Business Times 13 September 2006 ? Baby Boomers? Land Mines. Proper retirement investing is becoming increasingly important as the inflation monster rears its head. The writer is Philip Loh, chartered financial consultant with Great Eastern Life.

Over the past 15 years, Singaporeans have become accustomed to low inflation. The cost of goods has been kept low with most things, ?Made in China.? But the tide is turning. China is now inflationary for the global economy. As oil and commodity prices surge, baby boomers may find themselves retiring into an era of elevated inflation. An active retirement requires heavier financing.

Financing the dream retirement remains a daunting task. For example, those who own a car before they retire hope to continue to drive when they retire. The financing cost of a simple Japanese car could set a retiree back by almost $300 000 over a span of 25 years.

Land Mine 1 : An overly enthusiastic investment outlook

Many retirees have told me that their advisers are promising them 15% a year with minimum risk. The general rule is that if the deal appears too good to be true, it probably isn?t true. Fund managers generally never give a bearish view of the markets without running the risk of losing their job.

Land Mine 2 : Over reliance on property investment

Most retiring Singaporeans still have an outsized portion of their net worth tied to their property, which will not be paying them very well over time.

Based on my conversation with many property owners, the residential rental yield in Singapore is between 2- 3% a year. Leasehold or newer property may command up to 4%, But after compensating for the running down of the lease and the depreciation of the physical asset, the real yield is back to slightly above 2%.

Recent changes t the CPF property scheme dealth a serious blow to the property market. The spillover from the Medisave account, which had been going to the Ordinary Account (OA) is now diverted to the Special Account. This change alone reduces the OA contribution of many Singaporeans by more than 25%. The OA remains the primary source of mortagage financing. In other words, the purchasing power of many Singaporeans is significantly impaired.

My prediction is for property investment in Singapore to continue to deliver sub par performance for quite some time. It is perhaps payback time now as property prices continue to revert to mean over the next 10 years or so. I suspect it will take a while before Singaporeans see the roof over their heads as what it really is : a roof

Start planning for your retirement if you have not done so. The amount can be really substantial without you realising it.