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Retirement Planning in Singapore: Here’s Your Step-By Step Guide

Ruchi Gupta

Planning for retirement is very important both from a personal and financial perspective. It requires a lot of sensible planning and years of persistence to realize a sizeable retirement package able to sustain a comfortable livings standard. Everyone wishes to retire comfortably. However, the complexity and time required to build a sufficient retirement package can make the whole process seem daunting.

Retirement planning is thus important if one is to avoid the headaches that might come into being latter years. Retirement planning involves identifying sources of income, estimating expenses and implementing a savings program that would provide the much-needed finances after one leaves work.

The fact that everyone lives in unique situations makes it extremely impossible to estimate the actual amount of money that might be needed to live comfortable life after retirement Different people translate to different needs, which significantly affect the amount of money that might be set aside for retirement planning.

There are those paying for their children school fees, while there are those taking care of their aged parents. Even so, there are emergencies that might come into being significantly eating into the amount that might be set aside for retirement savings.


Plan early for retirement

When it comes to planning for retirement, sooner is always better. Consistent savings, as early as possible, is a must if one is to achieve retirement goals. Panning for retirement involves the following steps.


Estimate Your Working Years

When it comes to retirement planning, it is important to take into account the number of years that one will be in the workforce. Singapore’s employment age has recently been increased to 67 years. However, this does not mean that one cannot retire earlier or work longer.

The longer you stay working the more you are likely to save more for retirement. However, you can also start saving for retirement earlier to reduce the number of years you have to work to achieve a desired post-retirement income.

Starting to invest earlier in retirement allows one to ride out the volatility of the market easier when it comes to investments. For example, expecting a 10% return from the stock market over 8 years could be much riskier than expecting the same return over a 20 years period.

Starting to save earlier also allows one to enhance their retirement nest egg with ease without having to strain current living standards.


Estimate Monthly Expenses

It is important to estimate the amount expenses you are likely to incur in order to have an idea of the amount of money that can be set aside for retirement savings. Estimating monthly expenses allows one to identify unnecessary expenses that can be done away with.

To be able to save for retirement one should not spend more than they earn. One way of ensuring enough money is set aside for retirement is spending a maximum of 70% on expenditure.


Use a Retirement Calculator

Central Provident Fund provides an interactive tool that you can use to determine whether your retirement goal is achievable. The calculator is designed to determine the amount of savings one may need based on desired retirement age and retirement lifestyle

Do It Yourself Insurance and DBS bank also offer interactive calculators that you one use to determine potential retirement payout. Some of the key data needed for computation include, desired retirement age, and desired monthly income, current monthly income and age.


Bolster Retirement Savings with CPF

It is common practice for people to save for different things be it children’s education or dream vacation. Retirement savings should also be given significant considerations just like any other savings. You should calculate how much you have already saved for retirement and try to come up with new ways of bolstering the basket as the years for retirement inch closer.

In Singapore, the CPF system provides an easy and effective framework for setting aside a percentage of income for retirement. However being proactive in terms of savings and investing is the best way of ensuring retirement goals are achieved.


Take CPF Life Cover

One sure way of ensuring a stress-free life after retiring is taking advantage of CPF Life. The annuity scheme is designed to provide a monthly payout to Singaporeans once they are out of work. A Basic Retirement Sum of S$83,000 entitles one to a monthly payout of S$700 to S$750 under the scheme, once retired. One can also receive larger payouts of between S$1280 and S$1380 on Full retirement Sum of S$166,000.


Retirement Plans in Singapore:

Source: Shutterstock

Insurance plans provide some of the best and reliable retirement income in any part of the world. This is because they deploy disciplined prices to compound client’s small savings in big returns.

Below are some of the best insurance retirement plans for people in Singapore:


AXA Retire Happy

AXA Retire Happy is an inflation-adjusted retirement income plan. Any amount invested in this case grows at a rate of 3.5% each year to combat the effects of inflation. The plan also offers the highest Guaranteed Maturity Yield. The plans also pays a very high longevity benefit of more than S$400,000 when one is 80 years.


Aviva My Retirement Plus

Just like AXA Aviva MyRetirment Plus adjusts retirement income up 3.5% each year to cater for inflation. The plan also offers high guaranteed yield. In addition, it offers flexibility to withdraw accumulated reversionary bonuses as one desires.


Manulife RetireReady

Manulife RetireReady can be used to supplement Aviva and AXA’s Plans. The plan offers monthly income as well as additional monthly income that can be converted from bonuses before retirement. The unique aspect of this insurance plan is that it doubles monthly income if one suffers loss of independence during income payout period

Manulife RetireReady also waives premium payment in case of Total or Permanent disability during the premium payment period.



This article first appeared on ZUU online.

ZUU online is an Asia-based financial education online portal. Founded in Japan by Kazumasa Tomita, a former private banker at Nomura Securities, the portal seeks to fill the information gap between institutional research houses and the private investor.

(By Ruchi Gupta)

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