Singapore's economic policies are complicated and often misdirecting. I'll break down the misconceptions.
The primary purpose of CPF is not a pension scheme. It is structured as a massive forced bond purchase scheme by citizens. Financially what happens is the 37% of citizen income buys a long term bond (till retirement age, on average decades) at rock bottom interest rates (it's pegged to the overnight rate or a minimum of 2.6%). The returns are specifically decoupled from the real long term returns. This has historical roots in the government needing vast capital financing. They make enormous amounts of the delta between the short term interest rate and long term capital gains. Singapore has no oil or natural resources, but it's sovereign wealth fund has AUM in the regions of countries like Norway which do for this reason. It is not a shock absorber like the article suggests. The withdrawal terms are strict - housing, a significant medical expense and retirement are the only real ways to get money out of it.
"Trying to keep people employed" is a goal, not a policy. In fact the Singapore government maintains a large worker supply through immigration. The foreign worker population, ~30%. The main goal of the government is to maximize the absolute number of people working.
The reason it raising the retirement age is effective in workforce participation is because most people have no choice. Retirement only pays out after the age. The working life of an average Singaporean has seen 37% gone to CPF, maybe another 10% to income taxes, another 5% to GST, road tax, property tax, etc. After all this there's the astronomical cost of living. This is also intentional, to raise the number of employees.
Like Dubai, many of the migrant workers are ineligible for post retirement life in Singapore and so despite any mandatory savings will not represent any kind of burden on the state compared to delivery of health and housing and care costs.
So they are functionally productive and net positive to any scheme about post work funding for the community.
This is being entirely disingenuous and is completely different to what goes on in Dubai.
I have lived there and can rattle off plenty of criticisms about the country but complaining about migrant workers who clamour to work in SG is not one of them.
The vast majority of Singapore migrant workforce are Malaysian citizens who live over the border in JB, you can rent a 2 bed apartment there for $300 a month and eat out in a restaurant for $2 while commuting each day to a developed country and earn those level of wages.
To pretend these people have a rough deal compared to back home is absurd and I'd challenge anyone to actually talk to them first before getting on your high horse. Ask them if they would prefer to work in their home country.
The CPF sounds pretty clever. It covers a major individual cost and need (retirement, medical, housing) instead of just throwing it into a tax. It makes the government money. This sounds like a win win kind of policy.
To me it sounds like a tax structured in a strange way so it doesn't obviously read as a tax.
It's essentially a forced loan to the government at subpar rates. The "tax" is the delta between what the government pays out for the bonds vs what a bond of equivalent risk in the free market would have paid.
The magnitude of the investment also probably makes it impractical for anyone but the very wealthy to retire before that starts paying out. Most other countries have lower rates on their retirement schemes, which makes it feasible for more people to live on their savings for a few years before the government retirement scheme kicks in. E.g. in the US it's pretty feasible for the upper middle/lower upper classes to retire a few years before Social Security kicks in, especially if they're willing to live frugally.
It’s not a win win policy. The citizens lose massive amount of their money to government on the bond yield delta. It preys on people not knowing the effect of long term compound interest.
Edit: in fact interest delta is how banks make their huge profits except the government here does it by force.
In times of economic distress the government lowers the employer contribution part of CPF. That effectively gives everyone a wage cut to help employment, but without people complaining too much about it. The government is disciplined enough to raise the rate again later.
> instead of just throwing it into a tax. It makes the government money
It is a tax, but with extra steps.
The reason it makes the government money is because they’re collecting the extra interest that citizens would have earned if they were free to invest it on their own.
> It covers a major individual cost and need (retirement, medical, housing) instead of just throwing it into a tax.
Forced saving makes it a tax. It's essentially no different than payroll taxes in the U.S. that fund Social Security. Buying government bonds is still marginally better accounting than a complete Ponzi scam like Social Security in the U.S., but even that ultimately amounts to the same thing - the government is paying itself, so it's a wash.
> Singapore's economic policies are complicated and often misdirecting. [...] it's sovereign wealth
Tangentially, I've had a similar gripe around how some US folks discuss Singapore's similar old-rival Hong Kong. They'll advocate "Hong Kong shows policy X works, we should do X here too", while ignoring the other half of the system required to make it work, policies the same advocates would never want to adopt.
In particular, celebrating HK's "tax freedom" while glossing over how the government does fund expenditures. It's the ultimate landlord, deliberately constraining supply (with high subsidies to the poor to prevent revolt), and draws from its huge [0] sovereign-wealth fund.
[0] Huge by any US standards, even if far smaller than Singapore or Norway. To put the per-capita amounts in context, if the US is 1x, then HK=80x, Singapore=356x, Norway=379x.
> The primary purpose of CPF is not a pension scheme. It is structured as a massive forced bond purchase scheme by citizens. Financially what happens is the 37% of citizen income buys a long term bond (till retirement age, on average decades) at rock bottom interest rates (it's pegged to the overnight rate or a minimum of 2.6%).
Social Security is effectively the same thing. Payroll taxes are collected and placed in the social security trust fund, which invests them in federal bonds.
Payroll taxes actually pay for current Social Security benefits, the trust fund was tacked on with separate government funding in order to make it a bit less of a complete Ponzi scheme.
I had the privilege of getting a working gig in Singapore for a small AI startup: such a well run country! There is a sense of community for helping by employing people who need jobs, the police were friendly and I felt very safe there (I like to take long walks either early in the morning or late at night and I felt very secure.)
