You could argue that retirees are unlikely to bother with rising education costs, given that their children (if any) are unlikely to be of school-going age. So, what do retirees spend on and what does their typical budget look like? This will depend on how basic necessities are defined and the type of lifestyle they wish to achieve in their golden years.
A study conducted by the Lee Kuan Yew School of Public Policy shed some light on this topic. They identified the amount of income and the list of things needed for a minimum standard of living (by society’s standards). From this, you can then come up with the base income required to achieve that quality of life.
The 2021 study showed that for people aged 65 and older, a couple would need S$2,419 a month, while a single person would need at least S$1,421. The top three expenses would comprise of food (29.2 per cent), recreation and culture (19.7 per cent), and housing and utilities (18.4 per cent).
The long-term inflation rates of those categories are 2.6 per cent per annum, 1.2 per cent per annum, and 2.2 per cent per annum. So as a general guide, one should factor in these price increases when planning their future budget.
KEEPING UP WITH INFLATION: A LOOK AT VARIOUS ASSETS
The latest Singapore household sector balance sheet shows how an average household’s wealth is spread. Unsurprisingly, property formed the largest chunk (43.9 per cent) by virtue of property being one of the largest purchases by Singaporeans. The next two biggest holdings are deposits and CPF (19.8 per cent and 18.8 per cent. Shares and securities form the smallest allocation at 8.4 per cent.
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