Jan 30, 2010
Housing prices: Worry over impact on retirement savings
WITH prices of new three- and four-room flats reaching between $250,000 and $330,000 in some areas, I wonder how much a buyer will have in his CPF retirement account after paying for the flat in 20 to 30 years.
I took a loan of $80,000 some 20 years back and the interest came up to $70,000 when I had finished paying for my flat.
The Government should look into this or Singapore may end up with many retirees with little in their CPF account, assuming an average household income of $3,000 to $4,000. Since HDB flat buyers may use 30 per cent of household income, they may be able to service their loans, but little is left for retirement. Besides, along the way, husband or wife may lose their jobs.
Buyers are allowed to take up to a 30-year loan. By then, their earning power may also diminish when they reach 60, assuming they bought their flat in the early 30s.
Since there are many in this income bracket, I hope some financial experts will be able give their take on this important issue or Singapore may end up with many retirees with little to live on. Many buyers are not aware of the final price of their flat, including the interest over 30 years.
Kang Choon Tian
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