Amazing what the people and government have achieved since the end of WW2. 100% respect for them.
A side comment: I enjoy listening to English language news from many countries around the world to get different viewpoints. News media from Singapore is very interesting, indeed!
I spent years in Singapore and loved it there. Never had to face road rage (which so many of us experience daily several times driving in Texas! NextDoor is full of these stories) or aggressive behavior by anyone in authority including police and immigration officers. I know many people find Singapore boring after a while but it didn't bother me much. On the flip side, the cost of living is high as a foreigner and traveling to the US is very tiring due to the long distance.
Singapore is an effective slave/permanent underclass state with few personal freedoms that is ethnically and culturally homogeneous (in each class). Not trying to do a "who's the bad/good country" but nothing about it really applies to the US or should.
Listening to political speeches from Singapore are so refreshing compared to the juvenile garbage that we have to endure in the US from US politicians.
That’s true across much of the world. It’s also true past vs present. Listen to US politicians even as recently as the 1980s vs now. Our political class today is justifiably a pathetic laughing stock.
I worked with a guy from sg. He gave me tips for when I went to visit. He hooked me up with a family member that showed me the backend a bit.
The country effectively runs on a slave class. You must drive a new vehicle under 5 years old, and the license just to buy a car was $90,000 or so. This means an entire class of people that will be taking the bus to do your laundry and clean your house for the rest of their lives and likely their kids lives.
The guy took me around to construction sites. The Indonesian and Malaysian workers were some of the most brave or stupid workers I’ve ever seen. I saw a guy install a window in a three story building by effectively free climbing from the outside half a flight up starting on the third floor, from the outside of the building. No harness, no ropes, just him out there hanging and pushing against a nook with his work boots. The SG contractor had helmet, hi-vis, steel toed, carhart, radio, clipboards etc.
Singapore is an amazing place. It’s like, a rorschach test kind of. Like everyone sees something different there.
I noticed things that trip. However… I was able to enjoy the botanical gardens and Marina Bay Sands rooftop like the other tourists… fond memories, but they have a backdrop that reality is only thinly hidden there.
I agree with you that the migrant workers are effectively a serf class. However, I think it's fine that the SG government severely discourages owning a car. It's a small island with lots of people, there would be gridlock if everyone wanted their own car. The public transportation system is amazing and works well.
"Indonesian and Malaysian workers". Sounds like you never actually visited construction sites. Most of the workers ive come accross are from Bangladesh, India and China. Malaysian and indonesian immigrants tend to be better off than them.
With the MRT not having a car is not bad. Paying 100K SGD for a Certificate of Entitlement (10 year car registration) is definitely a rich person move. Good point on the underclass and labor conditions.
The country's progress and management is extremely good, however it's enabled mostly by exploitation of migrant workers and various kind of white collar crimes (ie, facilitating business for illegal or sanctionned entities - cf Nvidia chips for China for example)
A confounding factor here is that savings behavior is cultural rooted: https://pmc.ncbi.nlm.nih.gov/articles/PMC6135367/. Studies show that people within a country can have substantially different savings behaviors, robustly correlated with their origin countries, even among people who are third generation immigrants. It’s a mistake to treat either the U.S. or Singapore as homogenous populations for purposes of this analysis.
European languages have a future tense, which means people have different ideas of themselves in the present and future. You can even hear this in phrases like "that's a problem for future me."
While Chinese lacks the European styled future tense, ignoring time phrases, auxiliary verbs, etc. So people more clearly conceptualize their present and future selves as the same. Leading to things like increased saving.
This of course is rooted in linguist psychology, a very soft science. But still an interesting idea.
75% of Singaporeans are ethnically Chinese so based on what you are saying it would be worth comparing SG Chinese to Chinese CN on regret since China has a much less robust safety net.
You know who they didn't interview: those who regret saving so much. Many of those people are dead and so the regret is something we can only apply on assumption that they would. I've known a few people who unexpectedly died before they hit retirement age. I've know a few people who retired and died suddenly. The vast majority of people in a "first world" country have an expected lifespan of about 80 - but there is a statistical curve and people start dieing in significant numbers at 65, while you are not an outlier until you make it to near 100 (though some exist).
You need to have some emergency savings. You should save for retirement somehow. If you can structure the above as insurance - and you can trust the insurance - (I know a few cases where the insurance type system went bankrupt and those with a "policy got nothing") that is best.
Once the above is taken care of though, you can't take it with you (at least in most religions) so spend it. Save enough, but not too much.
People who save a lot are typically people comforted by sitting on a big nest egg. Saving a lot for retirement and then dying the day before retirement isn’t necessarily going to be a source of regret, because they had 30 years of warm fuzzy feelings about eventually hatching their nest egg. They could have spent it all instead, and had a life full of anxiety.
You’re looking for people who didn’t want to save but begrudgingly saved at the expense of their pre-retirement life and then died before they could enjoy retirement. That’s a much smaller group.
I'm not sure. There is a warm fuzzy from knowing you are okay if things go bad of course, but how many of those who saved for the feeling would have saved less - they still would want a good amount saved for things going wrong of course but not that much.
This is more fleshed out in the book "Die with Zero" which may be a bit too extreme.
But in general you have three things to spend in your life: time, money, and effort.
