How Much Money Do I Need To Retire Comfortably In Singapore?

As of 2022, Singapore has just increased the retirement age from 62 to 63. Re-employment age will be increased from 67 to 68. For employees who were hired at 55 years old will qualify for reemployment if they have worked with the business owner for 2 years and above. These measures set by the Ministry of Manpower helps to increase the workforce available in Singapore. They are also set to encourage senior citizens to continue working if they wish to.

However, there will be no changes to the CPF withdrawal age. It remains at 65 years old. The payout eligibility age remains unchanged as the ministry hopes to set a balance between retirement income and savings. Moreover, with better healthcare, Singaporeans are expected to live longer than before.

While retirement seems like a distant event for most people, all these changes in retirement age and policies will impact you. Retirement will happen at some time, even if you can’t quite visualize it now.

Many Singaporeans, and even others around the world often don’t take the time to prepare for their retirement carefully.

To ensure a comfortable and relaxing retirement, you should start planning early. The first thing you want to know is how much money you need to retire in Singapore. You want to live a comfortable life in your golden years, with less work and more downtime. But Singapore is one of the most expensive countries worldwide, and your daily expenses can become burdensome quickly. Factor in medical expenses, travel, shopping, bills, your retirement fund will be used up fast. Also, you might want to factor in inflation.

The key is to start planning for your retirement as early as possible. Consistency is the key. Let’s find out how to plan your retirement goals.

What Is Singapore’s Official Retirement Age?

The Singapore retirement age is 63 years old. That age is pretty convenient, placing Singapore somewhere in the middle range between 67 years (US, Norway, and Israel) and 58 years (Turkey).

Consider that the average life expectancy is:

• 83 years old for men
• 87 years old for women

That gives you at least 25 years of your life to reap the rewards of your work. Besides, if you’re feeling up for it, you can always keep working after 62. Otherwise, you can enjoy your Singapore retirement in peace – or in vibrant cruises – whatever floats your boat.

But first:

How Much Do I Need to Retire Comfortably in Singapore?

The amount of money you need to retire in Singapore varies for each individual. How much you need to retire in Singapore is an issue affected by several factors:

• The lifestyle you want to lead. A more activity-packed life with concerts, trips, and restaurant dinners will require more money. Even if you plan low-cost activities, such as hiking, you may still need continual investments in equipment and transport.
• Health status. The healthier you are, the less money you’ll need for doctor’s appointments and medication. Even so, being in your golden years requires more check-ups and attention to your health. So, you’ll have to plan a larger chunk of your income for that purpose.
• Preexisting debts. Hopefully, you’ll have paid most of your debt by the time you reach your sixties. But if you haven’t, you’ll want to consider these instalments when making your budget.
• Your children’s plans. When you’re in your sixties, your kids will be in their thirties or forties, growing their own families and businesses. You might want to help them financially – for example, with their apartment’s downpayment or your grandchildren’s education. But you’ll need the funds for that.

Apart from these highly subjective factors, you’ll want to consider some objective variables:

• The cost of living in Singapore is on the rise, so make sure your savings and investments can handle that increase.
• The cost of retirement in Singapore is also influenced by your life expectancy. If you’re to follow the country’s averages, you’ll want to plan for at least 20 to 25 years.
• Unexpected taxes. These taxes may come up because of inflation or other economic issues. Another global pandemic can always happen, and the world will undoubtedly be more preoccupied with going green and fighting weather changes. Singapore’s electricity bills also surged, causing monthly expenses to rise.

Is $600 000 Enough to Retire in Singapore?

Is $600,000 enough to retire for most? This is a question that is commonly asked. Now that we’ve tackled these issues let’s see exactly how much you need to retire in Singapore. Your lifestyle is the leading factor influencing the answer to that question.

However, the Department of Statistics in Singapore says that retired people over 62 need an average of $1,379 monthly to cover their expenses.

This sum includes basic costs:

• Food
• Housing
• Transport
• Recreation

However, that’s just the average, and you will have to account for inflation, possible medicine you might need, and more costly forms of entertainment.

• If you stick to $1,379 per month, you’ll need $16,548 per year and $330,960 for twenty years of retirement.
• However, $2,000/month is a more realistic sum. That brings you to $24,000/year and $480,000/20 years of retirement.

So yes, $600,000 can cover the cost of retirement in Singapore if you’re planning to lead a moderate, though comfortable, lifestyle. If you’re planning to lead frugally, even $400,000 might suffice.

But if you’re planning to live like royalty, you’ll need at least $1 million. This sum will allow you to travel at least once a year without trying to find the cheapest Airbnb – or its equivalent three decades into the future. You may also need this money to start your own dream business or simply as a cushion in case of emergencies or accidents.

Here’s how much you need to retire in Singapore if you start saving at 30:

And here’s how much you’d need if you start saving at 22:

Of course, one of the good things in Singapore is that we all have a CPF account. CPF contribution rates vary with your age, but there will definitely be money going into your retirement funds. This is helpful for those who have trouble saving for their retirement or did not start planning early.

