Singaporeans are living longer. Did you know the national average life expectancy in 2021 was 83.5 years? And that’s only set to increase by the time you reach retirement due to medical advances. What this also means is that the amount needed for retirement in Singapore has also been steadily increasing.
But how much do you really need to retire in Singapore? Is hitting the CPF Basic Retirement Sum (BRS) enough or do you need more than that? There’s no right or wrong answer. To figure out how much you might need, start by asking yourself these questions.
1. When do you want to retire?
The general rule of thumb is, the earlier you retire, the more savings you require. To help put things into perspective, the official retirement age is currently set at 62. Couple that with the average life expectancy and you’re likely to spend a good 20 years or more in retirement.
According to a recent study, a single elderly retiree would need about S$1,421 per month for basic living expenses. Multiply that over 20 years and you’ll need S$331,000 in retirement savings if you were to retire at 62. And that’s not including inflation.
Plan to retire earlier? Then you’ll need way more than that. And don’t forget this amount covers just the basic expenses. If you’re looking to maintain your quality of life with recreational activities like travelling or pursuing a hobby, you’ll probably need more. And that brings us to the next question.
2. What kind of retirement lifestyle do you want?
Do you see yourself travelling the world or are you more of a homebody? How much you need ultimately depends on your desired retirement lifestyle.
Whether you decide to go all out or live frugally, these are the costs that you’ll have to factor into your retirement plan.
- Accommodation: Is your house fully paid for? Are you planning to downsize in future? What are the costs of maintaining the property?
- Medical expenses: Do you have any chronic conditions or long-term medical needs?
- Recreational expenses: What do you enjoy doing? Whether it’s picking up a new hobby or socialising with friends, how much will these activities cost?
Alternatively, you can also use two-thirds of your monthly salary as a quick benchmark of what you might need for retirement.
Meanwhile, don’t forget about our sneaky little friend called inflation. In some figures shared by the CPF, this can be quite significant over 20 years:
|Price of||20 Years Ago||Today||Difference|
|Movie Ticket (Weekday)||$5||$8.50||70%|
To maintain the same standard of living that you’re enjoying now, you’ll probably have to pay more in future. This is also why it pays to save more.
3. Do you have enough for retirement?
Whether it’s picking up a new hobby, travelling the world or spending time with your loved ones, retirement can be a glorious time. It could also be the perfect time to catch up on things you’ve missed when you were busy making a living.
To make the most of it, start planning for retirement early. This ensures you have sufficient runway to build the retirement you’ve dreamed of.
If you didn’t already know, all Singaporeans born in 1958 or after and have at least S$60,000 in CPF will be automatically enrolled under the CPF LIFE scheme. This is a national annuity scheme that will give you monthly payouts for as long as you live.
While an important component of your retirement portfolio, what you’ll receive from CPF LIFE alone may not be sufficient. You may consider boosting your retirement funds with the following:
Have you started investing? Though it comes with higher risks, investing also gives you greater yields. If you’re not ready to take the plunge into high risk products like stocks and ETFs, you can consider instruments like digital Investment-Linked Plans (ILPs) that lets you invest according to the risk level you’re comfortable with.
One such instance is Tiq Invest, which features low management charge fees, transparency and easy-to-understand fund packages that are curated to your risk profile (e.g. Conservative, Moderate, Growth, Aggressive). It’s simple, easy to invest in, and there’s no lock-in period. This means you’re free to withdraw your funds anytime without charges, which is great if you need some emergency cash!
If you haven’t already done so, it’s time to start saving. Besides developing healthy saving habits, save better with insurance savings plans like Tiq Easy Save, which gives you high returns of 2% p.a. that are guaranteed for the first six years of your plan. Premium terms are short and you can choose to either make two yearly payments or a one-time lump sum payment.
Tiq Easy Save is great if you prefer flexibility as it features a relatively short lock-in period of just six years. You can choose to withdraw your money then or leave it in the policy to earn interest at prevailing rates. As a bonus, there’s also a death benefit at 101% of the account value that covers you up to age 100 as long as the policy is in force.
