How much is needed? What happens if you outlive your retirement funds? At what age do you want to retire?

According to BlackRock’s Global Investor Pulse survey 2017, Singaporeans are not doing enough to prepare for retirement

Results showed 64% of Singaporeans worry about running out of money in retirement, the highest proportion in Asia Pacific. Nearly nine out of 10 Singaporeans (87%) believe they are responsible for their own retirement income. However, this realization has yet to spark action – only 68% have started saving despite the fact they save an average 15% of monthly income, the highest rate worldwide. Some 84% are saving beyond the mandatory requirement of the Central Provident Fund (CPF), or in other forms of savings plan. But it is clear respondents are underestimating how much they will need for retirement, in many cases by as many as six years.

Millennials in Singapore demonstrate a high awareness of the need to save for retirement, and are concerned about outliving their savings and becoming a burden to their families.

Understanding CPF Life & what CPF can do for you at age 55

CPF Life is a life annuity that provides Singaporeans and Permanent Residents with a monthly payout for life, which they can choose to start receiving from their payout eligibility age. This helps ensure that retirees have access to some form of basic income for as long as they live.

What can you do with your withdrawable CPF savings:

1) Invest in Equities

2) Retirement Related Insurance

To supplement the CPF Life payout, you can consider putting aside some money in retirement insurance plans, such as annuities that can provide an additional source of stable income.

Besides annuities, life insurers have been rolling out retirement insurance plans that come with flexible premium payment terms and different payout periods to cater to your financial needs

3) Endowment Plans

Such policies can offer lump sum proceeds at different maturity periods, so you get a staggered payout, or monthly cash benefits if you prefer higher liquidity. The yield from endowment policies can also hedge against the effects of inflation.

4) Singapore Savings Bond

Treat retirement like a camera by focusing on what’s important. Be sure to capture the good times, develop from the negatives, and if things don’t turn out the way you expected, take another shot!

Reducing your retirement income gap requires you to take action now.

  1. Start early, save systematically and make these savings generate returns over time. Time is needed for your savings to compound
  2. Diversify portfolio is necessary so as to make your money work for you. Having an optimal portfolio which gives you the optimal return based on your risk appetite is important.
  3. Review your retirement plans & portfolio periodically.