You don't want to spend all your time saving money because you'll run out of time eventually, but you also don't want to spend all your money saving time because you'll run out of money.
It's all about balance and thoughtfully understanding what you actually want and how to get it.
> you can't take it with you (at least in most religions) so spend it.
I don't understand this PoV at all.
I can't take it with me, sure, but I'm happy anyway if I leave it behind to my kids.
This PoV that you need to spend, spend, spend to get the most value for your money is very primitive - my kids will do better if I die before touching my nest egg, and if I don't at least I'll have a longer runway to live without working.
There is no downside here, other than the artificial one that dictates you spend it all and leave nothing behind.
The people who are against saving are also the people who want you to spend all your money on their product. It’s just the capitalist wanting more meat for the grinder.
You just get taken in by life though, it isn't even about saving for some idealized retirement to me. As you age and your parents get old and you have kids and a spouse you just live less and less for yourself. You have to adopt a mental state where you feel gratification in sacrificing for others, if you constantly regret the things you can't do because people depend on you, you will drive yourself nuts. That sort of "I am a reliable provider and helper" mentality lends itself to obsessively building up a "safety net" because you can feel good about how stable and safe you make your loved ones.
> Once the above is taken care of though, you can't take it with you (at least in most religions) so spend it. Save enough, but not too much.
I get it to a certain extent, don't live in poverty if you don't have too, but I am a major saver. I rarely buy new things if an old thing is working fine. If I die early at least my family will will be set.
Really the social safety nets in the US are basically non-existent so having a big savings buffer makes me feel a bit safer. Honestly dying early doesn't worry me too much, I'll be dead so doesn't bother me. What does worry me is the economy tanks and all my saving become worthless. Then I would have some regrets...
Indeed. In fact, I would go further and say than, more than saving money, one should make preparations for a dignified passing should one's time come early. Living happy, dying before a gruesome disease completely erases that treasure. And, if destiny has it that one gets old enough, and one does so with little more than a camping tent, leaving this world because the night was too cold and one succumbed to hypothermia beats what most people get at the end.
Forced savings like done in Quebec, Canada is likely the best model for most people even though I dont like it as an individual that knows how to manage its portfolio. It also has the benefit of creating a sovereign wealth fund that can invest locally and be an economic driver but independent from the government.
I actually like the forced saving of Québec. I also have a defined benefit pension plan, a TFSA and RRSP but I am happy to be forced to contribute the RRQ for the general welfare of the province even though I know how manage my portfolio.
Considering that they also have to consider economic development in their investment decisions, the RRQ funds are well managed by the CDPQ.
People who score well on probability numeracy are likely better educated and better paid and have more in automatic savings plans. So if someone is maxing out their 401k they don’t feel they need to save more.
The article shows that in the US there is a 25 point gap between high and low income on savings regret, and a 14 point gap between high and low numeracy scores.
In Singapore where savings are more automatic numeracy is a more powerful predictor.
"Saving regret" ought to also refer to when you have saved too much. The shocks in that case would be things like "inflation ate away all my savings before I got to use them" or "the government confiscated my savings via wealth taxes" or just generally "the government made me spend 37% of my income on saving when I wanted to use it to raise kids."
> "the government made me spend 37% of my income on saving when I wanted to use it to raise kids."
This is a particularly funny one tbh. A nation's kids _are_ the retirement plan. It doesn't matter how many numbers you put in spreadsheets dated for 20-40 years into the future, if in said future, there isn't actually anyone to accept those numbers in exchange for labor.
Raising kids in a society where people hate their community and don't want to contribute through things like taxes generally isn't a society that is good for kids and their development.
This article seem to be confounding external impact with internal motivation.
Yes the jobloss impact caused the people to be unable to save and in turn they wished they have saved more.. but ignored is whether they could to begin with.
Of course external impact had little to do with internal procrastination.
Maybe I read the article too fast but I didn’t get that takeaway at all?
It’s basically just saying that the uninsured catastrophic event risk in America magnifies shock events.
E.g., if you have a major hospital visit in America you’re way more likely to regret not saving enough, but in Singapore there’s basically no effect since hospital stays don’t drain your savings account.
Singapore has a regressive shock absorber model where something like half the country are immigrants that are ineligible for, say, public housing which even the better off citizens take advantage of in Singapore (maybe even disproportionately so since there can be a long wait to get in, you are older and more settled at that point). Immigrants that get milked dry and go broke and jobless during a shock are booted from the country before they can be polled.
------ re: below due to throttling -------------
Vs say US, where immigrants and those funding public housing are generally better off than the people getting subsidized housing. Public housing is more a progressive than regressive tax in the US, so quite dissimilar. Immigrants in US are on average far better off than those on public housing. Asking "but how is this any different" (after I already answered it, lol) over and over doesn't negate this, nor the fact that immigrants are like half of workers in Singapore vs only 10% in the US so the funding dynamic and dependency is far different.
>Singapore has a regressive shock absorber model where something like half the country are immigrants that are ineligible for, say, public housing which even the better off citizens take advantage of in Singapore
It's similar in Vienna where only native Viennese are immediately eligible for social housing, but outsiders will end up paying into the system without being eligible.
By definition, outsiders don't have to pay into the system since they already have a gov't somewhere else that is dedicated to them, just like the Viennese do.
The Singapore PR system is purposefully racist. If you are white, your probability of getting a PR and citizenship is way lower than someone of the Chinese race. The government does not want significant changes to the country’s racial composition.
