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Mentally and financially prepared for retrenchment.

Friday, December 16, 2016


This is part of an email a reader wrote to me after reading an updated blog post. (They invested in multiple properties and are now retrenched.)



Reader:
"Their experience is getting more common. I am in my late 50s and I see many friends and relatives in my age group being asked to go. I am sure it will be my turn soon as the company has not been doing well.
"I have been reading your blog since 2010. I have invested in the REITs you suggested, including Saizen. I am not rich like you but I think I can cope if I lose my job today. I found out that many won't be able to cope. CPF and some savings cannot be enough.

"In a way, your blog saved me and I told my sons that they should learn from you too. Their future can be so much brighter than mine because they can start early."





Sometimes, when readers in their 50s or 60s ask me what should they do to be like me, I find it hard to give them an encouraging answer. This is because what I have achieved today took me almost 20 years. So, you can imagine how happy I felt reading the above email.

As long as we still enjoy a meaningful and regular earned income, we probably could and should make an effort to invest to have another stream of income, passive income. Age shouldn't matter.


When we are in our 50s and 60s, if still employed, we are in our final years of employment. If we want to have a chance at getting rich quick, put aside, maybe, $50 each month and buy BIG SWEEP or TOTO. 

Think again before signing up for some courses or schemes with get rich quick promises. If it sounds too good to be true, it might just be.

Also,

Think again before buying some life insurance or complicated financial product. Don't buy just because they are giving you some freebies.




What should we be doing?

Click on the suggestions below for some ideas:

1. Make good use of our CPF account.


2. Take part in CPF Life for lifelong income.

3. Invest in bona fide income producing assets and think of monetising our home.

Notice I put investment last in the list. This is because the CPF is a risk free and volatility free option.

Investments are rarely risk free and definitely not volatility free.

If you are in your 50s or 60s and if this is the first time you are reading my blog, remember, no one cares more about your money than you do. 

In your golden years, you should enjoy life a bit more if you can afford it but don't do anything stupid with money.

At your age, you cannot afford to make big mistakes with money.

What would be considered stupid and big mistakes?

Anything that might force you back into the workforce if it should go wrong even if you must become a cleaner making $1,300 a month.







Always ask yourself what is, realistically, the worst case scenario and if it should manifest itself, would you be able carry on with your life as usual.

Then, you would know what to do.

There are many examples of seniors who are foolish although they say wisdom should come with age.

Our golden years should be financially secure. Don't be foolish and you can make it so even in the face of retrenchment.

Related posts:
1. How many 20 years and $29K do we have?

2. Withdrawn CPF money in excess of MS.
3. Financial strategy for the elderly with spare $.

12 comments:

Singapore Man of Leisure said...

AK,

Setting aside $50 per month for Toto and Big Sweep can do less damage than whole life never invest, but in your 50s or 60s all of sudden become super interested in investing and go all-in!

Especially when you have not built up your own decades worth of investing battle scars...


It never bodes well when I see people with 50 to 60 years of life experiences still "believe" others are interested to help them get rich...

So used to letting others tell them what to do they have forgotten to pick up wisdom along the way...




AK71 said...

Hi SMOL,

Wisdom comes with age. This is something I never really agree with. ;p

I am glad you also think that a gambling budget of $50 per month is not too damaging. I am not averse to a bit of gambling in life and I made this clear very early in my blogging days: Is gambling a bad thing?

Bad AK! Bad AK!

OK, time to apply some scar removal cream. Ouch.

AK71 said...

Analysts have slashed their growth forecast for Singapore’s economy for 2016 to 1.4 per cent from 1.8 per cent - the third time this year they have cut their forecast, according to a quarterly survey released by the Monetary Authority of Singapore (MAS) on Wednesday (Dec 14).

While in line with the Government's forecast of 1 per cent to 1.5 per cent growth, it would be Singapore's weakest annual growth since 2009.

Source:
http://www.channelnewsasia.com/news/singapore/analysts-slash-singapore-growth-forecast-in-2016-to-1-4-mas/3366076.html

simplyme said...

