24 Jan 2025
SOURCE: CPF Board
Planning for your retirement? Your flat can serve as an additional source of retirement income, whether you choose to move out or continue living in it. If you are approaching retirement and looking for passive income streams, consider monetising your home to supplement your retirement finances.
Monetising your home
The Silver Housing Bonus and Lease Buyback scheme are two options that provide financial incentives and flexibility to seniors for a more comfortable retirement:
Silver Housing Bonus
When your children move out, you might become an ‘empty nester’ and find yourself living in a larger space than you need.
Beyond just adapting to the aspect of emptiness, the bigger space might be more challenging to maintain as you age and could be unsuitable for your changing lifestyle in retirement.
An option is to consider is right-sizing to a smaller and more manageable flat. This way, you can reduce maintenance costs and boost your retirement income with the sales proceeds. You can also receive a cash bonus through the Silver Housing Bonus (SHB).
The amount of the Silver Housing Bonus you can receive depends on factors such as the flat type and the required top-up amount to your CPF Retirement Account (RA).
Lease Buyback Scheme
If you value staying in your current home and ageing in a familiar environment, the Lease Buyback Scheme (LBS) might be a good option.
The LBS allows eligible seniors to sell part of their flat's lease back to the Housing and Development Board (HDB), providing a source of retirement income while you continue living in the home you love.
Under the LBS, you can receive a cash bonus, which is determined by factors such as the remaining lease duration, flat type, and the top-up amount to your CPF RA.
Make a voluntary housing refund
To give your CPF savings an additional boost, consider making a voluntary CPF housing refund. This gives you a head start in growing your retirement income through steady CPF interest rates. Making an early refund also reduces the amount you’ll need to return when you sell or transfer your property.
Do note that the mandatory amount to refund include both the funds used for the property and the accrued interest you would have earned if left in your CPF account.
This allows you to retire with more, as well as reduce future repayment obligations.
While retirement seems like a time of uncertainty and changes, planning ahead will pave the way for a smoother transition!
A fulfilling retirement rests on key pillars - a steady and lifelong income stream, sufficient funds for healthcare needs, and a fully paid-up home. Besides not having to worry about your housing loan, these two housing schemes give you the flexibility to monetise your flat in your golden years and give an extra boost to your retirement income.
Watch this video to learn what happens to your CPF when you turn 55 and discover the actions you can take.
As a first step, use the Retirement Payout Planner. You can create a personalised plan based on your current life circumstances to meet your retirement payout goals.
Start planning today!
Information accurate as of date of publication.
