List the ways your home can give you income or cash in retirement.
Jasmine owns a fully paid four-room HDB flat. She guesses it would sell for around S$600,000 (an example figure), which is more than half her savings.
For many Singaporeans in their fifties, the flat they live in is the largest thing they own. Jasmine's drawdown map still treats the flat as worth nothing. That is the right starting assumption, because you need somewhere to live. A home pays no income, and it costs money to keep: conservancy charges and property tax. A home can still become income or cash in later life in a few specific ways. You can stay, right-size, sell part of the lease to HDB or rent out a room. The mechanics of selling one flat and buying another are in Property & Mortgages: buy a home and manage the loan, lesson 8.4, Upgrading or right-sizing in the right order.
Staying is the most common choice and is often sensible. You keep your neighbourhood, your routines and your doctor. The home stays out of the income plan. It is still a reserve you can act on later if your savings run low, care costs arrive or you want a smaller place.
The risk is drift: intending to right-size "at some point" and never doing it, until a fall or an illness forces a rushed sale on bad terms. If staying is your plan, write down the condition that would make you move. It might be stairs you can no longer manage, a flat too big to clean, or your savings falling below a level you set in advance.
To right-size is to sell a larger home and buy a smaller or cheaper one, which can release a lump of cash. The cash you can spend is smaller than the gap between the two prices, for two reasons.
The first reason is the CPF refund. If you bought your flat with CPF savings, the sale proceeds first go back to your CPF accounts. The refund is the CPF money you used plus accrued interest, which is the interest that money would have earned if it had stayed in CPF. Your CPF statement shows how much CPF you used and the accrued interest to date. How much of the refund you can withdraw later depends on your age and CPF rules, so check on cpf.gov.sg. The second reason is costs. Agent fees, legal fees and stamp duty on the next purchase also come off the proceeds.
To estimate your own figure, start with the sale price and subtract the CPF refund. Then subtract agent fees, legal fees and stamp duty on the next purchase. Whatever is left is cash in hand.
Jasmine sketched a right-sizing version of her plan. In it she sells the four-room flat at 75 and buys a two-room flexi or a smaller resale flat. After costs and the CPF refund, she estimates about S$250,000 in cash. Lesson 6.4, Write your housing and care plan, tests what that S$250,000 does to her map.
HDB has run schemes that reward older owners for moving to a smaller flat, such as the Silver Housing Bonus. The Silver Housing Bonus has conditions on the type of flat you buy and on topping up your Retirement Account. Check availability and eligibility on the HDB and CPF websites before you count on any such bonus.
The Lease Buyback Scheme lets eligible older owners sell part of their flat's remaining lease back to HDB and keep living in it. You keep a shorter lease that is long enough to cover you, and HDB pays you for the years you give up. Most of the proceeds go into your Retirement Account to raise your CPF LIFE payouts. Part of the flat becomes a higher income floor for life. Any amount left after the Retirement Account top-up may be paid in cash.
The conditions cover age, household income, flat type and how much lease you keep, and the rules change from time to time. HDB's website explains the current conditions and has a way to estimate the proceeds for your own flat.
The trade-off is what you leave behind. A flat with a shorter lease is worth less to your heirs. The lease you keep does end. HDB says that if you outlive it, you will not be left homeless. HDB will look at your circumstances, such as family support, health and finances, and work out a suitable housing arrangement with you and your family. Check the details with HDB. The scheme works against passing the flat to your children. It fits well if your priority is a higher lifelong income without moving.
Renting out a room adds income while you stay where you are. Jasmine thinks she could rent a room for about S$900 a month at today's prices. She has not put this in her central plan. It is the backup she wrote into her rules in module 4 and tested in lesson 5.4, Run your plan through three scenarios.
HDB has rules on who can rent a room, how many occupants are allowed and how you register the arrangement with HDB. Owners usually need to have met the minimum occupation period before renting out a room. Rent is taxable income, and it can push your SRS withdrawals into a higher tax band, as explained in lesson 3.3, Time SRS withdrawals around your other income. Some costs don't show up in the rent figure. You share your kitchen and bathroom, you have to find and manage tenants, and some months may be empty between one tenant and the next.
Side by side, the four options compare like this:
Staying keeps your life and your options and leaves the most to heirs, but releases nothing. Right-sizing releases cash and lowers your running costs, at the cost of moving. Selling part of the lease raises your lifelong income without moving, but shortens what you can pass on. Renting a room keeps everything, at the cost of privacy.
Jasmine's preference is to stay until about 75 and then right-size. She keeps room rental as an emergency lever and the Lease Buyback Scheme as a later option if she can't face moving.
Work out what you want to leave your heirs and weigh each option against it. Then look up the current conditions for each option on HDB's site, and on cpf.gov.sg for the CPF refund and any right-sizing bonus. Estimate roughly what each option would give you before you decide which way you lean.
Write down whether you plan to stay, right-size, sell part of the lease or rent out a room. Next to each one, note the cash or income it would give you.
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