You will be able to list the sources of retirement income and explain why they are planned separately.
Retirement income in Singapore is not one pay cheque. It is a stack of separate sources that start at different ages, are taxed differently and carry different risks. Before you choose a withdrawal rate or decide how much to keep in cash, you list what is actually going to arrive, and when.
The base layer for most people is CPF LIFE, the national annuity that pays a monthly sum for as long as you live. It does not start at 55. Payouts begin at the payout eligibility age set by the CPF Board, and you can choose to start them later, up to age 70, in return for higher payments. How much you receive depends on how much is in your Retirement Account when payouts start and on the plan you choose. The CPF Board's CPF LIFE estimator will show your own figure, and that is the number to use, not an average you read in the news. Whatever the figure, it keeps coming whatever markets do and however long you live. That is why it anchors the bottom of the stack.
Above it sits everything linked to markets: dividends from shares, interest from T-bills, bonds or fixed deposits, and the capital you sell down from a portfolio. None of this is guaranteed. Dividends can be cut, interest rates fall, and share prices can drop just when you need to sell.
Between the two sits the Supplementary Retirement Scheme (SRS). You contribute while working and get tax relief on the contributions. From the statutory retirement age that applied when you made your first contribution, you can withdraw the money with favourable tax treatment, spread over a number of years. IRAS publishes the current rules. SRS is not a lifelong floor. It is a pot you choose when to draw, and the timing changes how much tax you pay, which module 3 covers.
Some people have other layers too: rent from a room or a property, part-time work in the early years, or help from family. Each has its own start date and its own risks. Rent depends on a tenant. Part-time work depends on your health and the job market.
The point of separating the layers is sequencing. If you blur them into one pot, a bad market year forces you to sell growth assets at low prices to pay for groceries. If you keep them distinct, guaranteed income covers the spending you cannot cut, and the market-linked layers pay for the rest. In a bad year you trim the flexible spending, live off cash for a while, and leave the shares alone to recover.
That leads to the question the rest of this course answers in dollars: how much of your spending is essential, and does your guaranteed income cover it? If it does, market falls change your holidays, not your meals. If it does not, the gap has to come from savings, and those savings need a plan for which account to draw first, how much to take each year and what to do when markets fall.
There is one more reason to list every layer now. The same list is the start of your estate planning. CPF savings pass to your nominees, insurance follows its nominations, joint accounts and property may pass to the surviving owner, and only the rest follows your will. Module 7 maps each asset to how it passes on.
For this lesson, write down every source of income you expect in retirement. Next to each one, write the age it starts, whether it is guaranteed or linked to markets, and where you will check its current figure.
List every source of income you expect in retirement, the age each starts and whether it is guaranteed or market-linked.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).