. You heard it right. A penalty fee for paying up your loan earlier. So they advised to apply for a refinancing of the loan instead to get a lower interest amount. Refinancing means to shorten the loan period and pay a higher installment per month so that this spare cash can be spread out nicely till the end of the new loan period. So there are people out there who apply to refinance their loans every few years to save money on interest payments. 

I've never owned a home before and there is so much to learn. I guess I will know more when I get there. I'll try to update this blog when I know more.

Is the housing market too expensive?

I'd say, yes!! It's way too expensive to afford a real home these days. There is not enough supply and demand is very high. Everyone needs a new home. So how then will I be able to afford a home at all? Most of the homes are going at nearly a million dollars. And just recently, even  banks are revising their housing loan rates. I really wonder how will I really ever going to afford a home for myself. The public housing market is so bad. The cheapest ones are located in areas that are so inaccessible and the flats are so old and runned down. Oh my goodness right? Horrible! Does this mean the only way to have a home is to migrate overseas and live abroad? At least they won't have age limits or strict laws on what sort of home we can get. Oh dear, what a thought. I'm sure there is a reason for the criteria set but some of us will never be able to afford a home. If we're single, we're so much worse off. Married couples stand a better chance. So what will I do? Will houses ever be made affordable especially to singles? How about having a singles village similar to a retirement village? Please give us a place to live. 

Saving For Retirement

When saving for retirement, one must not only save for daily expenses, they must also take into account medical costs and to ensure that there are enough insurance coverage as well as cash to cover costs that are not covered by medical and hospital insurance policies. I'm now experiencing first hand of my parents mistakes. They didn't plan well. They didn't include medical costs. It is inevitable that when we get to our old age, we might possibly face some medical problem. It's not that I'm a pessimist.  When I look around me, I hardly see a senior citizen who is very fit and has no medical issues. Old age is something that we must all face. Will the future senior citizens have less medical problems?

And as you know, the cost of medical treatment is getting more and more expensive each year. Even insurance policies are not able to cover everything. You'll need to pay even more premiums if you want more coverage. So seriously, when is really a good time to retire? What if there isn't enough? For those people who feel that they can rely comfortably on their kids, it's not all that simple. It can be very draining for the kids as they not only have to save for their own future but to also cover the costs of their parents medical costs. We are the sandwich generation. The burden is now on us.  And now suddenly I feel the sudden urgency to top up my CPF while I can. And if possible, I'd like to continue to earn an income to keep myself going. 

Doing nothing and sitting around can lead to dementia. Dementia is a serious disease that can rob you of your dignity, your freedom and independence. Even if you have enough money, I'd say just keep working. If not, then pick up an exercise regime, join a club to have friends and then pass the time by being part of something and contributing to something worthwhile. That's my word of wisdom for now. 

Investing your CPF with Unit Trusts

Is investing your CPF with unit trusts a good thing? In my opinion, it's not a good idea especially if you have no time to monitor it. When I first started investing 20 years ago, the first instrument that I got hold of was unit trusts. At that time, I thought that buying a unit trust would be a form of diversifying your portfolio. I thought that it would be the job of the fund manager to decide how to allocate the number of stocks, bonds and index funds for each portfolio and we won't have to worry a thing. So naturally I had thought that unit trusts are for beginners if you have no idea how to invest in stocks. Boy, was I wrong. 

Most unit trust funds did not perform so well and the CPF board started removing a lot of approved funds as time went by. I had made losses too. Even those that require cash. I'm not saying that all unit trust funds will cause you to have losses. You need lots of time to know how to rebalance it. I did not spend any time rebalancing it for many many years and that was a dangerous thing to do. Seriously.

I had bought some funds through an online platform and some through an insurance agent. After selling me the funds, the agent was reluctant to provide me advice on which funds I should switch to. I was on my own and I thought it was a bad decision to even buy it from the insurance agent. After all, she had already earned her commission and didn't want to have anything more to do with me. She said I could just go online to switch the funds on my own and her advice was to just 'leave it there'.  Leaving it there without any action is a very dangerous thing to do. I found that the money would be better off earning the 2.5% interest in the ordinary account. Also, if you have no idea what you're doing, trusting the fund manager to balancing the fund is really a bad idea.

So I decided to read some books on unit trusts investing as well as visiting several websites. I learnt about rebalancing and decided to take some action. First I liquidated most of my units in cash and those that I bought from the online platforms. I felt that I would rather invest them elsewhere. The only ones I kept are the insurance based unit trusts. I switched my units to 2 basic type of funds: Global Bonds and Global Equities. That's because I have no time or knowledge to keep up which country, continent or theme is doing well for each timeframe. The Global portfolio would cover everything world wide. Then at every time frame, I made sure that I would maintain the same amount of distribution between Bonds and Equities. 