How is that different from the US? Immigrants also get booted here if they lose their job. They also pay social security, Medicare, and other taxes but usually don't get the benefits unless they stay here for long enough and get a green card.
The difference is the number. Workers on temporary visas make up ~1% of the labor force in the US. And a large chunk of them will eventually get citizenship or permanent residency and qualify for benefits later in life.
Countries like Singapore and all of the Middle East meanwhile rely on a revolving door of cheap immigrant labor. In the extreme cases like Qatar 95% of the working population are on short term visas. Most of these countries don't have a pathway to citizenship at all for this worker class. You could live there, work and pay taxes for 10 or 20 or 50 years, but the day you "retire" you need to pack up and leave.
>They’re failing to save because the world is rough, and their institutions don’t do enough to help them weather it.
Well, America is rough. It turned on hardcore capitalism mode for itself because a significant portion of its population wants to try and solo socioeconomic hardships and hates any one who doesn't want the same challenge.
But not to just blame the voter, lots of money is spent for setting up systems to be amenable to acquiring more money. The very richest have correctly made a bet that uprisings to displace the wealthy and politicians just don't occur here these days, and therefore there is no real threat or need to change the way things have been going for the last 25 years or so.
Isn't it more a cultural issue though? As a European, I think many Americans take pride and love to succeed "on their own" and accept they could "die trying" (exaggerating a bit, hence the quotes, but the feeling holds).
Yes, the systems are amenable to acquiring more money, but I would claim that all that the richest need to do is to push the idea that "anyone can make it" - which was probably (more) true 50 years ago, but is probably an illusion today (some comments at: https://en.wikipedia.org/wiki/Socioeconomic_mobility_in_the_...).
Edit: I do not claim one model is better than the other; just that the culture influences the outcome more than other aspects.
Most Americans I know in my middling years are counting on the government to support them in their old age, quite the opposite that you’re exposed to via online manipulation hitpeices.
if by "culture" you mean rampant corporate propagandized media then yes. the US has historically been pretty close to europe over the last 100 years on many aspects. In the 70s there was legitimate debate about college being free. Now the debate is how much debt someone should take on. The overton window has shifted significantly since the 80s. We're now more like Russia with an entrenched oligarchy.
A large part of it is originally rooted in racism if you look how the US implemented its welfare state. Many benefits were skewed towards white americans (GI Bill, right to claim land, redlining and social security). I'm sure most Americans aren't nearly as racist right now as back then but the being 'on their own' is linked to the 'don't want 'lazy' african americans to get benefits'.
Yes, the US spends by far the most on healthcare per capita, and still gets the worst outcomes. It's not about throwing money at problems. You have to actually solve them (and want to solve them).
Social Security is a separate tax in a separate fund (invested in T-bonds). If you split that out of the budget, the budget looks even worse. The boomers retiring is just going to be bonds maturing without the holder (social security) reinvesting the money.
And yet that GINI keeps rising and cost of living outpaces inflation over the past 40 years in housing, healthcare, and education. If you are bottom quintile, maybe bottom 2, you are poorer now than 40 years ago on average. Recent policy changes seek to drop the third quintile as well.
The 'saving' vs. 'investing' debate here has a direct parallel in technical debt. Singapore’s model of high-efficiency reinvestment is like a well-refactored codebase—it allows for rapid pivots when a shock hits. America’s model feels more like a legacy system with massive technical debt; the 'savings' are there, but the friction of the existing infrastructure makes it nearly impossible to deploy them effectively during a crisis.
Singapore's economic policies are complicated and often misdirecting. I'll break down the misconceptions.
The primary purpose of CPF is not a pension scheme. It is structured as a massive forced bond purchase scheme by citizens. Financially what happens is the 37% of citizen income buys a long term bond (till retirement age, on average decades) at rock bottom interest rates (it's pegged to the overnight rate or a minimum of 2.6%). The returns are specifically decoupled from the real long term returns. This has historical roots in the government needing vast capital financing. They make enormous amounts of the delta between the short term interest rate and long term capital gains. Singapore has no oil or natural resources, but it's sovereign wealth fund has AUM in the regions of countries like Norway which do for this reason. It is not a shock absorber like the article suggests. The withdrawal terms are strict - housing, a significant medical expense and retirement are the only real ways to get money out of it.
"Trying to keep people employed" is a goal, not a policy. In fact the Singapore government maintains a large worker supply through immigration. The foreign worker population, ~30%. The main goal of the government is to maximize the absolute number of people working.
The reason it raising the retirement age is effective in workforce participation is because most people have no choice. Retirement only pays out after the age. The working life of an average Singaporean has seen 37% gone to CPF, maybe another 10% to income taxes, another 5% to GST, road tax, property tax, etc. After all this there's the astronomical cost of living. This is also intentional, to raise the number of employees.
Like Dubai, many of the migrant workers are ineligible for post retirement life in Singapore and so despite any mandatory savings will not represent any kind of burden on the state compared to delivery of health and housing and care costs.
So they are functionally productive and net positive to any scheme about post work funding for the community.
This is being entirely disingenuous and is completely different to what goes on in Dubai.
I have lived there and can rattle off plenty of criticisms about the country but complaining about migrant workers who clamour to work in SG is not one of them.
