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How to make a retirement plan in Singapore: How much do you need? Step by Step guide!

Updated: Aug 22, 2022

Have you ever wondered what you would be doing at the age of 65?

Many would have retired by that age and be enjoying their post-work years.

However, in order to do so, you would need a retirement plan to make sure that you’re financially independent at the age of retirement.

Now, you would wonder what retirement is. Retirement is when one stops working after reaching a certain age.

In Singapore’s context, most retire when they reach the age of 63. You would then be eligible to receive a monthly CPF payout anytime from the age of 65 to 70.

What is a retirement plan?

A retirement plan is a plan to prepare yourself for how you would like to spend your retired life. This plan allows you to prepare for your future life so that you can continue to meet all your goals and dreams independently.

This includes your retirement goals, the lifestyle you aspire to lead after retirement, the amount of money you would need, and investing to grow your retirement savings.

Different people have different goals and ideas on how they would like to spend their retired life. Hence, it is important for everyone to have a retirement plan designed specifically to suit their individual needs.

With a retirement plan, you could fulfil your wishes and goals while maintaining your financial independence.

If you'd like to skip this tedious process, you can look at retirement annuity plans available in Singapore 2022!

Check out what are retirement annuity plans.

Step 1: Understand your financial situation

Firstly, you would need to project your cashflows from now till retirement, which includes your earnings and spending. You can use spreadsheets such as Microsoft excel or google sheets.

The spreadsheet should include:

  • Current savings, investments and net worth

  • Years to retirement

  • Annual withdrawal rate

  • Investment return rate

  • Expected income

  • Expected expenses

  • Expected debt repayment

Inflation should be taken into consideration as the cost of living will increase every year. You can use an inflation figure of 2.5% for your calculations.

Evaluate your cash flows from now till retirement

Evaluating your cash flows means examining how you are generating your income. This is important to find out your net worth and how much you would need now for retirement.

Cash flows refer to your cash inflow and cash outflows. The purpose of doing this is to find out the net cash position (Cash inflows - Cash outflows) you have just before retirement and how much you will need till retirement.

Evaluate Cash inflows till retirement

In order to evaluate your cash inflows, you would have to account for your monthly income. This includes your salary, cash payouts from insurance plans, allowance from children, rental income or/and investments.

Evaluate Cash outflows till retirement

On the other hand, the evaluation of cash outflows includes monthly expenses, debts and liabilities.

Expenses include living expenses like food, entertainment, utilities, transport etc. This also includes premiums from insurance plans.

If you track your expenses, calculating your cash outflows should be pretty easy. If not, try tracking your expenses with a money app.

Once you know how much you spend per month, you can estimate how much you spend in a year. And calculate how much you would spend in total before retirement.

To be more accurate, you'll also have to account for inflation on your expenses which are at an average figure of 2.5% per year.

Repayment of debt is not an expense but is a cash outflow. You will need to understand the interest charged on the debt, the tenure of the loan and how much you're paying on your debts every year till retirement.

Identify your total Assets at retirement

This section talks about knowing what you own before retirement. It doesn't deal with cashflows, instead, it is based on the net cash flows that you've done earlier.

One question to ask yourself is where will you place your net cash flows over the course of the years?

To a savings account? A fixed deposit? Investments? or properties?

Once you've answered that, it gets you thinking about what you will own and how much you will have by the time you retire.

Your property, investments, car, and savings are big examples that you'll have to be familiar with.

If you know what you own and how much you have, planning your retirement becomes easier.

Identify your total Debt at retirement

This section talks about the debt you will have when you've reached retirement.

Over the course of the years to retirement, would you have repaid your debt?

If not how much debt would you be left with? What type of debt?

Some common debt among those retiring includes Credit card debt, Mortgage debt or/and vehicle loans.

Once you understand the debt you have left at retirement, think about how you can repay those loans during retirement.

Review your insurance policy

Policies should be reviewed to discontinue premiums that may not be essential such as life insurance policies that are no longer needed if your children are no longer financially dependent on you.

