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5 Ways to Grow Your Retirement Funds in Singapore

Retirement will probably be one of the largest expenses of your life, especially because you’ll still be spending, but not working. To ensure that you’ll have enough funds to have the freedom to live your retirement life as you wish, you need to make sure that your retirement income exceeds your expenses. 

Here are 5 ways you can use to start growing your retirement funds today:

1. Central Provident Fund (CPF) Top Up

If you are a Singaporean or permanent resident (PR), you’ll be able to receive CPF LIFE payouts from your monthly income during retirement. The exact amount you’ll receive would be based on your CPF Retirement Account (RA) balance, and your plan – Basic, Standard or Escalating. 

How much you have in your RA will be based on your contributions to your CPF accounts (Special Account and Ordinary Account) before you retire. Understandably, the larger amount in your RA, the larger your CPF LIFE payouts will be. So, if you want to boost your retirement payouts, you can increase voluntary contributions to your CPF Special Account (SA), which has a return of at least 4% p.a. While also enjoying a tax relief of  up to $14,000 per year. 

However, the downside is that CPF LIFE monthly payouts only start when you turn 65 years old. If you’re planning to retire early, you should ensure you have other sources of income to support your retirement life until you’re 65 years old.

2. Supplementary Retirement Schemes (SRS)

SRS is another great source of income when you retire. As opposed to CPF, it is entirely voluntary, yet you can still enjoy tax savings when you fund your SRS account. Singaporeans and PRs can enjoy tax relief in the following year of assessments up to $15,300, or $35,700 for foreigners. You can also withdraw your money in the event of emergencies, unlike CPF, although you may incur penalties and your withdrawal may be taxed. 

The best part of SRS is that you won’t have to pay any tax for all your returns through your SRS investments, until you withdraw them. In other words, you can grow your retirement funds slowly and steadily throughout your working years with your SRS funds, while enjoying tax benefits. Do note that you can only withdraw your SRS funds when you reach the statutory retirement age (currently at 62 years old), and only half of your withdrawal amount will be subjected to tax. 

Read more about the pros and cons of investing in SRS, as well as how to withdraw your SRS funds interest-free.

3. Invest Your Money

Another way you can grow your nest egg is to invest for the future you want. Investing in equities of high growth companies or blue-chip stocks can help grow your retirement funds quickly. Investing, especially if you start early, will let you leverage the effects of compounding returns to grow your nest eggs. However, there is no guarantee you’ll receive a return, or your capital will be guaranteed. Generally, broadly diversified investments typically yield better returns than products with fixed returns.

You can also consider investing in professionally managed funds with top global fund managers with InvestDIY’s Best Investment Funds. These funds are curated after assessing over 40 fund managers and close to 2,000 funds, with the goal of outperforming the market. Best Investment Funds are also ideal for beginner investors with limited knowledge or individuals who rather focus on what they’re good at, and leave investments to experienced professionals. However, for this strategy to successfully grow your nest egg, you’ll need to stay invested over a longer period of time, and your returns are not guaranteed. In other words, investing in shares is a higher risk option, which comes with higher returns when done right. 

4. Singapore Savings Bond (SSB)

If you don’t have much risk appetite, and would like to grow your investments with safer methods, you can consider purchasing SSBs issued by the Singapore government. In fact, SSBs are one of the most popular investment options for Singaporeans, as it typically offers a better yield than fixed deposits.

While you won’t be earning a lot, SSB guarantees interest and capital. It’s also interesting to note that if you purchase SSB at different times, you’ll receive different guaranteed returns. SSB also has good liquidity, which lets you withdraw money prematurely during emergencies.

5. Retirement Products

The average household in Singapore spends $4,906 monthly, but CPF LIFE is only estimated to pay between $730 to $2,000 per month, depending on how much you have in your RA. If you’re looking for something that has even better rates than SSB, but is capital guaranteed, that’s where retirement products come in. With multiple premium options and terms available, you can consider plans with guaranteed cash dividends or bonus dividends when your policy matures or when you retire. 

This type of retirement product can help you maintain the discipline to save for your retirement, while also taking into account your current financial situation. Put your hard-earned money to work with a retirement income plan that’s capital guaranteed, income guaranteed with bonus incomes and benefits to beat inflation.

Whether you prefer to use cash or your SRS funds, to pay in a lump sum or over a period of time, there’s definitely a retirement product that can suit your needs. 

Regardless of how you choose to grow your retirement funds, you should always be sure of your risk appetite and your current financial situation. Choose to invest in something you’re comfortable with. The returns will eventually compound as long as you start putting your money to work. If you have any questions or need help planning your retirement strategy, speak to our experienced consultants and leverage our expertise and experience. 

This is for general information only and does not constitute financial advice. This advertisement has not been reviewed by the Monetary Authority of Singapore.

1All return figures and other statistics shown above are for illustrative purposes only as past performance are not indicative of future performance or results. Actual returns will vary greatly and depend on various factors and involves risk. It is important to note that the capital value of investments and the income from them may go down as well as up and may become valueless. Some of the statements contained in this website may be considered forward-looking statements which provide current expectations or forecasts of future events. There is no assurance that the conditions described in this website will remain in the future and actual results may differ materially.

Posted in Investments, Retirement