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Retiring comfortably with a HDB flat.

Wednesday, July 30, 2014

A recent comment by a reader with a predicament led me to searching the internet for possible solutions. 

While unsuccessful, I came across an info-graphic by HDB which I find very good. 

So, I am sharing it here:

"If I sink my money into my flat, how will I be able to retire comfortably?"

Source: HDB Speaks.

I also wish to say that if we do the right things, we could possibly retire a millionaire without ever having to monetise our HDB flat. See:

1. Retiring a millionaire is not a dream.
2. What is $1 million at retirement?
3. $1 million in retirement funds.

If we want something badly enough, we will work towards it. If we are determined, our chances of success will be higher. Believe it.

Other related posts:
1. Housing and the CPF.
2. Buying an apartment: Considerations.
3. POSB HDB Loan: Peace of mind.
4. Balancing returns, risks, facts and fallacies.
5. Retiring before 60 is not a dream.


pf said...

See!! Govt tell ppl to monetize flat for retirement!!! Thats what I'm talking abt.

That's why i believe they will tweak supply/demand, cooling measures or heating make sure hdb flat prices stays supported. For ppl to use it as monetizing tool. Especially since many could not meet cpf min sum.

The message is clear if u read news. On ppl's protest for govt to have quick actions to bring down hdb prices, the defense against letting hdb prices crash is that many ppl dependent on hdb flat to monetize for old age.

Which is the reason why my future flat has got to hv an investment angle although its primary for my own stay.

AK71 said...

Hi pf,

You are a savvy one, that's for sure. LOL. ;p

Well, if we believe that property prices will go up in the long run, then, if we have the holding power, we cannot go very wrong buying a piece of real estate in Singapore.

The fear is always in over-consuming or over-leveraging and some people will fall into this hole, unfortunately.

In the short run, I believe that prices will still come down since that's the promise the government has made to the people, to make homes more affordable after prices shot through the roof in recent years.

I believe in thinking of our homes as investments too. I think it is the prudent thing to do. :)

See: Think like an investor.

pf said...

Ok lah. I want to buy a flat that i would be happy staying there for long time if i can't afford to change flats. But if my first loan, i choose a higher valued area as compared to a lower valued area. ..shld be ok lah. If i stayed at cheap and small place, cannot downgrade further to monetize flat.

I'm turning 35 next yr. Need to capitalize on youth, clean credit, no other loans, etc, u know....banks may not be so willing to lend if i am in my 40s or 50s. But overall i need to balance my liquidity over the mid to long term as well.

So, absolutely no plans to upgrade. (Imagine having to spend on renovation again!) Only downgrade possible.

Think quite hard for ppl to over consume nowadays with the MSR of 30% of income cap and based on regulatory interest computation rate of 3.5%. Coz cannot get the loan.

If got ppl over consume, too bad lor. Cannot retire, work in Mcdonalds or drive taxi.

AK71 said...

Hi pf,

Sounds like you have it all thought out. :)

Yes, it should be harder for people to over-consume on housing these days with all the cooling measures in place to prevent people from relying too much on borrowings. Having seen a few cases where I believe the buyers have overstretched their finances, I only wish that the measures were put in place earlier. :(

pf said...

Nvm lah. We cannot 100% wipe out all risks wan. Face some setback in life also good. Reality check. Wake up call.

If we keep relying on govt to think, to protect, then how do ppl learn? Some ppl just nv see coffin, won't cry wan.

AK71 said...

Hi pf,

Sigh. When some of these people are people I know, I cry for them. It is painful to watch. -.-"

KC said...

It is interesting to note that for the second infographic, HDB lead in first with Choosing the Right Sized Flat for the family. This is not always the case. Should a married couple decide not to have a child and opine that a 3 room flat is the right size for them, more often than not, they are 'priced out' by HDB's policy. Should they earn above $5,600 combined, these couples are not allowed to buy BTO 3 rooms in non mature estates like Punggol. They can only buy 3 room flats in mature estates like the recent Toa Payoh BTO exercise. This brings me to the second point. Such 3 room BTO flats in mature estates are priced very much higher than non mature estates. So how HDB? Right size, but high price. In this day and age, a combined salary of $5,600 by a couple is not tough to achieve.

KC said...

Correction: Income not more than $5,000

AK71 said...

Hi E H,

The bit you are referring to are the options available for retirement.

So, when it says right size, it is referring to "right sizing" or "down sizing", monetising the bigger flat and moving to a smaller one because an empty nest doesn't have to be a big one. :)

KC said...

So why wait till old then right size for retirement? Might as well right size from the start.

AK71 said...

Hi E H,

pf will tell you that it is about having options. pf is going to get a bigger flat because there are more monetisation options in future. ;)

It all boils down to our personal beliefs and strategies, I would say. This blog post shows us some options which are available. :)

KC said...

Then the current policies are not reflective of various needs and flexible enough to meet them.

AK71 said...

Hi E H,

I am sure that there is always room for improvement.

Would you like to write a piece on your views and suggestions? I would be quite happy to publish it as a guest blog as long as it doesn't defame anyone in the process. ;p

KC said...

Haha. I am rather bad at words. When I get to it, I will let you know. Anyway, the rooms for improvements are getting lesser and smaller. Thus possibly the current discontentment amongst citizens.

AK71 said...

Hi E H,

If there is lesser room for improvement, it means we are doing better now. ;)

OK, I think I know what you mean. Haha. ;p

pf said...

EH, hdb flats is just about the only social welfare that a Singaporean would have.

Few years ago (think last election), median income was $2.7k. That means that there are people who are earning below that amount. Social welfare has to consider those people.

I do complain about govt not allowing singles like me to buy BTO flats. Once they allow, i do complain that only allow 2 room, why not bigger....why income ceiling set at 5k?

But i do understand that those singles earning below 5k needs more help than those who earns above.

For the lack of a better quotation:
"When you harvest the grapes in your vineyard, do not go over the vines again. Leave what remains for the foreigner, the fatherless and the widow." Deuteronomy 24:21

If we have sufficient, leave something for those who are in need more than us.

pf said...

Sorry...just a slight correction. The quotation is what i believe in and what i know....perhaps i shld say...for the lack of an equivalent quote that i know.

Lol. :)

AK71 said...

Hi pf,

Here is my contribution:

"Who am I to take food from the mouths of starving rabbits?" Rumpole of the Bailey.

He said this when asked why wasn't he eating any greens. Leave the greens to those who need them more. ;p

I read every single one of John Mortimer's books about this rotund English lawyer. :)

pf said...

Did his doc says he doesn't need veges? Whahhaha

E said...

Dear AK can talk to urself pls (I cannot seem to post from your blog)

BTO vs Resale, understand that BTO is better & more wise to get..
But cons part is need to wait, shall i continue to wait till we get a desire flat or keep applying till we get a flat (even though we dislike the location), because both of us not driving thus want to get a flat close to MRT.

Or we shall go resale?

& if base on the resale age mention above blog post, say our youngest age is 30, we wanna sell in 25 yrs time , we need get those just MOP but say those BTO that just MOP near MRT in buangkok/sengkang, they are selling at about 100k above bto price..

Many thanks.

AK71 said...

Hi E,

Maybe, you will find my reply to this reader useful:

Resale flat in Sengkang or BTO flat in Bidadari?

Good luck with the house hunt. :)

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