By doing that, I started seeing results. I notice that the results would be even more obvious whenever the markets does a flip. For example in March 2020 when the markets crashed by 30% worldwide, the value of the bonds was higher than the value of the equities. I had to sell the bonds to buy more equities. But in the following months, equities started recovering and I had to sell off the stocks to buy the bonds again.  The overall value of the portfolio started to go up. It became higher that what it was before the crash.

As at end of last year, when I compared the opportunity cost of putting money in unit trusts versus leaving it with CPF, I found that I was able to catch up with 2.5% interest rate of what CPF board pays. Perhaps I should have quickly liquidated the funds back then but I was having so much fun.

Then in the past few months, Russia invaded Ukraine and inflation went up. Even bank interests were affected. The equities versus bonds thingy started getting shaky again. So I guess I should ride through another storm again.  

So yeah.....I'd say if you're a beginner and have no idea how to invest, do not use your CPF to invest in unit trusts. It took me years and experience to figure how to get it done and I won't say I have a foolproof method of maintaining it. I'm still learning each day. I'm still monitoring it regularly to rebalance it. So far it has been ok for me. I shudder to think what would happen if I had taken the insurance agent's advice to 'just leave it' there.  Never do that. You'll have to keep checking and monitoring it regularly. Rebalancing it is a must. You cannot let it sit there and do nothing. 

Till the next post.....

Do we have enough for our retirement?

This is the question that I keep asking myself. Each time I look at my parents mistake, I keep wondering if we will go down the same path as them. My only consolation is that, with CPF Life, you get your payouts month by month, so that you can spend each month base on each payout. The older folks who retired many years back didn't have an annuity. When they withdrew their CPF by the lump sum, they suddenly found themselves extra richer and started spending more without thinking of the future. Medical costs are inevitable. I've not heard of an old person without any health problems. We'll need money for medical costs and daily expenses. Plus there will be inflation. Keeping the lump sum in a bank account will cause the value to depreciate due to inflation. These are just my own thoughts. So many things to think about in the future and everyone needs money and it's worse if a person is retired and has no more income. Sigh....something more to reflect upon as each day goes by.

Comparing Pension Schemes

I did some googling in order to understand about the types of pension schemes around the world. It’s pretty complex. There are so many versions out there. I can’t put it all down here. So I’ll try my best to summarize it as much as possible.

They have employment based pensions, social and state pensions and disability pensions. Retirement plans can be classified as defined benefits or defined contribution plans. A defined benefit is a plan where workers will accrue their pension and upon retirement, the firm pays them a benefit.

Defined benefit plans may be funded or unfunded. In an unfunded pension, no assets are set aside by the employer. The arrangements are provided by the state and the benefits are paid directly from the worker’s contribution and taxes. This method of financing is known as pay as you go.

A funded plan on the other hand, contributions from the employer and from the workers are invested towards meeting the benefits. All plans must be funded in some way. And then after reading the rest of it online, I got lost in the mumbo jumbo stuff. I know it doesn’t apply to our CPF system.

Then my eyes fell on the part that says defined contribution plans. It’s a pension plan where employer set aside a certain proportion of a worker’s earnings in an investment account and the worker receives this savings and any accumulated investment earnings upon retirement. The contributions are paid into the worker’s account. The contributions are invested . On retirement the members account is used to provide retirement benefits and sometimes through the purpose of an annuity which then provides a regular income. I guess this may sound pretty close to our CPF system but the investment part may not be applicable.

In our CPF system, both the workers and employers will contribute a certain amount based on age and wages and this money will be distributed into 3 accounts namely the ordinary account, special account and medisave account.

The ordinary account may be used for housing loans, education loans and investments such as stocks and  unit trusts apart from retirement. This account only earns 2.5% of interest but this is still better than a bank account. Those who have enough to invest in a property might be able to maximize this value if they know how to.

The special account is purely for retirement purposes and will later be used to fund the retirement account which will then be used to pay for the CPF Life, an annuity. Although it’s possible to invest this amount, it is not encouraged as this account earns 4% of interest. IF you can find an investment that can give you a guarantee returns that is higher than 4%, then you probably have a very good eye for making investment decisions. Otherwise, just leave the money here.

The medisave account cannot be withdrawn at all. It is meant for funding certain medical bills and there are certain limits per year as well as based on the type of treatment. It can also be used to pay for the premium of certain health insurance. The most basic health insurance that anyone can have is the Medishield plan.

There are so many things to digest. This system is trying to take care of so many needs of workers. But what about those who are self employed? I understand that all self employed people have to make a compulsory contribution to their medisave account. The rest of the accounts will be voluntary. I guess that’s it for today. I shall write more as I go along. I’m not an expert in this area but I am learning as I go along.  