The vast majority of Singapore migrant workforce are Malaysian citizens who live over the border in JB, you can rent a 2 bed apartment there for $300 a month and eat out in a restaurant for $2 while commuting each day to a developed country and earn those level of wages.
To pretend these people have a rough deal compared to back home is absurd and I'd challenge anyone to actually talk to them first before getting on your high horse. Ask them if they would prefer to work in their home country.
7 replies →
> The main goal of the government is to maximize the absolute number of people working.
Why? What? You know, they have to win elections?
They recently tightened migrant worker visas quite a lot.
The CPF sounds pretty clever. It covers a major individual cost and need (retirement, medical, housing) instead of just throwing it into a tax. It makes the government money. This sounds like a win win kind of policy.
To me it sounds like a tax structured in a strange way so it doesn't obviously read as a tax.
It's essentially a forced loan to the government at subpar rates. The "tax" is the delta between what the government pays out for the bonds vs what a bond of equivalent risk in the free market would have paid.
The magnitude of the investment also probably makes it impractical for anyone but the very wealthy to retire before that starts paying out. Most other countries have lower rates on their retirement schemes, which makes it feasible for more people to live on their savings for a few years before the government retirement scheme kicks in. E.g. in the US it's pretty feasible for the upper middle/lower upper classes to retire a few years before Social Security kicks in, especially if they're willing to live frugally.
96 replies →
It’s not a win win policy. The citizens lose massive amount of their money to government on the bond yield delta. It preys on people not knowing the effect of long term compound interest.
Edit: in fact interest delta is how banks make their huge profits except the government here does it by force.
3 replies →
There's another clever bit:
In times of economic distress the government lowers the employer contribution part of CPF. That effectively gives everyone a wage cut to help employment, but without people complaining too much about it. The government is disciplined enough to raise the rate again later.
> instead of just throwing it into a tax. It makes the government money
It is a tax, but with extra steps.
The reason it makes the government money is because they’re collecting the extra interest that citizens would have earned if they were free to invest it on their own.
1 reply →
Why does the government get to decide when we retire?
63 replies →
It’s analogous to the US, where you put money into social security and then withdraw later.
The only question is whether the fund is running at a surplus or not.
The US has raided its fund to finance other government programs, and then will have to pay it back via tax revenues.
> It covers a major individual cost and need (retirement, medical, housing) instead of just throwing it into a tax.
Forced saving makes it a tax. It's essentially no different than payroll taxes in the U.S. that fund Social Security. Buying government bonds is still marginally better accounting than a complete Ponzi scam like Social Security in the U.S., but even that ultimately amounts to the same thing - the government is paying itself, so it's a wash.
2 replies →
Except for the part where citizens get low returns and are forced to work their whole lives accruing minimal benefit.
How is being a serf win win?
30 replies →
> After all this there's the astronomical cost of living. This is also intentional, to raise the number of employees.
how does that work?
> Singapore's economic policies are complicated and often misdirecting. [...] it's sovereign wealth
Tangentially, I've had a similar gripe around how some US folks discuss Singapore's similar old-rival Hong Kong. They'll advocate "Hong Kong shows policy X works, we should do X here too", while ignoring the other half of the system required to make it work, policies the same advocates would never want to adopt.
In particular, celebrating HK's "tax freedom" while glossing over how the government does fund expenditures. It's the ultimate landlord, deliberately constraining supply (with high subsidies to the poor to prevent revolt), and draws from its huge [0] sovereign-wealth fund.
[0] Huge by any US standards, even if far smaller than Singapore or Norway. To put the per-capita amounts in context, if the US is 1x, then HK=80x, Singapore=356x, Norway=379x.
I think it's also relevant that CPF is not only a pension schema but most importantly also a home ownership scheme via HDB OA https://www.cpf.gov.sg/member/home-ownership/using-your-cpf-...
You also get health insurance.
> It is structured as a massive forced bond purchase scheme by citizens
the UK effectively does the same thing with DB schemes forced to buy Gilts
DB schemes forced not to take long payment holidays when markets go up.
Offering a DB scheme however is an employer's choice, a choice most choose not to make today.
> The primary purpose of CPF is not a pension scheme. It is structured as a massive forced bond purchase scheme by citizens. Financially what happens is the 37% of citizen income buys a long term bond (till retirement age, on average decades) at rock bottom interest rates (it's pegged to the overnight rate or a minimum of 2.6%).
Social Security is effectively the same thing. Payroll taxes are collected and placed in the social security trust fund, which invests them in federal bonds.
The main difference is SS bonds are bought at market rates. CPF bonds are not.
Payroll taxes actually pay for current Social Security benefits, the trust fund was tacked on with separate government funding in order to make it a bit less of a complete Ponzi scheme.
2 replies →
I had the privilege of getting a working gig in Singapore for a small AI startup: such a well run country! There is a sense of community for helping by employing people who need jobs, the police were friendly and I felt very safe there (I like to take long walks either early in the morning or late at night and I felt very secure.)
Amazing what the people and government have achieved since the end of WW2. 100% respect for them.
A side comment: I enjoy listening to English language news from many countries around the world to get different viewpoints. News media from Singapore is very interesting, indeed!
I spent years in Singapore and loved it there. Never had to face road rage (which so many of us experience daily several times driving in Texas! NextDoor is full of these stories) or aggressive behavior by anyone in authority including police and immigration officers. I know many people find Singapore boring after a while but it didn't bother me much. On the flip side, the cost of living is high as a foreigner and traveling to the US is very tiring due to the long distance.