Also consider topping up your CPF Special Account (SA) to enjoy 4% interest, or participating in the Supplementary Retirement Scheme (SRS) to enjoy tax savings.
If anything unfortunate happens, insurance is what keeps you from depleting all your savings. Start with health and life insurance first as medical expenses are usually the heftiest. Cancer doesn’t come cheap, you know.
A whole life insurance that comes with a saving component can be a good tool to add in your portfolio. Besides protecting you, the cash value of your policy increases over the years and you can choose to cash it out and enjoy the returns when you surrender your policy at retirement.
Aside from above, you may consider an endowment plan. Endowment plans are often offered with maturity periods of 5 years, 10 years or 15 years depending on the policy. However, Tiq 3-Year Endowment Plan offers 2.3% p.a. high guaranteed maturity returns after 3 years, so you can get your returns sooner and reach your goals quicker! If anything happens to the life insured within the maturity period, their beneficiaries will get financial relief. This is because Tiq 3-Year Endowment Plan also provides life protection at 101% of the single premium paid. Get to know 3 important things about endowment plan before buying.
Start planning for your retirement
With people living longer and the cost of living going up, retirement planning no longer belongs in the backseat. Your best chance of having sufficient retirement funds is planning early.
To get started, have an honest conversation with yourself and figure out how much you’ll need. If there’s a gap, focus on how you can build up your retirement portfolio with the right products. It’s not too late to start planning, and products like Tiq Invest and Tiq Easy Save can help you play catch up before you retire. Stay on track by reviewing your retirement plan regularly, as you continue to save, protect and invest.
Terms apply. Information is accurate as at 16 June 2022. This content is for reference only. You should seek advice from a financial adviser before deciding to purchase the policy. If you choose not to seek advice, you should consider if the policy is suitable for you. This advertisement has not been reviewed by the Monetary Authority of Singapore.
This policy is underwritten by Etiqa Insurance Pte. Ltd. (Company Reg. No. 201331905K). Protected up to specified limits by SDIC. As buying a life insurance policy is a long-term commitment, an early termination of the policy usually involves high costs and the surrender value, if any, that is payable to you may be zero or less than the total premiums paid.
Tiq Invest is an Investment-linked Plan (ILP) which invest in ILP sub-fund(s). Investments in this plan are subject to investment risks including the possible loss of the principal amount invested. The performance of the ILP sub-fund(s) is not guaranteed and the value of the units in the ILP sub-fund(s) and the income accruing to the units, if any, may fall or rise. Past performance is not necessarily indicative of the future performance of the ILP sub-fund(s).
A product summary and product highlights sheet(s) relating to the ILP sub-fund(s) are available and may be obtained from us via www.tiq.com.sg/product/tiqinvest. A potential investor should read the product summary and product highlights sheet(s) before deciding whether to subscribe for units in the ILP sub-fund(s). Full details of the policy terms and conditions can be found in the policy contract.
This policy is protected under the Policy Owners’ Protection Scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC). Coverage for your policy is automatic and no further action is required from you. For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact us or visit the Life Insurance Association (LIA) or SDIC web-sites (www.lia.org.sg or www.sdic.org.sg).
Tiq by Etiqa Insurance Pte. Ltd.
A digital insurance channel that embraces changes to provide simple and convenient protection, Tiq’s mission is to make insurance transparent and accessible, inspiring you today to be prepared for life’s surprises and inevitabilities, while empowering you to “Live Unlimited” and take control of your tomorrow.
With a shared vision to change the paradigm of insurance and reshape customer experience, Etiqa created the strong foundation for Tiq. Because life never stops changing, Etiqa never stops progressing. A licensed life and general insurance company registered in the Republic of Singapore and regulated by the Monetary Authority of Singapore, Etiqa is governed by the Insurance Act and has been providing insurance solutions since 1961. It is 69% owned by Maybank, Southeast Asia’s fourth largest banking group, with more than 22 million customers in 20 countries; and 31% owned by Ageas, an international insurance group with 33 million customers across 16 countries.
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