How Are Singaporeans Planning For Retirement in Singapore?
You're never too young to start saving for retirement, so how are you planning for yours? It’s best to start your retirement planning as soon as you enter the working world, but the simple truth is that not everyone in Singapore does so.
We spoke to some Singaporeans and got their thoughts on retirement as well as what they're doing to prepare for it.
Lessons From Retired Parents
Wee Kee, a 44-year-old marketing professional, has been planning for his retirement in Singapore since he started working. He has an idea of what retirement is like from his father's experience.
1. Saving
“My parents were from very modest backgrounds; they grew up poor. My father worked day and night as a taxi driver in Singapore and, like a traditional family man, he would pass his earnings to my mother to allocate for expenses,” he explains. “They prioritised retirement savings over spending.”
2. Budgeting
Wee Kee continues: “My dad still stays in the same corner three-room HDB flat he bought 44 years ago and takes buses everywhere. He does his own housework and cooks simple meals. He has simple joys and keeps his regular expenses low after retiring based on what he budgeted for.”
Tip: to budget for your retirement needs, list all expected expenses and consider the following questions to prevent underestimating your expenses:
- How much time is left to pay off the mortgage?
- Will I be moving house or changing to more affordable options like the Community Care Apartments?
- How will retirement affect health insurance premiums?
- Given the rising cost of healthcare in Singapore, would my medical expenses increase as I age?
- Will I spend more on travel or hobbies with the extra leisure time retirement brings?
He says that he does have some retired relatives who live “fairly modestly” and have children who can help them should there be a need, although he admits that he doesn't know the true extent of it. He does help his own father in some situations, too, such as paying for meals out with him and when they go on holidays together.
“When I bought my home, I told my father I couldn't continue giving him a regular allowance. This is largely because of the heavy mortgage payments I have to manage,” he says. “He understood. It also helps that he has a stock portfolio I oversee that he can tap on should he need it.”
Generating an Income for Retirement in Singapore
For younger Singaporeans like Wee Kee, retirement planning has largely been concentrated on capital growth through investing in stocks.
1. Investing in Stocks
Individuals in Singapore often invest in stocks due to their potential for long-term growth, as demonstrated in historical data. For instance, the S&P 500’s annual return has averaged 10.7% since 1957. Essentially, if you start investing in your 30s, there may be a chance your investments will appreciate over the years as you countdown to retirement.
That said, financial experts caution against the flip side of such investments: stocks are inherently volatile, which can expose individuals to the risk of losing their retirement funds. An example was when it plummeted 56.8% from its peak in October 2007 to its lowest point in March 2009 during the 2008 financial crisis and the subsequent Great Recession.
“It's only recently that I put more thought into other schemes available as the stock market sagged. I check back every year or two to see if I'm still on track,” he explains.
2. Insurance Savings and Investment-Linked Insurance Products
Among others preparing for their retirement, insurance savings plans and investments seem to be growing in popularity as sources of passive income in Singapore. At 47, Zerlina Sim has explored a diverse range of options, including insurance products among others. For her, retirement planning is all about “establishing investments that give me either a rental payout each month or a recurring regular interest.” That being said, Zerlina has term and whole life insurance, as well as insurance savings products, which provide annual payouts, in her retirement planning portfolio.
Gro Retire Flex Pro is a flexible insurance savings plan that provides a steady stream of income when you retire. With Gro Retire Flex Pro, you are guaranteed acceptance1 regardless of your health condition. It also gives you the option to accumulate your cash payouts2 with Income Insurance at 3.00% per annum3 or spend according to your needs. This adaptability allows you to meet your evolving financial circumstances as you progress through different stages in life, which is crucial given the growing expenditures that come with marriage and raising children.
But When to Retire?
“It’s important to have a retirement plan, so you have the funds to do whatever it is you wish to when you finally make the decision to retire,” she emphasised.
For Zerlina, her children are a key consideration that dictates when she sees herself retiring – she doesn’t foresee herself retiring until her youngest turns 21 at least.
In the meantime, she’s taking steps to make sure she’s mentally and physically prepared for retirement as well.
Lawyer Maria Tan, 50, and her husband have invested in products and properties and have started to set aside money for their retirement in order to be comfortable later in life. They have a 10-year-old daughter and, therefore, want to be sure they have enough for her education, too.
She plans to retire around age 65, although they both intend to continue to be engaged in consultancy work to have monthly expenses covered. “So, when we say 'retire comfortably', it means we do not worry about big-ticket items and our child's education,” she explains.
As for Wee Kee, he thinks 65 is a good age to retire, as “any younger and you get mentally bored, and any older, you don't get enough time to tick off your bucket list”. He doesn't intend to retire per se, but instead shift focus to do work he’s passionate about. He hopes to have paid off his mortgage by then so that he has more leeway to do more of what he likes to do.
Being financially independent in your retirement years is a goal for many, so take the right steps to achieve this. If you have doubts about how to get started, connecting with an advisor online can shed light on how best to achieve your retirement goals and live the life you envisioned in Singapore.
1 You can further enhance your protection with Enhanced Payor Premium Waiver, Dread Disease Premium Waiver or Cancer Premium Waiver (GIO) rider. You are not required to undergo any medical underwriting unless you are applying for the Enhanced Payor Premium Waiver or Dread Disease Premium Waiver rider to your policy.
2 The cash payout consists of a monthly cash benefit and a non-guaranteed cash bonus.
3 Interest rate of 3.00% per annum is not guaranteed. The prevailing interest rate at the point of the deposit will be determined by us. Any cash benefits paid under the Disability Care Benefit cannot be accumulated with us.
This article is meant purely for informational purposes and should not be relied upon as financial advice. The precise terms, conditions and exclusions of any Income Insurance products mentioned are specified in their respective policy contracts. For customised advice to suit your specific needs, consult an Income Insurance advisor. This advertisement has not been reviewed by the Monetary Authority of Singapore.
These policies are protected under the Policy Owners’ Protection Scheme which is administered by the Singapore Deposit Insurance Corporation (SDIC). Coverage for your policy is automatic and no further action is required from you. For more information on the types of benefits that are covered under the scheme as well as the limits of coverage, where applicable, please contact Income Insurance or visit the GIA/LIA or SDIC websites (www.gia.org.sg or www.lia.org.sg or www.sdic.org. sg).
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