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Retirement: Here’s How You Can Ready Yourself for the Golden Years

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Here’s the good news – You’re most likely going to live a long time. Life expectancy has been steadily increasing in Singapore since the 90s. Life expectancy at birth in the year 1990 was 75.3 years. In the year 2013, this number increased to 82.4 years. An average Singaporean in now expected to live at least 7 years longer than in 1990, as reported by the Ministry of Health (MOH) in their findings titled “Life Expectancy in Singapore” (13 April 2016).

Here’s the not-so-good news – Now that you might live longer, you have to save more for your retirement. You need to be able to sustain yourself for the years after you leave your job and career behind.

The question you need to ask is – How do you get ready for retirement?

A poll conducted by BetterTradeOff recently revealed that 1 in every 3 Singaporeans are planning to work through their retirement simply because they are not retirement-ready.

If this sounds like you, perhaps it’s time to change that. Here are a few ways to save specifically for your retirement:

Supplementary Retirement Scheme (SRS) 

Relying blindly on your CPF savings after retirement is as foolish as assuming that your grandchild will be satisfied with just one toy to play with. The SRS can complement your CPF savings, making a nice little slush fund when you retire.

Why you should consider SRS as a viable retirement savings option?

  • Contributing to your SRS account will help your tax situation, as every dollar you put in up till S$15,300 each year will qualify you for tax relief on the current year’s income.
  • Furthermore, only 50% of the amount you withdraw after the official retirement age will be taxed. (i.e. if you withdraw S$200k, only S$100k will be taxed)

Optimise your CPF accounts 

You’ll most likely be contributing to your CPF accounts monthly using your monthly salary and employer contribution. CPF automatically allocates the contributions into your Ordinary Account, Special Account and Medisave.

But that’s just the default, and if we want to ensure we’re well-prepared for our retirement, we need to optimise our CPF.

To do so, you should consider transferring money you don’t need from your Ordinary Account to your Special Account to earn higher interest. If you have extra cash in your bank, you can also make a voluntary cash contribution to your Special Account, and as a bonus, be entitled to tax reliefs up to S$7,000 per calendar year.

Here’s how much interest you get for each account:

  • Ordinary account: 2.5 to 3.5% per annum (p.a.)
  • Medisave and Special accounts: 4 to 5% p.a.

It’s actually quite simple to do it, but many people often neglect this. To make voluntary cash contributions to your CPF, follow our guide here.

Opting for Retirement Plans from Insurers

 One of the biggest worries of retirement is taking care of medical expenses and bills because your CPF savings may not suffice. Private insurers including Aviva, AXA and Manulife offer specific plans for retirement.

Such plans offer a range of retirement solutions including paying for assistance/care upon old age, monthly payouts, premium savings plan that guarantee capital and returns. With select plans, you even have the option to add a rider to waive your premium in case of disability, critical illness, involuntary income loss, etc.

Start learning to invest your money

 A lot of us feel that investing is dangerous or costly. However, research and wealthy people would say that the opposite is true – staying out of the market is dangerous and costly.

How so? If you’re not actively growing your money and you’re merely relying on your monthly salary, there’s a high chance your money will be eaten away by inflation, or you’ll end up with insufficient funds for your future.

Historical data shows that despite the ups and downs in the stock market, it has been an upward trend over the past few decades. If you’re in the market and you stay invested over the long term, you’ll be able to reap those benefits as well.

You don’t have to start with a lot of money either. There are regular savings plans which let you put in a small amount money each month. You can also look into the Straits Times Index for a start – a relatively fuss-free way to be invested in a basket of top company shares in Singapore.

Getting yourself acquainted with the things needed to start investing, and read more about investing so that you don’t make unwise decisions.

Whatever your plan maybe for the future, the earlier you start, the safer it gets.

 Retirement is more than just trying to still look young, so put down that anti-ageing cream and invest in an index fund, top-up your CPF account, opt for a retirement plan and dress-up your future instead!


By Vipin Kalra, Chief Executive Officer, BankBazaar International. BankBazaar is a leading online marketplace that helps consumers compare and apply for a credit cardpersonal loanhome loancar loan and insurance. 

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