CPF Contribution Rates

What are the CPF contribution rates in Singapore?

For Singapore’s CPF system, both you and your employer will have to put a sum of money in monthly. That is good news because you will end up saving more without feeling the pinch in your wallet.

Source: Central Provident Fund Board

Is Singapore a Good Place to Retire?

That’s how much you need to retire in Singapore depending on your lifestyle, health issues, and plans, but also possible taxes (and inflation, which is also a sort of tax).

But is Singapore a worthy place to retire, or should you consider somewhere else?

The island is relatively pricey, so you may be better off living in enchanting Croatia or a sunny Greek island. However, Singapore has its advantages:

• Multiple government initiatives for retirees, helping you tackle the high cost of living
• Excellent healthcare
• Top-notch amenities and opportunities for retired people

Besides, you might have a psychological connection with this country if you were born or lived here for many years before retirement.

But Singapore – just like any other country in the world – is an excellent place to retire if you can do it comfortably. Here are some tips on that:

1. Build Your Savings

Start saving money long before your retirement age to enjoy the life you deserve. That means:

• Bonds
• Fixed deposits
• Savings accounts

Automate your contributions to ensure you’re putting money aside instead of spending it chaotically.

2. Start an Investment Portfolio

Investing is different from trading; and, unless you’re Bobby Axelrod, you shouldn’t go into trading. Instead, you should focus on long-term investing and building a diverse portfolio.

Your portfolio should include stocks and bonds, ETFs, REITs, and many more in different proportions, according to your risk appetite. However, your goal should be growing your assets in the long term to help you retire.

3. Life Insurance

Life is unexpected. Life insurance will also help you financially, especially if you’ll have to handle unforeseen medical expenses. And, unfortunately, being over 60 always leads to some health problems.

The earlier you purchase your life insurance, the cheaper the premiums are. This is because humans are assumed to be in a better health stage at a younger age, and have a lower probability of falling ill.

4. Fight Inflation

Inflation is like a storm: you can’t prevent it, and it will get you soaked, but you have to weather it to survive. Since even moderate rain can get you wet, you need the right umbrella to guard you. And you can expect some inflation to wear down the price of your assets in the following decades.

The solution is to increase your income:

• Do your research before opening a savings account or a fixed deposit. Make sure the interest and terms are convenient.
• Keep track of your retirement egg. You want your investments to help you cover the cost of retirement, so ensure your money is working for you. Still, avoid high-risk investments and never do business with loan sharks.
• Consider passive income strategies. If you don’t have the time to get a second job, consider renting a room in your home or monetising your hobbies (e.g., hold guitar lessons if you like playing the instrument or sell your cookies if you like baking).

What Is the Supplementary Retirement Scheme (SRS)?

The Supplementary Retirement Scheme (SRS) is one of the government schemes that will help you handle the retirement cost in Singapore. This savings plan offers you specific tax incentives to save more money for your retirement.

What is the SRS all about?

The Supplementary Retirement Scheme (SRS) addresses everyone, from Singaporeans to PRs and foreigners. This scheme works well alongside other saving plans to retire in Singapore and it allows you to contribute a maximum of $15,300/year (Singaporeans, PRs) or $35,700 (foreigners).

The scheme boasts a tax cap relief of $80,000/year, meaning that you will pay fewer taxes on your income.

Here’s how you can leverage your SRS account:

• Consider topping off your CPF retirement account to reap interest. The interest rate is 0.05% per year. Although that means just $7.5 after one year, remember that the interest is compounding, and you’ll keep depositing $15,000/year. Your account will have:
  • $150,406 after ten years
  • $225,895 after 15 years
  • $301,572 after 20 years

Alternatively, you can:

• Use this money to diversify your portfolio with more financial instruments. For an average 7% return on investment, your balance could look like this:
  • $90,923 after five years
  • $219,824 after ten years
  • $400,613 after 15 years
  • $654,180 after 20 years

However, your contributions aren’t guaranteed in this case – even the wisest investments can go wrong.

Planning For Your Retirement Well

Planning to retire in Singapore is an excellent idea because you’ll live in one of the world’s most developed, high-tech countries. Besides, you’ll get the best conditions and amenities for retirees, from entertainment opportunities to government initiatives and healthcare.

However, the cost of living is very high, and so is your cost of retirement.

That means you need at least $600,000 to lead a comfortable life instead of a frugal one. This amount can seem like a lot, but don’t let numbers scare you.

Saving $1,562.5/month in your thirties can easily get you that amount. Alternatively, you can use the SRS government scheme to top off your contributions. You can start setting out realistic goals and work on them. It is never too late to start!

If you are looking for a customizable loan plan to sort out your finances (debts, bills, courses), U Credit has got you covered! We help you plan your finances and share professional advice for your retirement planning. Make an appointment or visit our shop near Bugis MRT!