Taking a family photo together

3 Tips From Building Income to Staying Active

You’ve probably heard that the best time to start planning for your retirement is now. And that’s the truth, even while you are juggling all the demands of family life: daily expenses, children’s education, your parents’ healthcare. How do you go from here, to taking control of your future? Read on for 3 retirement planning strategies you can adopt to be ready for your future.

#1 Money matters: Build passive income streams for your retirement

Annuities: CPF LIFE, pseudo-annuity from SRS, endowment plans

Annuities can provide a regular source of income. It works by you accumulating funds at an initial stage, which helps you to achieve a sizeable stream of income in your retirement years. You can use a ready-made one from CPF, or structure your own using SRS and endowment plans.

  • CPF Lifelong Income For the Elderly (CPF LIFE scheme): CPF LIFE is the national life annuity scheme that offers Singapore Citizens and Permanent Residents a monthly payout for as long as they live.

    Understand how CPF works for your retirement

    Tip: Delay your CPF LIFE payouts to earn more interest

    How to earn more interest with CPF savings

  • Pseudo-annuity from SRS or endowment plans: You can also structure a pseudo-annuity ladder with by using the Supplementary Retirement Scheme (SRS) or a series of endowment policies which mature at different times. Use the cash flow from SRS withdrawals and maturing policies to supplement your CPF LIFE payouts to ensure you have enough for yourself and for your loved ones.

    Tip: Use cash flow from SRS savings and endowment to fund your retirement.

Dividends from stocks, REITs

Blue chip stocks, Straits Times Index Exchange-traded Funds (STI ETFs) and Real Estate Investment Trusts (REITs) can provide regular income. Especially for REITs, as dividends are usually paid out at least twice a year.

Coupons from bonds, SSBs

Fixed income instruments such Singapore Savings Bonds (SSBs) are another way of putting in place a passive income stream. It’s suitable as a long-term investment because the longer you hold it, the higher your return. You can use either cash or SRS monies to purchase SSBs. However, do bear in mind that tenure for SSBs is 10 years.

Property rental income

If investing in stocks, bonds and funds is not for you, you can consider investing in property to rent out. Purchasing a condominium and renting it out can provide you with some passive income you can use for your retirement. As with all investments, it comes with its own set of risks and challenges—and investing in property will require you to find tenants, play landlord and keep an eye on the retail property market.

(Read: 5 ways to earn extra income in Singapore for my family)

#2: What to do after retirement? Keep your mind active

Staying active after retirement

The average life expectancy in Singapore is around 85 years and increasing. With 62 being the official retirement age in Singapore, you still have a good number of retirement years ahead of you.

Spend that time wisely and engage in some lifelong learning by continuing to upgrade your skills or pick up new ones through various courses or classes. If you have a keen interest in investing, you can even take up courses on investments to help you further your knowledge and allow you to put your new skills to immediate use and make better investment choices.

Ready to pick up a new skill? You can check out the courses and classes available through the Lifelong Learning Institute, SkillsFuture SG and National Silver Academy. You never know…. you might find a new passion and make some like-minded friends along the way.

#3: Get enough insurance to prevent loss of retirement savings on rainy days

A happy family who has been adequately insured

Reduce your health-related worries by investing in healthy habits and getting suitable healthcare insurance such as private hospitalisation and critical illness covers now while you are still young. You can plan for your future healthcare with schemes such as MediShield Life, ElderShield and CareShield Life which can provide a basic standard of care. Make your long-term care insurance worth it by planning for it early as the cost of professional elder caregiving and nursing services are high and could take a significant portion of your retirement savings if you are not adequately prepared.

For example, a trip to the A&E past midnight would set you back around S$500 or more depending on the treatment administered and whether it is a public or private hospital, so it’s important to have enough for health and medical emergencies. Don’t forget to also look out for subsidy schemes such as the Community Health Assist Scheme (CHAS) for Singapore Citizens that can help with your medical and dental care at participating general practitioners (GP) and dental clinics.

If you’re looking out for your parents’ well-being as well, you can start by topping up MediSave for your parents early by transferring money from your CPF to your parents’ accounts. By doing so, you’re setting up an adequate retirement account for your parents. You can also choose to supplement it with additional or upgrade plans to give yourself and your loved ones wider healthcare coverage.

Conclusion: Planning for retirement is best done early

Couple discussing future retirement plans

Retirement and planning for it should be simple and easy to understand. In conclusion, you can use your CPF to invest in an annuity plan or plan ahead to maximise your payouts, and you can supplement your retirement income through investments. You should also look into investing in your children’s future through education saving plans, as well as your future through lifelong learning when you retire and investing in good long-term healthcare insurance.

Ready to start planning for the future? If you’d like someone to work through a plan with you, just let us know. After all, what are neighbours for?

Speak with a Wealth Planning Manager

 

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