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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.

• gruez 8mo ago
  >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. Yeah there's even a term for it: https://en.wikipedia.org/wiki/Financial_repression https://en.wikipedia.org/wiki/Financial_repression
• raw_anon_1111 8mo ago
  It’s almost impossible for an upper middle class couple to retire in the US before their 65 unless they have some type of government provided or private company provided health insurance like teachers, police officers, military etc. It’s about $25K a year for a decent plan which is doable. But you have to hope that Republicans - and yes this is a political issue - don’t successfully kill the ACA and make it impossible to get insurance at any cost if you have a pre-existing condition. If you are old - you will develop a pre-existing condition. My parents are 83 and 81 and retired at 57/55. But my mom was a teacher who still gets benefits through the government and my dad gets benefits from the one factory that didn’t shut down in our hometown. I’m 51 and even if I could retire early financially, I wouldn’t do it and stay in the US. Play the smallest fiddle for us. I “retired my wife” at 44 in 2020 8 years into our marriage when I did a slight transition to an industry where remote work with travel is the norm (cloud consulting + app dev) and we have traveled a lot including doing stints as “digital nomads”. We are staying in one of the countries that we might retire to as a Plan B for six weeks starting next week. Even now that we moved to state tax free Florida and my wife hasn’t had to work in six years, she keeps a current CDL because she can get a job as a school bus driver easily for the benefits and someone will pay me for independent consulting if I lose my job.
  • throwway120385 8mo ago
    The other way to avoid a pre-existing condition is to just avoid medical care entirely.
    • atomicnumber3 8mo ago
      Ah yes, the 4chan retirement plan. Die of a preventable cause at age 42 while waiting for your captcha.
      • paulddraper 8mo ago
        If you accept that cancer is a death sentence, it’s not absurd to “self fund” your insurance with a nest egg. You can shop around quite a bit for non urgent care, and get good cash discount.
        • raw_anon_1111 8mo ago
          How much of a nest egg do you think would let you afford a major operation like heart surgery or cancer care?
          • watwut 8mo ago
            Even a minor one.
          • paulddraper 8mo ago
            Read the qualifier. And heart surgery is ~$60k. [1] That's <36 months of insurance premiums according to the earlier poster. [1] https://cost.sidecarhealth.com/ts/heart-bypass-surgery-cost-by-state https://cost.sidecarhealth.com/ts/heart-bypass-surgery-cost-...
            • mothballed 8mo ago
              It cost $30k for a loved one just to go to the hospital when their heart "felt weird" but absolutely nothing turned out to be wrong and all they did was run a couple quick scans and tests. I do agree with the overall idea of what you're saying that usually the premiums are way more than what you could get care for if you just saved the money, but the numbers on the website seem very wrong. I realize it's a total anecdote but from loved one's bills it is $20-30k just to get in the door and that is if actually nothing is wrong and there is no heart attack yet they're quoting $30k for an actual heart attack care.
• alistairSH 8mo ago
  That's not all that different than US Social Security. SS has a much lower required contribution/tax rate, but the overall scheme seems similar (lower than market returns, etc) and naming (despite SS actually being called a tax, many residents think of it as a required personal retirement savings account).
  • everforward 8mo ago
    SS is different mostly in that you’re not really loaning money to the government. The money coming in today mostly goes right back out as payments. There’s also an upper limit on SS taxable income. I forget what it is, but basically the entirety of the top quintile isn’t paying SS on their entire income. I want to say it’s like 90k, but it’s been a while since I looked.
    • raw_anon_1111 8mo ago
      The top social security taxable income hasn’t been as low as $90K since around 2005. It’s currently $184500. 93% of income earners earn less than that https://dqydj.com/income-percentile-calculator/ https://dqydj.com/income-percentile-calculator/
    • alistairSH 8mo ago
      SS is forced to invest unspent funds in T-bonds... That's sort of a loan to Uncle Sam. And yeah, income over $185k isn't taxed by SS (silly law - fixing that would mostly fix the fund depletion that's likely to happen right about the time I retire).
