<p>“That’s quite a nice income; certainly my household’s income is nowhere
near that a month.”</p>
<p>“I just did the math for my household; one paycheck, two adults, one
high schooler, two cats, two 10-year-old cars, suburb of DC, paid less
than $150K for the 1,875 SF house in 1992 from a very very motivated
seller and got a great deal.”</p>
<p>We have a 1,200 sq ft home that we bought in the late 1980s for about
$100K. It was paid off in the 1990s. One 2000 car with two kids. In
our state, you can save a lot on taxes living in an inexpensive home.
There isn’t a general income tax but property taxes are high to
generate enough to run the state. Which means that living in a small
home can result in overall very low state tax rates. Of course our
state and several other New England states are experiencing problems
with job retention and growth given that there are other areas in the
country where living costs are far lower than they are here. I think
that there are benefits to living in New England as there are a lot of
very good school districts here but I do hear a lot of other people
talk about lower costs of living elsewhere, particularly in NC.</p>
<p>I understand that the DC area has a fairly high cost-of-living. But
clearly there are people that live on less than the upper and middle
classes.</p>
<p>“We have no “emergency fund” of cash sitting in a bank. It’s hard to
know what else to trim. If we had an income of $10K/month, I’m sure
we’d be able to save more money, too, but $1000K/month just for
college savings? Very unlikely.”</p>
<p>Perhaps we need something like this:</p>
<p>Unlike most countries in the world today, which finance their
social security systems on a pay-as-you-go basis, Singapore
requires people to save for their own retirement. The institution
through which the saving takes place is the Central Provident
Fund (CPF). While the accounts belong to the individual, monthly
deposits are paid both by employees and their employers. Currently,
the required contribution rate is 40 percent of wages, up to a
salary ceiling of S$6,000 per month (average annual earnings equal
S$30,038; S$1.40 = US$1.00). All compulsory savings, both at the
time of deposit and at the time of withdrawal, are tax exempt.
The funds are used to finance a wide range of programs and options
including allowing people to purchase homes, invest in stocks and
bonds and nonresidential property, pay for health care, purchase
life and disability insurance, finance a college education and
save for retirement. As a result of this system, about 85 percent
of the population live in homes they own - the highest home
ownership rate in the world. The high rates of contribution, along
with rising wages, have meant that the CPF system has been an
important contributor to Singapore’s savings rate - also the
highest in the world.</p>
<p>Depending on how CPF saving is defined, it equals between 16.3 and
30.4 percent of gross national saving.</p>
<p>Gross national saving, in turn, equals about 48 percent of GDP.</p>
<p>Members maintain three accounts with the Central Provident Fund -
Ordinary, Medisave and Special accounts. Among them, the total
contribution of 40 percent of income is credited as follows:</p>
<p>30 percentage points go to the Ordinary account, which can be used to
purchase a home, make certain investments, purchase certain types of
insurance and pay college education expenses.</p>
<p>6 percentage points go to the Medisave account for medical expenses.</p>
<p>4 percentage points go to the Special account for old age and
contingencies.</p>
<p>[url=<a href=“http://www.ncpa.org/studies/s198/s198.html]NCPA”>http://www.ncpa.org/studies/s198/s198.html]NCPA</a> - Study #198 - Compulsory Savings in Singapore: An Alternative to the Welfare State<a href=“1995”>/url</a></p>