Boring is good for business.
1 reply →
Singapore is an effective slave/permanent underclass state with few personal freedoms that is ethnically and culturally homogeneous (in each class). Not trying to do a "who's the bad/good country" but nothing about it really applies to the US or should.
Ethnically homogeneous? Do you know anything about Singapore?
Listening to political speeches from Singapore are so refreshing compared to the juvenile garbage that we have to endure in the US from US politicians.
That’s true across much of the world. It’s also true past vs present. Listen to US politicians even as recently as the 1980s vs now. Our political class today is justifiably a pathetic laughing stock.
I worked with a guy from sg. He gave me tips for when I went to visit. He hooked me up with a family member that showed me the backend a bit.
The country effectively runs on a slave class. You must drive a new vehicle under 5 years old, and the license just to buy a car was $90,000 or so. This means an entire class of people that will be taking the bus to do your laundry and clean your house for the rest of their lives and likely their kids lives.
The guy took me around to construction sites. The Indonesian and Malaysian workers were some of the most brave or stupid workers I’ve ever seen. I saw a guy install a window in a three story building by effectively free climbing from the outside half a flight up starting on the third floor, from the outside of the building. No harness, no ropes, just him out there hanging and pushing against a nook with his work boots. The SG contractor had helmet, hi-vis, steel toed, carhart, radio, clipboards etc.
Singapore is an amazing place. It’s like, a rorschach test kind of. Like everyone sees something different there.
I noticed things that trip. However… I was able to enjoy the botanical gardens and Marina Bay Sands rooftop like the other tourists… fond memories, but they have a backdrop that reality is only thinly hidden there.
I agree with you that the migrant workers are effectively a serf class. However, I think it's fine that the SG government severely discourages owning a car. It's a small island with lots of people, there would be gridlock if everyone wanted their own car. The public transportation system is amazing and works well.
2 replies →
"Indonesian and Malaysian workers". Sounds like you never actually visited construction sites. Most of the workers ive come accross are from Bangladesh, India and China. Malaysian and indonesian immigrants tend to be better off than them.
Slave class? What?
> You must drive a new vehicle under 5 years old, [..]
No? And no one is forced to drive anything. I don't own a car.
With the MRT not having a car is not bad. Paying 100K SGD for a Certificate of Entitlement (10 year car registration) is definitely a rich person move. Good point on the underclass and labor conditions.
1 reply →
Exactly this.
The country's progress and management is extremely good, however it's enabled mostly by exploitation of migrant workers and various kind of white collar crimes (ie, facilitating business for illegal or sanctionned entities - cf Nvidia chips for China for example)
2 replies →
A confounding factor here is that savings behavior is cultural rooted: https://pmc.ncbi.nlm.nih.gov/articles/PMC6135367/. Studies show that people within a country can have substantially different savings behaviors, robustly correlated with their origin countries, even among people who are third generation immigrants. It’s a mistake to treat either the U.S. or Singapore as homogenous populations for purposes of this analysis.
I once heard a linguistic explanation for this.
European languages have a future tense, which means people have different ideas of themselves in the present and future. You can even hear this in phrases like "that's a problem for future me."
While Chinese lacks the European styled future tense, ignoring time phrases, auxiliary verbs, etc. So people more clearly conceptualize their present and future selves as the same. Leading to things like increased saving.
This of course is rooted in linguist psychology, a very soft science. But still an interesting idea.
75% of Singaporeans are ethnically Chinese so based on what you are saying it would be worth comparing SG Chinese to Chinese CN on regret since China has a much less robust safety net.
Both sides see declines when hit with economic shocks
We are talking about material impacts, not culture
You know who they didn't interview: those who regret saving so much. Many of those people are dead and so the regret is something we can only apply on assumption that they would. I've known a few people who unexpectedly died before they hit retirement age. I've know a few people who retired and died suddenly. The vast majority of people in a "first world" country have an expected lifespan of about 80 - but there is a statistical curve and people start dieing in significant numbers at 65, while you are not an outlier until you make it to near 100 (though some exist).
You need to have some emergency savings. You should save for retirement somehow. If you can structure the above as insurance - and you can trust the insurance - (I know a few cases where the insurance type system went bankrupt and those with a "policy got nothing") that is best.
Once the above is taken care of though, you can't take it with you (at least in most religions) so spend it. Save enough, but not too much.
People who save a lot are typically people comforted by sitting on a big nest egg. Saving a lot for retirement and then dying the day before retirement isn’t necessarily going to be a source of regret, because they had 30 years of warm fuzzy feelings about eventually hatching their nest egg. They could have spent it all instead, and had a life full of anxiety.
You’re looking for people who didn’t want to save but begrudgingly saved at the expense of their pre-retirement life and then died before they could enjoy retirement. That’s a much smaller group.
I'm not sure. There is a warm fuzzy from knowing you are okay if things go bad of course, but how many of those who saved for the feeling would have saved less - they still would want a good amount saved for things going wrong of course but not that much.
This is more fleshed out in the book "Die with Zero" which may be a bit too extreme.
But in general you have three things to spend in your life: time, money, and effort.
You don't want to spend all your time saving money because you'll run out of time eventually, but you also don't want to spend all your money saving time because you'll run out of money.
It's all about balance and thoughtfully understanding what you actually want and how to get it.
