As a Canadian school teacher living in Singapore, I have to admit that there are loads of perks.
My income taxes, for instance, are a heck of a lot lower. I can invest money—buying the same products my Canadian and American-based friends buy—but I don’t have to pay capital gains taxes. I can also travel to exotic locales far more cheaply, and the weather over here (especially now) is infinitely nicer than it is in Canada.
That said, what are the drawbacks?
I’ll make a bold statement here, and suggest that most of my teaching colleagues (despite having amazing experiences overseas) will have far fewer financial resources when they retire than they would have if they had stayed in North America. Despite paying lower taxes and earning higher incomes in Singapore, they won’t be blessed with a teacher’s pension when they retire.
What’s more, they might even have less money in the bank (or in their investments) when reaching their golden years.
The reason is that most expatriates live the high life: a life they can’t afford. They don’t adjust their living standards to account for missing pensions, and many of them don’t realize that the clock ticks—and that they’ll need to live off the money they’ve saved.
Expenses that few Canadians would ever dream possible
My neighbor is an automobile broker. When she got in the elevator today, I asked how business was. “Not great right now,” she replied. “The COE costs went up again. A new Toyota Camry now costs $140,000.” Based on the exchange rate, that’s roughly $108,000 Canadian/US.
Searching for deals online, I found a 10 month old Camry for $109,000 Singapore dollars, or $85,000 Canadian/US.
That’s not chump change. And if you bought, say, a new Camry today, you could only drive it for 10 years. After that, you’d have to pay the government an additional tax to keep the car on the road. And we’re not talking about a paltry sum. According to my neighbor, the current CEO tax on a new car with 1,600cc or above, is more than $60,000. A quick look online, and I found that she’s right. …read more
When you buy a car in Singapore, the price includes the cost of the COE (certificate of entitlement). It varies constantly, but the fact that you have to renew it after a decade encourages people to buy new cars, rather than keeping older ones on the road.
How do expatriates deal with this?
Many of them, from what I’ve seen, buy the same sorts of cars they would have bought at home. A friend of mine recently paid $160,000 for a minivan ($124,000 Canadian).
What I found interesting, also, was that local dealers tell you what the expected level of depreciation is going to be. Take that second hand Camry for $109,000 Singapore dollars ($85,000 Canadian). They list the depreciation at more than $10,400 per year.
Car prices in Singapore are a lot like Singapore rentals for condominiums. They can change in a heartbeat.
Currently, both rentals and cars are expensive.
So it pays for expatriates to use a degree of conservatism.
What do you think? If you lived here, would you buy a car costing three times the price you’d pay at home, even if you were making 50% to 75% more money? And if you do live here, let me know what I’m missing.