Retirement Planning Singapore: What do you need for retirement?


Retirement Planning Singapore - How much do you need for retirement?


In our retirement planning, we are often underestimating substantially what we need for our eventual retirement that could cost substantially more than what we think we would require in today’s terms as follows,

Retirement in

Multiple of the amount you think you require now

10 years


20 years


30 years


40 years


50 years



Required Savings upon retirement is hence a much larger sum as compared to what we think we require in today’s terms. The table below shows the estimated savings a 30-year old, 40-year old and 50-year old would require upon retirement at age 65 so as to be able to sustain their various required monthly expenses of $1,000 – $5,000 per month (in today’s terms).


Retirement Planning Singapore - Required Savings Summary

Note: Assumptions based on the table below



Retirement Planning Singapore: What does the government say?

The Minimum Sum provides CPF members with monthly payouts in their retirement years. At 55 years old, CPF will create your Retirement Account and transfer some of your CPF savings from your Special Account and/or Ordinary Account into this account to form your retirement sum. Your retirement sum will be used to buy a CPF LIFE annuity to receive lifelong monthly payouts from your payout eligibility age, which is currently at age 65. Depending on your desired CPF LIFE monthly payout and your CPF balances, you can choose from a range of payout options that best suit your needs in retirement.

CPF Life Monthly Payouts

*: Payouts are estimates based on CPF LIFE Standard Plan parameters in 2016.

#: Available from January 2016

Source: CPF


However, the question is – Is this enough?

Are we underestimating the amount of money that we need to retire simply because we are not taking into account inflation? This amount of $1,200 translates to $40 a day that may be a small amount given the sky rocketing cost of basic amenities and food in Singapore with our steady inflation. Inflation rate in Singapore averaged 2.8% from 1962 until 2014. The cost of a meal that cost $5 today could cost up to $12 in 2045 just 30 years from now. The amount of $40 per day may be barely adequate even for just 3 meals a day in 30 years time.

This is the power of inflation and the compounding effect of that is somewhat frightening. For example, if you think that you need just $1,000 monthly in today’s terms to retire, you may actually need almost $2,500 to buy the same things in 30 years time. This is an astonishing 2.5x the amount that you need today.  In 50-years, you would need almost 4.5x the same amount.

Putting that into perspective, if you are a 30-year old who is looking at a mere $1,000 monthly in today’s terms upon retirement, you would need almost $640,000 in savings upon retirement 30-years later! See table below,

Retirement Planning (30-year old)

Note: Inflation rate rounded to 3% for all calculations

*: Calculation based on average age expectancy for females in Singapore at 85 years old

^: Based on $1,000 per month required in today’s terms for a 30-year old today retiring completely in 35 years time

**: Savings to grow at 4% per annum based on current CPF Retirement Account interest


Retirement Planning Singapore: Key Takeaways on what you need for retirement?
  • Retirement using only CPF is not enough. We need a surprising large amount of money at the point of retirement due to inflation. For a 30-year old today,  you would require $640,000 to retire for a $1,000 monthly payout (in today’s terms). Referencing it just to the minimum sum or even the enhanced retirement sum ($241,500 based on proposed changes) may be insufficient as inflation until retirement can be very significant. For a 30-year old, if you instead think that you will make $5,000 (in today’s terms) in monthly expenses upon retirement, the amount that you would need given the same assumptions upon retirement is a whopping $3.2 million at point of retirement! In summary, both amounts are much less than what we would have manage to accumulate in our CPF accounts
  • Life Expectancy could be longer. We are generally also underestimating the amount of time that we would need the income as life expectancy is generally expected to go up meaning that we would require income for a longer period of time as compared to what is estimated now. Additionally, what we have calculated is based on the average, meaning that you could very well be living longer than others that would mean that you would require income for an even longer period. In this current day and age and with steady medical advances, it is not uncommon for some people to live even until a 100 years old.
  • Prepare for retirement early. Ultimately, we need to over prepare rather than under prepare and it is never too early to start thinking about retirement. It is crucial that we start looking at this now (if you haven’t already) and start planning for your retirement.

Please see articles below on retirement planning

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