S&P 500 Mutual fund for CPF

Right now I notice a lot of folks are buzzing about finding ways to use CPF to buy the S&P500 index and the best way to do it is through a mutual fund. CPF does not allow people to buy foreign ETFs so the only way around it is through a mutual fund in Singapore Dollars. It seems like the main buzz right now is to buy it through EndowUs but frankly I do have reservations about mutual funds aka unit trusts. Based on my experience with them, I've never made much money with unit trusts especially with CPF funds. I rather stick to the usual 2.5% interest. Alternatively I have bought some stocks with it. Not all stocks are performing that well but they still pay some form of dividends and that's good. 

Meanwhile, they are also increasing the CPF contribution rates for senior citizens about 55 and that's a good thing especially for those who are still employed at age 55 and above. They are also increasing the retirement age.

Whenever I look at my parents, it's a stark reminder to me to try to work towards the Enhance Retirement scheme. I am a long way off from achieving that at the moment. With the steep inflation rates, it's not going to be easy to save and top up for my CPF each year. I'll try my best.

GST will also be increasing from 7% to 8% next year and then to 9% the year after.. With so much costs going up, I hope to get a pay increase to help cope with the increasing costs. Will the employer have some compassion on us? Business is also not doing well so what should I do?

I've just started learning some python and I hope to get far with it. Hopefully this knowledge will help me get somewhere in future.

I found this CPF Calculator

Check out this CPF calculator by the Value Warrior. I found it very useful. There is also another CPF calculator under the Endowus Page but I have not included the link here. 

I did do a personal projection of CPF using my excel sheets, however the results are not really the same. I made the assumption that there will be no salary increments and bonuses because my employer is very very stingy and doesn't appreciate the staff. We should even be lucky to still have this job. Anyway, using the most pessimistic assumptions, this site says I have barely reached ERS. But Endowus says I will run out of withdrawal CPF by the age of 82 unless I have invested with them. Should I be worried? Actually I did do my own investments of CPF OA which is not reflected in the predictions. I can't really say the dividends are really generating wonderful amounts but there is some form of capital appreciation as some of this were bought during the market crash during our first year into the pandemic. All these numbers are making my head swim.

Meanwhile, the situation at home is not good. The old parents health are not doing well. They don't have much savings left due to their bad planning and they don't have much medical insurance coverage. The burden will be upon us. They had the money but didn't save and invest well. Now the headache is upon us. I'm determined to top up my CPF again every year but if my parents medical bills suck up my savings, my plans will be derailed. I can only pray for a better job with better pay.

I read horrible news of how scammers also cheated so many people by sending them fake links to banking sites that look like the actual bank. I would like to emphasize never never click on anything from any email, sms and watsapp and wherever.  It's scary and terrible. 

Some notes on RSTU CPF

I have wonderful news! Well, at least to me. I've just done a top up of my special account. Hooray! This is the first time that I am topping up at so early in the year. I usually wait till it's the end of the year. I've read that topping up at the beginning of the year allows you to earn more interest for your account and since I am way behind in achieving the Full Retirement Sum (FRS), people like me should try to top up as earlier in the year as possible. There are folks who even did it exactly on the 1st January 2022. 

The top up was so fast and the amount was immediately shown in the app. I used the CPF app to do this top up with paynow. Once the transaction was done, the balance was done immediately!

Although I do feel a pinch in my savings account for doing this, I'm doing this for the better future old age. According to the app, there is a term that says "Part of this account has been reserved." I googled to find out what is that. It simply means that whatever you top up, cannot be withdrawn after 55. This money will be used as part of your CPF Life. Now I understand why there are advocates who are earnestly topping up their SAs before retirement. If you can hit the FRS at a faster rate, the balance will be available for your withdrawal after 55, assuming that you do not want to go for the ERS. But my advice is if you are still going to continue working after 55, leave your money in there to continue earning the 4% of interest. There is no bank deposit out there that can offer you a higher interest rate. So if you top up towards your CPF Life account and hit the FRS, you can treat the SA as a savings account that can earn a higher interest rate. 

It is also better to target for the ERS limit after 55 if you want a better retirement income plan. Whenever I look at the mistake my parents made with their retirement funds, I am motivated to work towards achieving the ERS.  For those of you who come from a comfortable life, you may not feel what I'm going through. Because of my parents mistakes, the burden of taking care of their retirement is on me and my sibling. 

Never ever assume that you will die before you can see your CPF money. Never have this strange believe that the government will take your money or force you to work till you die. I read so many funny comments online. Anyway, I shall save that for another time. Till the next blog.