Are there options to complement CPF life for my retirement? Click here!

CPF life payout is a national insurance annuity scheme whereby you will start receiving money from your CPF savings at the age of 65 onwards. When you reach 65 with a minimum CPF savings of S$60,000, you will be automatically enrolled. 

Based on research conducted across Asia, most people overestimated their retirement funds and realised they have depleted it half way during their retirement. This becomes an issue because they have to worry about finances during retirement. So, what are 2 questions that you should be asking about retirement and how can we address them? Let’s find out!

Question 1 - How much money do I need to retire comfortably?

What is your definition of a comfortable retirement? Do you only want to have a basic income just to survive 3 meals a day? Or, do you fancy more; such as giving extra pocket money to your future grandchildren, buy gifts for your friends and even traveling. What about medical cost?

So, what is considered enough? Based on Singstat (click here), an average monthly household expenditure for age 50-59 is about S$4837 and S$3,586 for those above 60. This is really high! Besides, this data is compiled in 2016. Imagine factoring inflation each year at 2% for 20 years, this amount can easily hit above S$6,000.

Question 2 - Is the payout of CPF life enough for me to retire?

Imagine you place in S$60,000 at age 65 in year 2035, based on the estimator provided from CPF (click here), you will be expected to receive an estimate monthly of S$530 to S$600. Will this be viable for your monthly living 20 years later? 

Now, what if you wish to have a monthly payout of around S$3,000? You will have to place in around S$400,000 to S$510,000 at age 65 in year 2035. Will you be having this amount in your CPF savings?

Given this scenario, if you need at least S$3,000 per month, with CPF Life providing you with a minimum of S$600, what can you do to achieve the remaining S$2,400 for your retirement paycheck?

1) Start your retirement plan early

Planning comes from understanding and it is essential you have an aim what you wish to do during retirement. What kind of lifestyle do you wish to live? How much money is enough for potential future medical bills?

You can start by identifying the percentage of unnecessary expenses that you spend monthly. You should also identify bad debts that fall in value the moment you purchase them. These items will not be useful and the monies can then be reuse into your retirement plan which we will discuss in the next section.

However, before this, it is important you should have a proper protection plan to keep your fixed income stable in the event that your health forbids you to work anymore.

2) Select an appropriate instrument

Depending on your risk appetite and personal preferences, there are multiple instruments that you can consider for your retirement plan. There are two forms of income engines, the fixed income (employment or business income) and the passive income; which in our case, investment. The investment plan that you decide should beat the rate of inflation and maximise your earnings across time. Here are 4 types of policies you can consider;

i) Dollar Cost Averaging DCA

If you wish to have a stable investment return of around 3% to 5% per annum, dollar cost averaging may be an instrument you can consider. This instrument is a monthly plan and is suitable to take up if you do not have a huge sum of money and not to worry about market volatility. This plan is recommended for a duration of 10 to 15 years in order to see good returns. Therefore, starting young is important!

ii) Lumpsum investment

If your risk appetite is larger, and intend to have around 6% to 8% per annum, you may consider lumpsum investment or some may call it, Allocation. In this case, it is important to ensure there is a regular rebalancing of your portfolio to keep up with market volatility.

iii) Mixture of DCA and lumpsum investment

A good mix of both dollar cost averaging and lumpsum investment can be a good way to diversify your portfolio and enjoy the best of both worlds.

iv) Premium financing

You can also consider premium financing if you have a larger sum of more than S$45,000 looking to invest. This plan allows you to leverage by investing with a higher premium policy but with a lower initial down payment. For example, you sign up a S$350,000 investment plan, your initial down-payment will be S$100,000 and the rest will be co-share with the bank. 

Depending on your preferences, after the end of the policy, you may choose to receive payout from your investment or to continue to earn the interest. 

3) Government-Supported Policies

As we are moving towards Ageing population, the Singapore government is providing more support to help you retire early and help with your fixed income in the event of mishap. Here are 2 areas you may consider;

i) Supplementary Retirement Scheme (SRS)

You may consider allocating a part of your annual income to Supplementary Retirement Scheme (SRS) to enjoy tax rebate. However, the interest is 0.05% and you can only withdraw after 10 years from the date of your first penalty-free withdrawal which is at age 62. The maximum annual sum to place into SRS for Singapore citizen is S$15,300 and S$35,700 for Foreigners.

You may consider this plan to achieve a double-win in savings for your retirement and from your tax contribution. To know more, you can click here.

ii) Care Shield Life

Care shield life previously also called Elder shield is a long-term insurance scheme devised to provide for Singaporeans citizens and PRs who are 30 years and above with a basic S$600 monthly support in the event that they are severely disabled.

All Singaporean citizen will be automatically enrolled into this policy once they turned 30 and their premiums will be deducted annually via MediSave. The amount deducted starts from around S$250 per year from age 30 and increases to less than around S$500 when you reach age 67.

However, a basic monthly support of S$600 might not be enough to help out with your fixed income in the event of mishap. Hence, Care Shield Life Premium can be considered where most of the annual premium can still be deducted via Medisave with some amount payable by cash. To calculate, you can visit here 

If you are confused with too many terms, plans and policies, find that calculation is a headache, and wish to seek advice from a knowledgeable perspective to enhance your retirement plan, you can contact Raymond Wong here.

Raymond has help over 800 clients to plan their finances and also appeared in various media channels such as Straits Time, Hello Singapore and money week providing financial insights. Here a few testimonials;

Testimonial 1

I have known my financial consultant Raymond Wong Chung Shun for several years and find him helpful, knowledgeable, competent and fast to respond to my financial needs.

He is also able to provide sound and professional financial advice for me and my family and review my existing protection and investment portfolio to provide an efficient and comprehensive financial plan to benefit me more and to my best interest.

I would also recommend Raymond to anyone who likes to receive excellent and impartial financial planning strategies with the best of breed solutions from various insurers and fund houses to achieve financial independence for their future as well as lifetime financial security and success.

Ms Leong

Head of Finance, CPA

Testimonial 2

We find our financial consultant, Raymond Wong Chung Shun, friendly and helpful and knowledgeable on the financial plans that we need.

Compared to our past experiences with others whom we have engaged previously, Raymond is always not aggressive and always listens to our needs.

We would also recommend Raymond to anyone who likes to plan for financial success and achieve financial independence.

Mr Ho & Mrs Ho

Director, Business Owner and Former Head of Operation

Testimonial 3

Raymond is a sincere, thoughtful and professional consultant.

He provides sensible advice for me based on my personal preference for wealth planning as well as my current financial status.

I would strongly recommend Raymond to others.

Miss Jiang

NTU Professor