The years of your life after retirement are often considered a golden age—a time when you get to reap the benefits of your hard work.
As of 2019, the average life expectancy in Singapore for a 65 year old resident is around 20 years. This means that if you retire at 67—the latest age for retirement — you could have two decades (or more) to spend time with those you love.
But being a retiree comes with a caveat: you have to spend your money wisely. Since you’re no longer earning, you’ll have to be extra prudent about your living expenses and risks. Thankfully, the Singapore government has safeguards in place to protect the elderly population financially.
Here are some significant financial milestones you’ll experience after reaching 67:
You stop paying for CareShield Life premiums
According to the Ministry of Health (MOH), one in two healthy Singaporeans aged 65 and above could develop a severe disability brought about by worsening chronic diseases, age-related illnesses like dementia, or a sudden accident. This puts them at risk of being unable to live independently.
Singapore’s CareShield Life program is a compulsory (optional for Singaporeans born in 1979 or earlier), long-term insurance scheme designed to offer financial support if this happens.
| Related: Everything you need to know about CareShield Life |
The CareShield Life program replaces the previous ElderShield program. Both were designed to offer monthly payouts but the main difference between them is their longevity. ElderShield provided payouts for up to six years, whereas CareShield Life will provide payouts for as long as you are severely disabled.
The payouts are fixed based on your year of claim, increasing annually from S$600 per month in 2020.
Singaporeans are required to pay for their CareShield Life premiums the moment they join until they turn 67 (if you join at age 59 or later, your premiums will be paid over 10 years). Now that you’ve reached retirement age, you’re off the hook for these premiums but remain covered for life!
If you want to make a claim, you will need to receive an assessment beforehand. A severe disability assessment fee at a clinic is S$100 or S$250 for a house call. This fee will be waived if it’s your first assessment for a CareShield Life claim. If it’s not your first assessment, you will receive a reimbursement for the assessment fee if the claim is successful.
Here’s an important fact you should know about CareShield Life: if you join, you will be covered for the rest of your life, no matter where you live. This means you can make a claim and receive payouts to your bank account even if you are living in another country!
You can start receiving CPF LIFE payouts
Over these past four decades, you’ve worked hard and directed a significant portion of your wage to the Central Provident Fund (CPF). When you retire, you can begin enjoying the fruits of your labour through the CPF LIFE program.
CPF LIFE was introduced in 2009 as an alternative to the Retirement Sum Scheme (RSS). Both CPF LIFE and the RSS offer monthly payouts, but whereas the RSS will only provide payouts to a certain age, CPF LIFE guarantees payments for the rest of your life. These payouts are designed to replace your work salary and cover your living costs.
| Related: How to use CPF to retire: CPF Retirement Account, interest and payouts |
As long as you’re born in 1958 and older and you’ve reached the S$60,000 minimum balance in your Retirement Account 6 months before you reach 65 years, you’ll automatically be enrolled in CPF LIFE.
Note: Though there is no minimum amount to join CPF Life, the S$60,000 amount is a minimum recommended amount to help ensure that your payouts are helpful and make a difference in your daily life. You can voluntarily sign up even if you do not get automatically enrolled (up to one month before age 80).
You can continue to transfer funds from your OA and SA to your RA until your RA balance reaches the Enhanced Retirement Sum. If your RA hasn’t reached the minimum amount but you want to join CPF LIFE, you or your loved ones could help by adding cash or selling a lease (more on that later).
Ready to choose a plan?
Between 65 and 70, you have a chance to choose one of three different CPF LIFE plans. If you reach 70 without deciding on a plan, Singapore will automatically place you on the Standard Plan and start delivering your payouts immediately.
Depending on the CPF LIFE plan you choose, if you have at least the Basic Retirement Sum (BRS) at age 55, you will receive an initial monthly payout ranging from around $600 to $2000 - if you choose the Escalating Plan, the monthly payout you could receive will go beyond this range as it increases yearly. However, you can join CPF Life even if you do not meet the BRS—though the monthly payments will be less than $600.
Note that you can choose to defer your CPF LIFE payouts - this may be suitable if you’re still working or have other sources of income.
The latest you can defer CPF LIFE payouts is age 70. For every year you defer, your payouts will increase by 7%.
If you find that you need more support, you or a loved one can top up your balance to increase your payouts.
