Thursday, August 15, 2019

When your Singapore Dream dies, what will you do ?


A man in his 40s experiences the coming of the Autumn of his life. His parents are getting old and his children still need his support. He also has to deal with a tougher working world as he has less energy to spend at work.

My dad has just been discharged from hospital and my mum is struggling with post-hospital care-giving. For the past few days, I have been helping out to buy to medical equipment to make my mum and our helper's life easier. We bought a commode, a ripple bed, and expect the delivery of a back-rest next week. My parent's home has been turned into a make shift hospital. Delivery of adult diapers will now be a regular event at my household.

Autumn is no longer a time of earning money aggressively. All the #YOLO and personal growth will suddenly take a back seat and you will be forced to play a game a defense.  Consequently, my single-minded focus on money will naturally shift to focus on time for loved ones.

I am grateful for a good summer because I was able to earn a decent amount of money and invest it well. But now, I am entering Autumn and increasingly I will have to look into playing defense and put the welfare of my family above that of my career. 

To visualize the coming of Autumn quantitatively, the Ministry of Manpower publishes data on median salaries broken down by educational qualifications and gender for our review. This gives an idea of how our Singapore Dream will unfold as we grow older. But more importantly, it also tells us when we will be expected hit our peak earning years and when the Singapore Dream begins to die.

This can provide some insight into how long we can sustain our break-neck career trajectory and when we should start planning to give up on the Singapore Dream.

a) Degree holders earn more but plateau much earlier.

If I did not leave the corporate world, I would have under-performed my peers with degrees when it comes to salary and earned income. Fortunately, I was "outsourced" early in my career and did not drink the "career ladder Kool-Aid" drunk by many corporate executives. I knew the music would end early for engineers of my generation. The CECA agreement signed in 2005 was the death knell for many local IT professionals, but as an outsourcing professional, I saw it miles away.

You can see that degree holders in Singapore do rather well and can earn up to $10,000 per month at age 45 after which they start to decline. This corresponds very clearly to the retrenchments we are seeing in the economy and it basically means that after age 45, there is nothing much to look forward too.

b) Diploma holders earn less but can extend their careers much longer.

I read elsewhere that Diplomas and Trade schools are designed by society to increase a population's conscientiousness and this is clearly reflected in the career longevity of Singaporean diploma holders. Diploma holders have salary trajectories that continue to trend up until they can receive their CPF money.

Perhaps this is a testament to our need for worked with genuine skills and not middle management administrative skills. We have to keep this up for the middle class, give them something to look forward to right up to their first CPF payout.

c) Post-Secondary qualifications without a diploma earn less and peak earlier.

This reinforces my theory that a diploma is useful for nation building and results in the longest (but not highest earning) careers. Qualifications such as A levels are not really useful or helpful to society and it is better to get a diploma than to be a  glorified clerk in some office.

All this means something for readers of this blog who are primarily Singaporean degree holders.

Here's what kind of lessons we can all draw from this simple graphing exercise :

a) Gen X needs to get off your high horse NOW

Is a 1.8L car better than a 1.6L ? What kind of condo will be proof that you have finally arrived ? Which luxury watch is better Lange & Sohne or Patek Phillipe ?

These are the stupid and inane questions Gen X bother themselves with everyday.

Once you realize that your earned income peaks at 45, you will see the importance of getting off your high horse. You have to find ways to stop increasing your expenditure further at age 45. Setting aside some cash reserves for retrenchment should also become a priority.

The biggest threat to your life is the hedonic treadmill. You have become accustomed to a life of a PMET with a car and a condo but such a lifestyle needs a high maintenance. The downgrade needs to begin immediately upon reaching 45, hopefully before you get retrenched.

Maybe you can start by reducing purchases from Cold Storage and start shopping at Sheng Siong.

b) Invest to maintain your salary trajectory

I don't think there is any shame upping your savings to 50% of your take home pay if you make $10,000 a month - it would just equalise you to the same standard of living as a diploma holder of the same age.

Saving 50% can mean creating an investment portfolio that can provide dividends that will continue to provide increments beyond 45.

This is basically what the curve is trying to tell local professionals. After 45, your increments will come from increasing rents and dividend payments and not from salary increments.

c) If you are planning to emigrate, a plan to quit Singapore needs to be executed around age 45

45 is the peak of your earning power. By reaching this point, you have enjoyed and contributed everything you reasonably could to the Singapore economy. Now society wants you to step aside for younger people and will begin to value your skills less.

Being a global city, Singapore will always be a tough place to work. You can plan to quit by 45 so that you can transition and still remain on the upper part of a salary curve somewhere else. I have written about SIAMFIRE or retiring in Bangkok if you can't afford to stay in Singapore. There are also alternatives like Australia that pays blue collar workers well so you can go there for a kinder and gentler corporate culture.

Maybe for this National Day, you need to ask yourself how much more shelf-life you have and start planning for the inevitable. Our government has published excellent data for us to make our plans decades in advance.

What will you do when you plateau and the Singapore Dream dies when you reach 45 ?

[ NB : I will be 45 this coming Christmas. This data was a sobering wake up call to me. ]



8 comments:

Gerald said...

Hi Chris,

As a Gen X myself, I fully agree with your assessment that we should start to reduce our expenditure in light of the diminishing earning ability by 45. But then again, at times, this can be wishful thinking because we are the sandwich generation. You have aged parents and young kids. I am sure you know the struggle.

Hope everything is well for your parents. Good article once again.

Regards,
Gerald
https://sgwealthbuilder.com

Christopher Ng Wai Chung said...

Gerald,

Thanks for the kind words.

Regards

Henry said...

Take care Chris.
Fully agreed with you as I ezperienced it few year ago. I am sending your article to my kids to read.

Ben said...

Hi Chris,

The reality is true cold heartless. One will have to plan for himself or herself and do not rely on the employment before 45. I can attest to your presented facts. It is the norms of the society to tell the ordinary commoners folk that his/her time is up at the age of 45.

I can sense it during my full-time employment. I am only few years from the said age of 45. Hence, I decided to call it a day before being booted out by the society. The runway is getting shorter. I won't be surprised if the runway becomes even shorter in time to come. One will have to be dissipated from the workforce by 40.

The above circumstance will create the meaning of starting a family. Raising a kid require at least 22/20 years before he/she can support him/herself. Such age is only applicable for diploma holder. For the degree holder, it will mean 21/23 years. In order to hit the workspan of 45 years, it will be a big ask for one and this is only applicable for one child unless one manage to have twins/tripruple/quarlruple (more expenses though) at the first birth. This will mean that one will have to get married and have kids upon graduation from the polytechnics/universities. I can't imagine the heavier impact when the runway is shortened to 40 years old. This will make one reflect whether there is any meaning of starting a family despite all the odds stacked against one.

I can't say for others. I decide to deviate from the known and travelled path and focus on the desired path which I feel to be right for me.

My two cents of views.

Ben

Dividend Warrior said...

Sigh, the sandwich generation :(

N level said...

Within 43, 47 I had gotten 2 retrench... I hv always prepare this days when I was in the twenties, brought my others houses in Malaysia, standby enough cash to endure thru 55, 65. Having only N level was not a shame, early investment planning since twenties help me pull thru these tough time.

Christopher Ng Wai Chung said...

Thanks for the participation guys !

This thread has quite a response from the public.

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