Wisdom is neither gained with age nor education. It is gained through experience. The probability of having more meaningful experiences wld increase with age but it's not guaranteed. Some people live their lives in a cocoon/bubble only to see it pop when the cost of it happening is highest. But fear not, our government will happily pump in more social spending (and cut unimportant areas like research, education, defence, etc). You worry? I worry too.

AK71 said...

Hi simplyme,

I like the idea of Workfare. It is along the same line as the CPF. Individual responsibility first and the government rewards us for our effort.

I hope I do not live to see the day Singapore goes the way of a Welfare state.

simplyme said...

Workfare is definitely work-ethics driven. There are those that are definitely with the sole intention of giving out free money to the "masses" though. I really dislike that the budget catered to it can only grow (and ditto to the populace's dependence/expectations of monetary handouts). I do even those programs geared towards the "unfortunate older cohorts" (i.e. Silver support) will not become the norm. In short, the government should not tax the responsible segments of citizens who take lots of pains to plan for their financial future to subsidise those who refuse to plan and spend freely. I find it doubly worrying that the self-employed have free will over CPF contributions. With the numbers of self-employed increasing (think Uber, Grab and other similar modeled freelancers), I fear the CPF will fail to serve its true purpose in the future economy.

AK71 said...

Hi simplyme,

The only constant in life is change.

We can only hope that the leaders we have elected to govern the country will continue to do the right thing. -.-"

AK71 said...

If we are prepared, we need not fear the big bad letter "R".

"About 120 employees from Toyota agent Borneo Motors and Suzuki agent Champion Motors will be retrenched in the coming weeks, in one of the largest downsizing exercises to hit the local motor industry. Their parent company, vehicle distribution giant Inchcape, is restructuring its operations here. The cohort represents 12 per cent to 14 per cent of Inchcape's headcount in Singapore. The latest retrenchments come amid a gloomy economic outlook."

Source: The Straits Times.

AK71 said...

Economic restructuring and slower growth took a toll on the labour market last year, which saw the highest number of layoffs since the global financial crisis in 2009.

A total of 19,000 people were retrenched or had their contracts aborted last year, up from 15,580 the year before.

Retrenchments alone hit 16,600, according to preliminary full-year data released yesterday by the Ministry of Manpower (MOM).

Source:
http://www.straitstimes.com/singapore/manpower/layoffs-hit-7-year-high-as-restructuring-takes-its-toll

AK71 said...

"It will never happen to me."

It just might.

To have complete peace of mind, be prepared.

AK71 said...

Deutsche Bank plans to cut as much as 17 percent of its equities staff and 6 percent of its fixed-income staff around the world, the Wall Street Journal reported on Friday, citing people familiar with the matter.

The paper said notices were to be sent to many employees next week. It cited one source as saying the cuts were part of Deutsche Bank's previously announced plans to cut 9,000 staff.
- Reuters

AK71 said...

Mr Chua said...
Coincidentally, I was on the phone with my brother in law and he said my sister (perhaps too emotionally shaken to talk to me) was taking a pay that resembles 20 years ago. She is near 50 years old , had an ITE cert and escaped restructuring, retrenchment 3x. The last time was hard and she didn't manage to escape. I agree totally with AK's way of cutting down on expenses and keeping the "boat afloat" to maintain our sanity.

As a father of 2, I can't help but think that it is extremely important to start savings and investing early. Would AK be coming out to teach something basic for all parents? I think our MOE curriculum sorely lacks that and judging from the commercial markets of "gurus' touting their financial freedom software and what's not, those who are caught in the undesirable position of $ not enough are rushing and queuing up to attend previews after previews.

AK - greater ability comes with greater responsibility - maybe is time to put on the suit again, huh?

--------------------

AK said...
My aunt also escaped restructuring a few times and finally was retrenched last year. She is in her 50s.

It is important to be financially savvy in our world today and I think this is sinking in for more and more people, one way or another. Hopefully, more will realize this through less painful ways.

I am quite happy to share my own story here but I don't want to join the pool of gurus out there. Those who read my blog will, hopefully, find it useful in attaining financial security and, eventually, financial freedom. :)

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