A Singaporean's guide to saving for retirement

Beside a small monthly payout from CPF, how else can you ensure that you have a decent amount to retire on, without having to be a millionaire, play the stock market or pick up a gambling habit? 

Most Singaporeans are known for living a champagne lifestyle on a beer budget – this means we're good at sniffing out value deals for anything from shopping to financial planning. Let's start with the main asset we have, called the CPF. Our government built this retirement account so that every Singaporean and Permanent Resident who has worked here over the years is simultaneously building a nest egg that they can eventually use when they retire.

However, the funds in your CPF account may not necessarily set you up in the style you've been accustomed to. Depending on how much you have, your CPF funds may only give you a small monthly payout.

This is because you may have dipped into it for a variety of reasons; paying for your HDB is the most common one. So how else can you ensure that you have a decent amount to retire on, without having to be a millionaire, play the stock market or pick up a gambling habit? 

More options: CPF and SRS

When you reach 55, your Retirement Account is automatically created in your CPF, so you’re not starting from zero. That’s good.

But there's more. If you're born in 1958 or after, you will be placed on the CPF LIFE scheme. Alternatively, you can apply to join CPF LIFE anytime from age 65 to before you turn 80 years old. The CPF LIFE scheme offers you monthly payouts for as long as you live.

Depending on which plan you choose and how much you accumulate in your retirement account, you can get a monthly payout between $660 to $1,920 (find out more here).

If you want to make some extra contributions, the government has also created a Supplementary Retirement Scheme (SRS) run by IRAS. It's on a voluntary basis, unlike CPF which is enforced, and contributions must be made in cash (not from your CPF account).

So all this is what the government has put in place for you. But what else can you do, considering that $1,920 is not a lot of money for a middle manager currently earning around $5,000 a month…


It's important to save and earn money and save and earn… you get the picture. It's also a tedious one. We're not making light of having savings in the bank – every working individual needs to put away his earnings but at the end of the day, most of us can't just live off our savings when we retire.

Why? Because bank interest rates are only ever so slightly higher than if you were to leave your money in a biscuit tin under your bed. Compounded by inflation, all costs will rise and the money you save will be worth much less than when you started.

One other way to create cashflow is to earn income during your retirement.

It may seem counterintuitive (aren't I supposed to be relaxing!?) but most people still have to keep working after "retiring" –just to support their lifestyle. In fact, according to Aviva's Consumer Attitudes to Saving Survey in November 2015, 56% of Singaporeans are actually looking to work past the retirement age of 62 years.

Well, one way to earn an income without working is if you have a business that is already self-sufficient when you retire (which is hard work, complex and requires a lot of money to begin with probably, so we won’t talk about it here…) or by renting out your property.

Rental property is a pretty sweet way to make a bit of extra cash without having to work (ok, just a bit of housework maybe, to keep the property clean). You can rent out rooms in the home you're living in, or if you'd rather live with your parents, you can rent out your own.

But note that rental income can be volatile, depending on the property market. So while this is a viable option, you probably shouldn't rely on this source of income alone to support your needs during retirement. 

Invest and endow

Another way to prepare for your ideal retirement lifestyle is to make your cash work harder for you (instead of leaving it in your CPF account, bank or biscuit tin). This seems like the natural thing to do because it's making use of money you already have anyway, not having to take away from your money for spending.

Case in point, your CPF funds. If you are able to service your mortgage from your monthly CPF payment from your current job and have enough left over to meet your Minimum Sum, you can consider investing various instruments, including unit trusts, under the CPF Insurance Scheme (CPFIS) to enhance your retirement nest egg.

Alternatively, you may also choose to use your CPF monies from your Ordinary Account (OA) or Special Account (SA) to invest directly via unit trust platforms such as Aviva's Navigator. One thing to note is that as with any investments, there's always risks involved. Also, any potential returns you get from your investments through the CPFIS will go back to your CPF accounts – remember, it's an investment for your future retirement plans!

Another way you can leverage on savings you already have is to consider endowment plans from insurance companies, specifically designed for retirement.

Some of these plans even take into account inflation and how that might affect your retirement savings. For example, Aviva's MyRetirement Plus not only guarantees you a monthly retirement income at your desired retirement age, but also increases every year to help you meet inflation and the rising cost of living.

Find out more about MyRetirementPlus

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