Updated May 24, 2023
Adequate funds, adequate activities, or adequate social connectivity? Maybe all three and more.
“Moving to ensure retirement adequacy”, the Straits Times editorial (August 20, 2021), caught my attention as I flipped through the pages. Two days previously, I spent more than just a few moments reflecting the implications of yet another ST article, “Parents must plan early for retirement”. Are we adequately prepared for retirement?
The editorial focused on a pilot project (DBS Bank and Central Provident Fund) to monetize home equity in Singapore. The editorial reported that homeowners, on average, hold about 60% of their net wealth in housing equity. The challenge is how to unlock this wealth for retirement. Asset-rich but cash-poor is certainly not a situation to look forward to in our golden years. But is it all that is to it in “retirement adequacy”?
Perhaps Maslow’s hierarchy of needs could provide us with a more holistic view of retirement adequacy. There are controversies related to the stratification of these needs or the absence of further requirements, such as spiritual needs. However, for this discussion, Maslow’s model is adequate.
Physiological needs refer to food, water, warmth, and shelter. The next level is safety needs (personal safety, job security). Both these levels are considered basic needs for existence. Financial security takes care of these fundamental needs.
What about the higher levels in the hierarchy? Social needs are also essential. They refer to intimate relationships, friendships, and a sense of belonging to groups. Esteem needs (prestige, self-respect, dignity, accomplishment) come next. Both social and esteem needs to satisfy our psychological rather than physical needs. Lastly, at the top of the hierarchy, we have the desire for self-actualization, the need for the realisation of one’s growth potential, creativity, and self-fulfilment.
Important as they are, we should move beyond focusing on basic needs. After all, Singapore’s average per capita GDP is in the top 10 ranking in the world. Hence, retirement adequacy should highlight both financial and non-financial preparations. Retirement may seem, to many, a long way off, but when the time comes, we should prepare for a smooth transition to the last phase of our lives. So, how do we prepare ourselves for our higher needs?
Most companies view retirement planning as a personal responsibility, whereas management provides little guidance. When corporations embody good corporate citizenship by supporting their employees during the transition phase, will the day come? Until then, we have to take ownership of our retirement. This requires learning, just as we did before starting our working lives. Aristotle once said, “Education is the best provision for old age.” We need to invest in new interests and meaningful relationships to create a pleasant journey in the closing chapters of our lives. Like any sound investment, we can look forward to satisfying returns over time.
For a start, visit C3A. They may provide you with exciting possibilities for living a full life.
Vince
Dr Vincent Chong is a retired Professor of Radiology at Yong Loo Lin School of Medicine, National University of Singapore.
