Financial literacy vital at all ages

Financial literacy vital at all ages
Long queues formed at MRT stations across Singapore yesterday afternoon as senior citizens rushed to claim their free $50 travel card top-ups.

MANY of my older neighbours and other senior citizens in my neighbourhood are confused about the various enhanced Central Provident Fund (CPF) options available, particularly the Minimum Sum Scheme and lump-sum withdrawals.

I imagine this scenario to be replicated nationally. Many may feel overwhelmed by the options, which they say are complicated, as they do not fully understand their implications.

For these policies to be successful, the Government needs to communicate directly with citizens to ensure that the policies are explained in an understandable manner, so that people can exercise their options wisely.

While there have been calls for greater flexibility of access to CPF savings, not many people - particularly those who are older - understand what is in store for them in their twilight years.

Failing to exercise prudent choices can result in hardship in their later years and a greater burden on the Government.

Singaporeans also appear to lack financial knowledge, with only 23 per cent saying they knew exactly what to do if they were given a lump sum for investment ("Few S'poreans have formal retirement plan: Survey"; Feb 22).

And these are usually those who are better educated, financially literate and more well-off.

Less-educated seniors with lower income levels and who lack financial knowledge run the risk of making poor financial decisions by withdrawing large sums of money from their Retirement Accounts, leaving little for monthly needs.

With an increasingly ageing population, more of whom live separately from their children, the problem could become serious in the years to come.

The Government should introduce compulsory courses on financial literacy and management in our school curriculum, so that our children and grandchildren can be smart in managing their finances when they are young, as well as later in life.

V. Subramaniam (Dr)


This article was first published on March 11, 2015.
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