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Getting the Basics Right in Retirement Planning

Getting people to plan for their retirement has always been challenging as it is human nature to postpone difficult financial decisions in favour of more pressing needs such as buying a home and starting a family.

So, it comes as no surprise that most surveys on retirement indicate that a significant proportion of Singaporeans are unprepared. For instance, one digital financial advisory service operating in Singapore1 found that 39 per cent of Singaporeans are not confident about retirement adequacy and that almost half have not planned for retirement at all.

Complicating matters is that today’s blend of surging inflation, market volatility and heightened geopolitical risk brought on by the Ukraine-Russia conflict poses problems that can be unsettling for even seasoned savers.

For older investors, sharp market downturns threaten to diminish the ability of savings to last as long as is needed, while inflation will reduce future purchasing power.

For younger savers, the unfamiliar dynamics and volatility could drive some away from investing, which is a shame as it would then threaten their retirement adequacy; others, however, could be drawn to try their luck in hugely risky assets like cryptocurrencies and could end up losing all or most of their nest eggs.

The answer is that when it comes to retirement, it is important to get the basics right. First, even before starting to think about investing, individuals should first set aside emergency savings of at least six times monthly expenses.

Rather than keep this money in a bank, they should consider the Government-issued Singapore Savings Bonds which currently offer better interest rates than fixed deposits and have the added attraction of penalty-free withdrawal at any time.

Second, individuals should start planning as early as possible to harness the twin benefits of compound interest and time.

These features form the central pillars of the Central Provident Fund (CPF), and it would be prudent for members to familiarise themselves with the various topping-up schemes that are available in order to extract CPF’s maximum benefit.

They should note that members below 55 can earn up to 5 per cent on their CPF balances, whilst those above 55 are paid up to 6 per cent. In both cases, the interest is guaranteed by the Government and compounds annually.

Third is to use CPF as the foundation on which to build the projected income in retirement. For instance, someone turning 55 this year and who sets aside the current Full Retirement Sum of $192,000 can expect to receive a monthly payment of about $1,500 at age 65 for the rest of their lives.

This sum is designed to be sufficient for basic needs and, if more is needed, can serve as the foundation on which to build the necessary sum through saving and investment.

Fourth, investment portfolios should be regularly rebalanced with age and with changes in one’s life circumstances. For instance, a person in their 20s with more than 30 years before retirement can, in theory, take on more risk in their investments as they have time on their side to ride out short- to medium-term volatility.

As such, the portfolios of younger investors can comprise a higher proportion of equities. However, as they age, money should be shifted into safer vehicles such as investment-grade bonds to preserve their funds.

Retirement planning can be challenging for many, given the rising cost of living. However, it need not be difficult – provided one gets the basics right.


1.   Source: Endowus. A robo-advisors or robo-advisers are a class of financial adviser that provide financial advice and investment management online with moderate to minimal human intervention.

They provide digital financial advice based on mathematical rules or algorithms. These algorithms are designed by financial advisors, investment managers and data scientists, and coded in software by programmers. These algorithms are executed by software and do not require a human advisor to impart financial advice to a client. The software utilizes its algorithms to automatically allocate, manage and optimize clients' assets for either short-run or long-run investment. Robo-advisors are categorized based on the extent of personalization, discretion, involvement, and human interaction (Source: Wikipedia)

Examples of robo-advisors include: Autowealth, Endowus, FSM MAPS, Kristal, MoneyOwl, StashAway, Syfe. Banks like DBS, OCBC and UOB also offer robo advisory platform for investment.

CCS is also a community-based orgnanisation providing courses as part of the National Silver Academy (NSA), in support of young seniors aged 50 years and above on retirement financial adequacy and mental resilience. Click here to find out more.

Credit Counselling Singapore

Published 08 July 2022.