You may also receive occasional CPF top-ups from the government, such as the Bicentennial Bonus CPF top-up from 2019. These one-off bonuses depend on specific government rules and conditions, and they’re never a guarantee. For example, the Bicentennial Bonus was only given to lower-income Singaporeans with low CPF balances to commemorate Singapore’s 200th birthday.
Though these government bonuses can be a welcome addition to your RA, they aren’t guaranteed. The best way to protect your RA balance is to set up financial safety nets like health insurance. The monthly cost of insurance helps you to avoid having to empty your savings in the case of an unexpected accident or event.
You can make end-of-life plans for your beneficiaries
To ensure that your CPF savings go to the right people when you reach the end of your life, nominate your beneficiaries. If you don’t, the remaining CPF funds will be paid to the Public Trustee for distribution according to the intestacy laws. The Public Trustee is the government agency that administers the estates of deceased persons.
You may also have other insurance policies where you can nominate your children or loved ones as the beneficiaries. Always remember to designate beneficiaries for any policy that you sign up for.
Lastly, if you don’t already have one, it’s also never too late to create a will. There is a specific Wills Act that governs wills in Singapore. This act includes some rules you must follow to ensure that your will is valid, such as that the testator must be at least 21 years old.
In a will, you can outline who your beneficiaries are and how your assets will be divided among them. Do note that CPF monies and life insurance proceeds where you have made a trust nomination are generally not subject to your will.
You can also define any other requests, such as your last wishes or how you would like a funeral to be held.
Make sure to also mention any debts you may have—your beneficiaries, guardians, and executors will need to know this information to settle the will properly.
Remember—a will is designed to help give peace of mind and clarity to those you leave behind, so you should strive to be as complete as possible with your information. In this way, you can give guidance to your loved ones and even help them jump start their own future investments and financial planning.
Sell your lease or move to a different home
Singapore offers some property schemes and bonuses to help flat owners who wish to move or earn some income. You may find that you don’t need that much space as a retiree; downsizing can be a good way to add some money to your retirement fund.
| See more: What is HDB Enhanced Lease Buyback Scheme and how does it work? |
In the Lease Buyback Scheme (LBS), you can sell part of your flat lease back to the Housing and Development Board (HDB) to receive a stream of retirement income while continuing to live in the flat. The money earned from selling the lease can be used to top up your CPF Retirement Account, which can then be used to join CPF LIFE.
There are a few factors that will affect your overall eligibility for LBS:
- You must be at least 65
- At least one owner must be a Singaporean citizen
- You must have a gross monthly household income of S$14,000 or less
- You must not concurrently own a second property
- All owners have been living in the flat for at least five years
- There are at least 20 more years on the lease
- Aside from short-lease flats, HUDC, and Executive Condominium units, all flats are eligible
When you sell back your lease, the proceeds must be used to top up your Retirement Account (RA) to the age-adjusted Full Retirement Sum.
If you’ve already topped up the RA to meet these minimum amounts, you’re free to withdraw any remaining proceeds from the lease buyback in cash, up to a cap of S$100,000. You’re also eligible for a sliding LBS bonus that will vary based on the size of your flat.
Keep in mind there’s no way to calculate the value you’ll get from selling the tail-end of your lease on your own, you’ll need to set an appointment with HDB to get an estimate.
Silver Housing Bonus (SHB) is another program that supplements your retirement income with a bonus of up to S$30,000. You can earn this bonus by selling your current flat or private housing — as long as its Annual Value is below S$13,000 and you don't concurrently own a second property — and using the proceeds to top up your CPF RA and join CPF Life.
Do keep in mind that the new property you purchase can’t exceed the selling price of the current/last sold property. It should be a 3-room or smaller flat from the resale market or HDB.
For many, retirement offers a new lease on life
Retirement may seem “boring” after experiencing an exciting and demanding workplace atmosphere for so many years. But it’s very possible to enjoy life much more as a retiree than you did in an office. This partially depends on maintaining an active social life and having a clear plan for what you want to do with your time.
Many people rediscover their love for travelling after retirement. Others explore new forms of exercise and physical challenges. Plenty of retirees get back into shape, run marathons, and explore the world with those closest to them. Now that you’re no longer constrained by the demands of a career, the possibilities are endless.
Disclaimer: The information in this article is accurate as of 27 Nov 2020 unless otherwise stated. Whilst we endeavour to keep the information accurate and updated, GoBear makes no representation or warranties for the accuracy of the information in this article or content of any websites which may be linked.
This article is for informational and promotional purposes only; it does not constitute advice or recommendation and does not take into account your own individual circumstances.