Money can be passed down to your children and grandchildren though.
6 replies →
> you can't take it with you (at least in most religions) so spend it.
I don't understand this PoV at all.
I can't take it with me, sure, but I'm happy anyway if I leave it behind to my kids.
This PoV that you need to spend, spend, spend to get the most value for your money is very primitive - my kids will do better if I die before touching my nest egg, and if I don't at least I'll have a longer runway to live without working.
There is no downside here, other than the artificial one that dictates you spend it all and leave nothing behind.
Why are you working to earn that money - take unpaid time off to spend with the kids.
i get what you are saying, but leaving money to the kids isn't the answer. (Other than collage money)
The people who are against saving are also the people who want you to spend all your money on their product. It’s just the capitalist wanting more meat for the grinder.
1 reply →
You just get taken in by life though, it isn't even about saving for some idealized retirement to me. As you age and your parents get old and you have kids and a spouse you just live less and less for yourself. You have to adopt a mental state where you feel gratification in sacrificing for others, if you constantly regret the things you can't do because people depend on you, you will drive yourself nuts. That sort of "I am a reliable provider and helper" mentality lends itself to obsessively building up a "safety net" because you can feel good about how stable and safe you make your loved ones.
> Once the above is taken care of though, you can't take it with you (at least in most religions) so spend it. Save enough, but not too much.
I get it to a certain extent, don't live in poverty if you don't have too, but I am a major saver. I rarely buy new things if an old thing is working fine. If I die early at least my family will will be set.
Really the social safety nets in the US are basically non-existent so having a big savings buffer makes me feel a bit safer. Honestly dying early doesn't worry me too much, I'll be dead so doesn't bother me. What does worry me is the economy tanks and all my saving become worthless. Then I would have some regrets...
I save out of a combination of buying into minimalism as a kid (though obviously it's nuanced) but also out of laziness, lol.
Indeed. In fact, I would go further and say than, more than saving money, one should make preparations for a dignified passing should one's time come early. Living happy, dying before a gruesome disease completely erases that treasure. And, if destiny has it that one gets old enough, and one does so with little more than a camping tent, leaving this world because the night was too cold and one succumbed to hypothermia beats what most people get at the end.
As someone who used to save too much, I agree.
Forced savings like done in Quebec, Canada is likely the best model for most people even though I dont like it as an individual that knows how to manage its portfolio. It also has the benefit of creating a sovereign wealth fund that can invest locally and be an economic driver but independent from the government.
I actually like the forced saving of Québec. I also have a defined benefit pension plan, a TFSA and RRSP but I am happy to be forced to contribute the RRQ for the general welfare of the province even though I know how manage my portfolio.
Considering that they also have to consider economic development in their investment decisions, the RRQ funds are well managed by the CDPQ.
Numeracy questions are on page 20 here https://www.rand.org/content/dam/rand/pubs/working_papers/WR...
People who score well on probability numeracy are likely better educated and better paid and have more in automatic savings plans. So if someone is maxing out their 401k they don’t feel they need to save more.
The article shows that in the US there is a 25 point gap between high and low income on savings regret, and a 14 point gap between high and low numeracy scores.
In Singapore where savings are more automatic numeracy is a more powerful predictor.
"Saving regret" ought to also refer to when you have saved too much. The shocks in that case would be things like "inflation ate away all my savings before I got to use them" or "the government confiscated my savings via wealth taxes" or just generally "the government made me spend 37% of my income on saving when I wanted to use it to raise kids."
> "the government made me spend 37% of my income on saving when I wanted to use it to raise kids."
This is a particularly funny one tbh. A nation's kids _are_ the retirement plan. It doesn't matter how many numbers you put in spreadsheets dated for 20-40 years into the future, if in said future, there isn't actually anyone to accept those numbers in exchange for labor.
Raising kids in a society where people hate their community and don't want to contribute through things like taxes generally isn't a society that is good for kids and their development.
That seems like it causes a different category of problems than "I wish I had saved more but I didn't and now I have nothing"
This article seem to be confounding external impact with internal motivation.
Yes the jobloss impact caused the people to be unable to save and in turn they wished they have saved more.. but ignored is whether they could to begin with.
Of course external impact had little to do with internal procrastination.
It's not confounding at all. It's making the point that internal motivation, according to the study, has no major factor in savings regret.
It says that understanding risk (as operationalized by understanding probability) has a larger effect.
But it is also saying that the more external impact someone has, the more they regret saving more -- in the United States but not Singapore.
The study is explicitly saying that internal motivation does not seem to matter. And the article is arguing the reason why.
Maybe I read the article too fast but I didn’t get that takeaway at all?
It’s basically just saying that the uninsured catastrophic event risk in America magnifies shock events.
E.g., if you have a major hospital visit in America you’re way more likely to regret not saving enough, but in Singapore there’s basically no effect since hospital stays don’t drain your savings account.
That’s what I also got from this article
Not just healthcare stuff, but also apparently Singaporeans tend to have a lower unemployment rate, so they be able to recover from stuff faster
Singapore has a regressive shock absorber model where something like half the country are immigrants that are ineligible for, say, public housing which even the better off citizens take advantage of in Singapore (maybe even disproportionately so since there can be a long wait to get in, you are older and more settled at that point). Immigrants that get milked dry and go broke and jobless during a shock are booted from the country before they can be polled.
