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How to plan for your retirement in Singapore?

After years of working hard, retirement is finally the chapter of your life where you can rest and enjoy your time with loved ones. To fully enjoy life after retiring, it’s important to plan and prepare in advance. Here are a few pointers to guide you in creating an ideal and robust retirement plan:

1. What is my ideal retirement life?

The first step in every plan is to imagine the outcome. It’s no secret that the cost of living in Singapore is relatively high, and filling up your free time after your retirement might cost considerable money. Whether to travel the world, spend quality time with your family, or pursue a passion without worrying about money, knowing your goals will keep you motivated and help you stay on track.

While you’re at it, you should also take into account your expenses during your retirement, such as housing (e.g. mortgage, rent, utilities), medical (e.g. insurance, healthcare costs) and other commitments (e.g. children, car loans). After laying out all your potential expenses, you can determine how much money you’ll need for your ideal retirement, and slowly work towards it.

2. When can I retire?

In Singapore, the official retirement age is 62 years old, and this is expected to increase to 65 years old by 2030. However, with the Financial Independence, Retire Early (FIRE) movement on the rise, and after surviving the Covid-19 pandemic, many Singaporeans are working harder to retire early, so they can enjoy life before they get too old or unexpected things happen. 

Whether you want to retire in 10, 20 or 40 years, it’s important to know when you can or want to retire so you can determine how much time you have to reach the amount you need. As you grow closer to retirement, you’ll want to be more conservative with your retirement funds and take lesser risks to preserve your funds. On the other hand, if you’re young and not retiring anytime soon, you can take higher risks and put more money in investments to get the best bang out of your buck. 

3. Where are you now?

Maybe you’re in your early 30s or 40s, where retirement feels far away. You have some savings and investments, which is great.  Anytime between now and when you retire is a great time to make your money work to earn more money. Although it’s never too late to start saving for retirement, it pays to start early. Starting early would mean that your money will have more time to multiply and enjoy the magic of compounding returns.

Here are a few areas you can look at:

  • Did you maximise your tax benefits? Learn more about how to save money on taxes with an SRS account.
  • Are you overspending? Are there any unnecessary expenditures that can be reduced so you can put that money to work instead?
  • Do you have an emergency fund, in case you lose your income or need a great amount of money urgently? 
  • Medical costs in Singapore are rising, is your insurance coverage enough for you and your family if someone gets sick? Did you optimise your CareShield Life plan?

Knowing the answers to these questions will help you find the gaps in your financial and retirement planning, so you can maximise the benefits of every dollar. 

4. How can I get the money?

You’ve been carefully saving money with your CPF, but is it enough to fund your ideal retirement life? As the saying goes, “don’t put all your eggs in one basket”. It’s important to ensure that you have multiple streams of income for your retirement. 

That’s why many Singaporeans are opting to save for their retirement with these alternative income streams, on top of their CPF:

  • Supplementary Retirement Schemes (SRS) are created by the government to help Singaporeans save more for their retirement. You’ll also be able to enjoy tax benefits when you save with SRS too!
  • Endowment plans are one of the safest options for savings that provides better returns than fixed deposits and SSB.
  • Investments in high growth global companies can help grow your nest egg quickly. With experienced fund managers and a diversified portfolio, you can reap one of the best returns in the market with InvestDIY’s Best Investment Funds
  • Legacy products are designed in mind for retirement and legacy planning. You can enjoy lifetime cash dividends with the right plan, which can help you shorten your road to retirement, or guarantee your retirement income.

You should also be sure to take into account the inflation rate, so inflation doesn’t devalue your nest egg or you may outlive your retirement funds. 

Regardless of which stage of life you’re at, you can always start planning for your retirement now. With the right tools and help, you can even reach financial freedom and leave your dream life earlier. Ready to start, but have some questions or need more information?  Speak to our experienced consultants to clarify further. 

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