    • eru 8mo ago
      > SS is different mostly in that you’re not really loaning money to the government. The money coming in today mostly goes right back out as payments. That's only a difference in accounting, not in reality. They could 'fully find' SS tomorrow, by just creating a bunch of T-bills for it. > There’s also an upper limit on SS taxable income. I forget what it is, but basically the entirety of the top quintile isn’t paying SS on their entire income. I want to say it’s like 90k, but it’s been a while since I looked. How's that different from CPF? See https://www.cpf.gov.sg/employer/infohub/news/cpf-related-announcements/new-contribution-rates https://www.cpf.gov.sg/employer/infohub/news/cpf-related-ann...
• danans 8mo ago
  > 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. It also robs the individual's freedom to gamble with their retirement funds while expecting/demanding a bailout when shit hits the fan. In the USA we have thoughtful policies that allow people over a certain amount of wealth invested in key industries to do that.
  • twoodfin 8mo ago
    The vast bulk of this “freedom” is exercised by public and union pension funds, not individuals. e.g. https://apnews.com/article/biden-business-united-states-government-and-politics-retirees-09d93d2af8cc68de47eccda4a9ef0250 https://apnews.com/article/biden-business-united-states-gove...
• skrtskrt 8mo ago
  > The magnitude of the investment also probably makes it impractical for anyone but the very wealthy to retire before that starts paying out... But they can pull out for housing right? That's an enormous portion of most people's expenses. If I didn't have to worry about housing, I could be living large on less than half of my salary, I would certainly semi-retire at least.
  • everforward 8mo ago
    Sort of. So far as I can tell, you can withdraw to buy housing but I don’t think you can pay rent out of it. The loans are also 75% max loan-to-value so I think until you can get 25% of the purchase price in your account you have to pay CPF and rent (or live with family). Also, not an economist, but I suspect the forced savings has a wildly inflationary effect on housing prices. You can’t do much else with the money until you retire, so I would guess the price of housing rises up to match the forced savings rate.
    • delta_p_delta_x 8mo ago
      > the forced savings has a wildly inflationary effect on housing prices Housing prices are inflationary independent of CPF, because flats in Singapore are powerful investment vehicles. For HDB flats, however, there is means-testing and rebates to the amount of ~50%, sufficient for anyone on the 30th percentile and above to afford.
      • refurb 8mo ago
        Since the government controls the supplies of HDBs, it controls the price inflation. So it would be more accurate to say “housing prices are inflationary because the government wants them to be”. Yet this introduces a ton of new problems as well. In order to keep them “good investments” it becomes ever increasing prices with ever increasing rebates to help lower income afford them. But eventually prices will stop going up.
        • com2kid 8mo ago
• eru 8mo ago
  The rates aren't all that subpar, if you adjust for risk. You can take your CPF out and invest yourself (within limits), and most people do worse.
• NoLinkToMe 8mo ago
  That's partially true. 37% contribution of pay, earmarked for personal welfare expenses (housing/healthcare/retirement), basically covers 60% of a typical state budget. But these funds aren't pooled like taxes. Typically the top 25% pay something like 80% of the income taxes. And the recipient of that tax revenue is typically the bottom 50% who get means-tested welfare benefits. In the Singaporean model it seems that the CPF funds of 37% are not pooled but allocated to personal accounts. In other words it's a redistribution in-time (from early to late) and in-type (general income to housing/healthcare/retirement expenses), but to the same person. Whereas a tax is typically a redistribution in the same time period, but to different persons, and can be earmarked to whatever. I'd certainly prefer a 37% tax earmarked to me only (with modest ROI) + 10% income taxes + 0% cap gains, than the 40% tax I pay (west-europe) on my income which is wholly redistributed to others + 36% cap gains if I invest the remainder.
  • Muromec 8mo ago
    That does not count the missing opportunity cost, which is the actual tax from the savings
    • NoLinkToMe 8mo ago
      No because in other similar countries like the example I gave of mine, that money is taxed and goes to another person. There is no opportunity cost. In Singapore it's 'taxed' and earmarked to you, and then generates a very modest ROI. Yes there is an opportunity cost versus a place like Dubai that has 0% tax. But not compared to a similar welfare state that puts a 40% tax and you lose that money forever.
• itemize123 8mo ago
  Not true. Importantly, a majority of the cpf can be used for participating in stock market.
• cryptonector 8mo ago
  This is what all forced savings programs are. The name is a euphemism.