1 Oct 2024
SOURCE: CPF Board
Retirement is often seen as a time to enjoy the fruits of labour from many years of working. For some, it's pursuing their passionate hobbies and for others, it’s about spending time with their loved ones.
In essence, retirement is about making the most of your time to pursue what you enjoy and find meaning in.
Pursuing your desired lifestyle in retirement
However, the anxiety of outliving one’s savings is a common concern as people approach retirement. According to SingStat*, 1 in 2 Singaporeans aged 65 in 2023 may live beyond 85 years old. The fear of financial insecurity in later years can cause stress. This worry could stem from not knowing whether personal savings or investments will be enough to sustain one’s desired retirement lifestyle as we live longer.
*SingStat life expectancy for Singapore residents aged 65 in 2023
Lifelong payouts as the foundation of retirement
So how can you tackle this anxiety and pursue the retirement you desire with peace of mind?
CPF LIFE (Lifelong Income For the Elderly), the national longevity insurance annuity scheme, ensures you receive monthly payouts for as long as you live. Having a steady, lifelong stream of income could offer some reassurance for your finances during retirement.
There are three CPF LIFE Plans for you to choose from, depending on your retirement needs.
Ms Chua (67), who is on the CPF LIFE Escalating Plan*, noted that the plan has reduced her uncertainty around managing savings. It has offered her peace of mind and financial security, especially after she turns 80.
*CPF LIFE Escalating Plan’s payouts start lower initially but grow by 2% yearly. Suitable if you wish to maintain your lifestyle as the cost of living increases.
Mr Huang (70), who is on the CPF LIFE Standard Plan*, prefers a plan that offers a steady payout. For Mr Huang, simple joys like caring for his grandchild Bradley and sharing coffee with his wife bring him a sense of fulfilment, and he is prepared to cut down on his expenses if necessary.
*CPF LIFE Standard Plan’s payouts remain steady for life. Suitable if you can cut back on spending as the cost of living increases.
There's also the Basic Plan, where the payouts fall when your CPF balances drop below $60,000. This plan could be suitable for you, if you can cut back on spending even more over time.
So how can you support your desired retirement lifestyle like Ms Chua and Mr Huang?
Boosting your retirement income
1. Transfer savings from your Ordinary Account (OA) to your Special Account (SA) or Retirement Account (RA)
If you have more savings in your OA, whether from years of hard work or right-sizing your flat, consider transferring them to your SA or RA to enjoy the higher interest rates of 4% to 6% per annum. If you have idle cash savings, you may also consider making a top-up to your SA or RA.
By topping up early, you will also benefit from compounding interest, growing your savings more quickly.
Ms Chua’s advice? In her words, it’s to simply "save as much as you can in your CPF" and to avoid accumulating debts or loans.
2. Defer starting your payouts to age 70
You can choose to start receiving your CPF LIFE payouts from age 65. However, if you enjoy staying active through work and plan to work past the retirement age, you have the flexibility to start your payouts later, anytime between age 65 and age 70.
Those who choose to defer starting their payouts will see their monthly amount increase by up to 7% for every year of deferment. This means that if you choose to defer starting your monthly payouts until 70, your payouts will increase by up to 35%!
Taking care of your loved ones
It is also important to ensure your loved ones are taken care of in the event that you are no longer around.
Having an up-to-date CPF nomination allows your loved ones to receive your CPF savings quickly and conveniently when you pass on. Making a CPF nomination is free, and you can update it according to your wishes.
For CPF LIFE members, any unused CPF LIFE premiums, which comprise the CPF LIFE premium less the total payouts you have received, along with your remaining CPF savings, will be distributed to your nominees.
Without a CPF nomination, your monies will be transferred to the Public Trustee for distribution to eligible family members under relevant intestacy laws. This process incurs a statutory fee, and it could take up to 6 months for your loved ones to receive your savings.
If you don’t remember when you made your CPF Nomination, it might be time to review your nomination to ensure it reflects your latest intentions.
As you plan for retirement, the ultimate goal is not just financial security but also the opportunity to pursue passions, maintain meaningful connections, and enjoy a fulfilling lifestyle that brings joy and purpose.
The information provided in this article is accurate as of the date of publication.