------ re: below due to throttling -------------
Vs say US, where immigrants and those funding public housing are generally better off than the people getting subsidized housing. Public housing is more a progressive than regressive tax in the US, so quite dissimilar. Immigrants in US are on average far better off than those on public housing. Asking "but how is this any different" (after I already answered it, lol) over and over doesn't negate this, nor the fact that immigrants are like half of workers in Singapore vs only 10% in the US so the funding dynamic and dependency is far different.
>Singapore has a regressive shock absorber model where something like half the country are immigrants that are ineligible for, say, public housing which even the better off citizens take advantage of in Singapore
It's similar in Vienna where only native Viennese are immediately eligible for social housing, but outsiders will end up paying into the system without being eligible.
> outsiders will end up paying into the system
By definition, outsiders don't have to pay into the system since they already have a gov't somewhere else that is dedicated to them, just like the Viennese do.
3 replies →
I think you can buy if youre PR and married (or old enough). If you are lucky you can receive your PR in 1 year.
The Singapore PR system is purposefully racist. If you are white, your probability of getting a PR and citizenship is way lower than someone of the Chinese race. The government does not want significant changes to the country’s racial composition.
How is that different from the US? Immigrants also get booted here if they lose their job. They also pay social security, Medicare, and other taxes but usually don't get the benefits unless they stay here for long enough and get a green card.
The difference is the number. Workers on temporary visas make up ~1% of the labor force in the US. And a large chunk of them will eventually get citizenship or permanent residency and qualify for benefits later in life.
Countries like Singapore and all of the Middle East meanwhile rely on a revolving door of cheap immigrant labor. In the extreme cases like Qatar 95% of the working population are on short term visas. Most of these countries don't have a pathway to citizenship at all for this worker class. You could live there, work and pay taxes for 10 or 20 or 50 years, but the day you "retire" you need to pack up and leave.
4 replies →
That sounds quite similar to the US.
>They’re failing to save because the world is rough, and their institutions don’t do enough to help them weather it.
Well, America is rough. It turned on hardcore capitalism mode for itself because a significant portion of its population wants to try and solo socioeconomic hardships and hates any one who doesn't want the same challenge.
But not to just blame the voter, lots of money is spent for setting up systems to be amenable to acquiring more money. The very richest have correctly made a bet that uprisings to displace the wealthy and politicians just don't occur here these days, and therefore there is no real threat or need to change the way things have been going for the last 25 years or so.
Isn't it more a cultural issue though? As a European, I think many Americans take pride and love to succeed "on their own" and accept they could "die trying" (exaggerating a bit, hence the quotes, but the feeling holds).
Yes, the systems are amenable to acquiring more money, but I would claim that all that the richest need to do is to push the idea that "anyone can make it" - which was probably (more) true 50 years ago, but is probably an illusion today (some comments at: https://en.wikipedia.org/wiki/Socioeconomic_mobility_in_the_...).
Edit: I do not claim one model is better than the other; just that the culture influences the outcome more than other aspects.
Most Americans I know in my middling years are counting on the government to support them in their old age, quite the opposite that you’re exposed to via online manipulation hitpeices.
3 replies →
if by "culture" you mean rampant corporate propagandized media then yes. the US has historically been pretty close to europe over the last 100 years on many aspects. In the 70s there was legitimate debate about college being free. Now the debate is how much debt someone should take on. The overton window has shifted significantly since the 80s. We're now more like Russia with an entrenched oligarchy.
> Isn't it more a cultural issue though?
No. Culture is downstream of institutions.
A large part of it is originally rooted in racism if you look how the US implemented its welfare state. Many benefits were skewed towards white americans (GI Bill, right to claim land, redlining and social security). I'm sure most Americans aren't nearly as racist right now as back then but the being 'on their own' is linked to the 'don't want 'lazy' african americans to get benefits'.
1 reply →
Like half of our budget goes to welfare (Social Security, Medicare, Medicaid, Income Security, etc). https://www.usaspending.gov/explorer/budget_function
Yes, the US spends by far the most on healthcare per capita, and still gets the worst outcomes. It's not about throwing money at problems. You have to actually solve them (and want to solve them).
1 reply →
Social Security is a separate tax in a separate fund (invested in T-bonds). If you split that out of the budget, the budget looks even worse. The boomers retiring is just going to be bonds maturing without the holder (social security) reinvesting the money.
1 reply →
What annoys me the most about this is I'm like 80% sure none of those programs will exist by the time I retire.
5 replies →
And yet that GINI keeps rising and cost of living outpaces inflation over the past 40 years in housing, healthcare, and education. If you are bottom quintile, maybe bottom 2, you are poorer now than 40 years ago on average. Recent policy changes seek to drop the third quintile as well.
America is designed for rich people
2 replies →
"In Singapore, people who report never putting off difficult things are more likely to express saving regret than those who sometimes do."
That seems like what they should have been looking at re procrastination--conscientiousness.
I am not at all surprised that people who Take Care of Business lament not doing a better job (saving) and people who YOLO don't as much.
The 'saving' vs. 'investing' debate here has a direct parallel in technical debt. Singapore’s model of high-efficiency reinvestment is like a well-refactored codebase—it allows for rapid pivots when a shock hits. America’s model feels more like a legacy system with massive technical debt; the 'savings' are there, but the friction of the existing infrastructure makes it nearly impossible to deploy them effectively during a crisis.
[flagged]