You will be able to list the sources of a retirement income and what each depends on.
Ask someone in their twenties how they will pay for retirement and the usual answer is "CPF, I suppose", followed by a shrug. Ask what CPF will pay them, or what they will spend at 70, and the shrug gets bigger. Retirement is so far away that it feels like a problem for an older version of yourself.
The trouble is that the older version of you has very few ways to fix it. Most of what decides your retirement income is set by what you do in the thirty or forty years before it. This lesson lists where that income can come from, and what each source depends on, so you can start to see how big your own gap might be.
For most Singaporeans, the first source is CPF LIFE. As lesson 5.3 explained, it turns your Retirement Account savings into a monthly income. Payouts start from your payout eligibility age and last as long as you live.
Its size depends on how much is in your Retirement Account when payouts begin. That in turn depends on how much you and your employers paid in over your working life, how much interest it earned, how much you used for housing, and whether you topped it up. A person who earned well for many years and used little CPF for housing will have a larger payout than someone who had long gaps in work or used most of their Ordinary Account on a flat.
Think of CPF LIFE as a floor. For many people it covers basic needs, and for some it covers more. The estimate you found on cpf.gov.sg in lesson 5.3 shows roughly where your floor is today.
Anything you want above that floor has to come from money you build yourself. That means cash savings, investments held in your own name, and the Supplementary Retirement Scheme from lesson 6.3.
This is the source you control most. How large it gets depends on three things: how much you put in each month, how many years it has to grow, and what it earns along the way. The second matters more than people expect. Money invested at 30 has many more years to grow than money invested at 50, which is why the investing amount from lesson 6.4 is worth setting early, even if it is small.
SRS deserves a mention of its own. Contributions can lower your income tax while you work, and in retirement, withdrawals can be spread over a number of years, with only part of each one counted as taxable income. Those rules, including how withdrawals are taxed, are on the IRAS website.
Two other things make the picture larger or the need smaller.
Some people choose to keep working part time after leaving a full-time job, for the income, the routine or both. Even a modest part-time income in the first few years of retirement lets your savings stay invested for longer. Do not build your whole plan on it, though, because health and the job market may not cooperate.
A paid-off home works on the other side of the sum. With no loan repayments and no rent, your monthly costs in retirement drop a long way. A home can also be turned into income, by renting out a room or by moving to a smaller place and keeping the difference. HDB also runs schemes for older flat owners, such as the Lease Buyback Scheme, and the current terms are on hdb.gov.sg.
None of the sources above means anything until you know what you want to spend. That number is personal. Two people with the same salary today might want very different retirements: one wants to travel twice a year and help with grandchildren's school fees, the other wants a quiet life near the hawker centre.
Start with a rough figure at today's prices. Pretend you are retired now and list what you would spend each month. Using current prices keeps the figure easy to judge, and converting it into future dollars is a later step.
Here is Wei Ling's first try, with figures made up for the example. She assumes the flat she plans to buy, from lesson 7.1, is paid off by then.
Food and groceries: S$900 Utilities, conservancy charges and phone: S$300 Transport: S$200 Healthcare and insurance premiums: S$450 Travel: S$400 Gifts and family: S$250 Hobbies and everything else: S$500
The total is S$3,000 a month. Some costs she has now are missing: no loan, no CPF contributions, no saving for goals, no work clothes or lunches out. Others are higher than today, such as healthcare.
It is a first guess and she knows it. The point is to have a number she can compare with her CPF LIFE estimate in lesson 7.3. How to refine it, including inflation, how long the money has to last and how to draw it down, is taught in Retirement & Estate.
Now try the same thing for yourself. Picture an ordinary month after you stop full-time work, the costs that would still be there and the ones that would have gone.
Write a first estimate of the monthly spending you would want in retirement, measured at today's prices.
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