Financial independence a pipe dream for the poor

Financial independence a pipe dream for the poor

IN HIS letter ("Pursue financial independence, not just work till retirement"; Feb 16),

Mr Wong Shih Shen argued that financial independence, acquired through passive income from savings and investments, should be the focus, rather than retirement planning.

While this may be easier for the high-income earners to achieve, it is certainly hard for those in the middle- and low-income brackets.

A study of 2,000 lower-income households by the Ministry of Social and Family Development, published in July 2013, revealed that 57 per cent, or six in 10, were employed, primarily in service-related jobs, as well as those requiring manual labour, such as cleaning and labour-related jobs, or as plant and machine operators.

The study found that the majority of lower-income households relied on income from work to make ends meet, often taking on multiple jobs, additional part-time jobs or working longer hours.

Fifty-seven per cent of the respondents reported that they had just enough for their needs, while others sought financial help from agencies and extended family members.

Therefore, one wonders how these people will be able to save for their retirement? Where can they find the passive income from investment when they are struggling to pay for essentials?

The Government recognises the problems of the poor and is trying its best to provide greater financial security for all.

This includes unlocking the value in their homes through various schemes, moves to promote social mobility and government bursaries for students.

Such policies to help the poor are a fair distribution of the nation's wealth, as these people are likely to continue working in the lower-wage ladder without the means to achieve financial independence.

The Straits Times / Premium               Published on 13 March, 2015

By Francis Cheng