With rising life expectancy, a Singaporean at the age of 62 can expect to live for another twenty years. A greying Singapore also means a change in the way we support ourselves. Today, 10 economically active persons are supporting one elderly. By 2030, only 3.5 persons will be supporting one elderly! Therefore, it is important that you plan early for a secure retirement.
Retirement Planning through CPF
The scope of the CPF encompasses the following:
Retirement
Healthcare
Home Ownership
Family Protection
Asset Enhancement
It is important to plan the use of your CPF savings to ensure the following:
Sufficient savings to last throughout your retirement
Your CPF will provide you with a retirement income to meet your basic needs in old age. Members are encouraged to supplement their CPF with their personal savings.
A property that is fully paid-up when you retire
Buy a home that you can afford so that your home will be fully paid-up when you retire.
Sufficient savings to meet your medical needs in your old age
Saving for future medical expenses is important as the need for medical care increases significantly as you grow older. Use your Medisave wisely by staying in affordable wards when hospitalised. You should also stretch your healthcare dollar by buying medical insurance such as MediShield. This will help you to meet the treatment expenses for prolonged or serious illnesses.
Investing on your own. It is important to plan carefully before investing one's hard-earned personal savings. The CPF Investor Education Site offers information on basic investment concepts and investment articles. It also allows a member to assess his risk tolerance level, and features information like investment options, performance of CPFIS investments and funds' expense ratios.
"MoneySENSE" is a national financial education programme to enhance the basic financial literacy of consumers and covers 3 tiers of financial literacy:
Tier I: Basic Money Management - covers skills in budgeting and saving, and provides tips on the responsible use of credit;
Tier II: Financial Planning - equips Singaporeans with the skills and knowledge to plan for their long-term financial needs; and
Tier III: Investment Know-How - imparts knowledge about the different investment products and skills for investing.
For more information and useful consumer guides, visit the MoneySENSE website.
Supplementary Retirement Scheme. The Supplementary Retirement Scheme (SRS) is part of the Government's multi-pronged strategy to address the financial needs of a greying population. It is a voluntary scheme that complements the CPF. Participants can contribute a varying amount to SRS (subject to a cap) at their own discretion. The contributions may be used to purchase various investment instruments. The SRS offers attractive tax benefits. Contributions to SRS are eligible for tax relief, investment returns are accumulated tax-free (with the exception of Singapore dividends), and only 50% of the withdrawals from SRS are taxable at retirement.
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