You should also check whether your coverage would be enough for basic hospitalisation plans, critical illness or long-term care, in the event of unforeseen circumstances.

Step 2: Review your CPF

CPF LIFE is a national longevity insurance annuity scheme that provides you with monthly payouts no matter how long you live.

There is an automatic inclusion if you are:

  • A Singapore Citizen or Permanent Resident;

  • Born in 1958 or after; and

  • Have at least $60,000 in your retirement savings when you start your monthly payouts

Before we get into CPF LIFE, you’ll need to understand what a Retirement account is.

Savings from your Special Account, followed by your Ordinary Account will be transferred to your Retirement account.

The sum in your Retirement account A.K.A your retirement sum will provide you with your monthly payouts for CPF LIFE at age 65.

Yes, that means you will get to enjoy interest on your Retirement account for up to 10 years.

How much can I withdraw from CPF?

In order to know how much you can withdraw, you’ll have to understand the different types of retirement sums.

When you turn 55, you can choose to withdraw:

  • Up to $5,000 if you have $5,000 or less in your CPF OA & SA account or;

  • Any retirement account savings above the Basic Retirement Sum of $96,000 if you own a property or;

  • Any retirement accounts savings above the Full Retirement Sum of $192,000 (if you do not own a property, you’ll not be eligible to withdraw any amount above the Basic Retirement sum);

CPF Life retirement sum will increase by 2.5-3.5% every year to account for inflation.

Individuals who make withdrawals after turning 55 mainly use the funds for immediate expenditure needs or purchasing big-ticket items.

Most individuals who have no immediate need for these funds leave it in the account to accumulate more interest until they reach the age of 65.

With higher CPF savings, more interest can be earned and compounded over time, achieving higher annuity CPF payouts in future. Hence, some may choose to top up their CPF to have a better retirement sum.

CPF LIFE Payouts

You can choose your CPF LIFE plan when you wish to start receiving monthly payouts, anytime from age 65 to 70.

CPF LIFE plan has 3 types of plans:

All 3 CPF LIFE plans share common features:

  • They will provide you with a monthly payout no matter how long you live.

  • Your Retirement Account (RA) savings will be used to pay the CPF LIFE premium for your CPF LIFE plan. These premiums will earn attractive and risk-free CPF interest rates of up to 6%, which includes the extra interest of up to 2% from the Government.

  • When you pass away, your beneficiaries will receive your CPF LIFE premium balance (if any) together with any remaining CPF savings.

However, each plan provides different types of monthly payouts to cater to members with different retirement income needs.

How much are the CPF Payouts?

The table below shows the CPF LIFE standard plan’s estimated monthly payout from the age of 65 and the amount of savings you would need at different points in life:

Sourced from CPF

The payouts are pro-rated based on the retirement sum you have in your account at age 65.

To calculate your payouts under other plans, you can use the CPF LIFE Estimator calculator!

Step 3: How much do you need for retirement in Singapore?

To find out how much you need for retirement in Singapore, you would need to predict your monthly cash inflows and outflows. On top of that, you would have to factor in your health status.

Additional expenses may be incurred due to poor health.

The type of retirement lifestyle also plays a part in how much you would need to set aside for retirement.

Each individual’s retirement plan would differ due to different lifestyles and needs. Hence, it is crucial to determine your net cash position, and from there determine the amount you would need for retirement.

Decide when to retire

Planning for retirement early is necessary to retire at a certain age. This affects when you should receive your CPF Life payouts, it also allows you to determine how much income you need during your retirement years.

If you assume that you'll live up to 85, then you can start calculating the retirement income you'll need during your retirement years.

Most Singaporeans retire at the age of 62, which is the age for retirement in accordance with the Ministry of Manpower.

Project Cashflows during retirement

In order to calculate this sum, a retirement calculator can be used to determine if your retirement goals are achievable.

This is an interactive tool by CPF to determine the amount of savings needed based on their desired retirement age and lifestyle. Alternatively, if you’d like to manually calculate how much you’ll need, we’ve listed the steps for you to take below!

