America vs. Singapore: You can't save your way out of economic shocks

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.

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!

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.

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.

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.

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."

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.

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.

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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.

>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.

"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.

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