Project Cash Inflows during retirement

Some sources of cash inflows during retirement include CPF Life payouts, dividends, allowance from children, Rental income or investment returns.

These cash inflows are used to calculate the projected cash inflows during your retirement. It is also used to predict and gauge whether your retirement income goals are achievable.

Project Cash Outflows during retirement

As a retired individual, you will be going on holidays more often. It's important to account for those discretionary expenses.

Apart from that, consider your living expenses, Vehicle expenses, debt repayment, insurance premiums, and children's or grandchild's education expenses.

These make up the projected outflows during your retirement, hence allowing you to calculate your net cash position.

Step 4: Calculate your retirement shortfall

Then, calculate your net cashflows. This will allow you to determine any shortfall in your retirement needs.

As such, you can start investing earlier to make up for any shortfall in the amount required for retirement.

Here’s how to calculate your retirement shortfall:

Retirement Shortfall = [Cash outflows during retirement] - [Cash inflow during retirement] - [Savings @ retirement age] + [Investments @ retirement age]

Retirement age is the age you decide to retire; savings & investments should be calculated when you identified your total assets at retirement.

The net amount is your retirement shortfall. It is also how much more you need by the time you retire.

Step 5: Find out your risk profile

If you have a retirement shortfall, and you’re looking to invest, you will need to identify your risk profile.

The risk profile is an evaluation of an individual’s willingness and ability to take risks. Depending on your risk profile, you will understand the type of assets you should invest in.

You can try out our risk profile calculator to help you determine what you should be investing in!

Our risk profile calculator seeks to understand your:

  • Investment time horizon

  • Investment experience

  • Risk tolerance

  • Overall Investment objective

  • & more


Step 6: Where to invest money for future retirement sum?

You can consider investing in CPF investment schemes (CPFIS). This scheme allows you to invest your Ordinary Account (OA) and Special Account (SA) savings in a wide range of investments to enhance your retirement savings.

You can invest under CPFIS if you:

  • are at least 18 years old;

  • are not an undischarged bankrupt;

  • have more than $20,000 in your OA; and/or

  • have more than $40,000 in your SA; and

  • have completed the CPFIS Self-Awareness Questionnaire (SAQ) (applicable to new investors with effect from 1 October 2018)

Other investment alternatives include dividend ETFs, REITs, Bonds and properties which could yield you considerably higher returns.

If you'd like to explore these alternatives, it'll be wise to consult a financial advisor.

Contrary to their reputation for pushy sales tactics, financial advisers help new investors cut through the noise.

According to a survey report by St James’s Place Wealth Management, a majority of Singaporeans or 81%, stated that they heavily prioritise seeking financial advice before making any major financial decision.

And 56% ranked financial advisers as their top source of financial advice.

Financial advisors can arrange your investments and build a financial plan that helps ensure you will meet your financial goals in a sustainable manner.

Techiya provides investment planning services, and we do the following:

  • Identify your current life stage

  • Identify your goals, needs and wants

  • Find out how much you will need for each need, wants, and goals

  • Plan how you can achieve these goals sustainably

  • Build and optimise your financial investments

Step 7: What should I do after crafting a retirement plan?

After crafting a retirement plan, you should review the plan on a constant basis to ensure that information is up to date. Should any unforeseen event happen, changes should be made accordingly?

You should also set up an estate plan to prepare how to manage your assets in the event of incapacitation or death. This plan would determine how your assets would be distributed and managed after death.

After setting up an estate plan, you should aim to reduce the amount of debt you are currently in to reduce the number of expenses at the age of retirement.


Having a retirement plan allows you to be better prepared for retirement. This plan reduces any unexpected shortfall at retirement.

There are also many tool kits available for you to calculate the retirement sum required in order to better prepare yourself for retirement.

With proper retirement planning and futuristic thinking, you would be able to retire comfortably.

Hence, it is always beneficial to start planning for retirement ahead, for yourself, or your parents to relish in comfort at the age of retirement.



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