03 Dec 2020 

SOURCE: CPF Board

Feel like you've been drifting through your financial journey and are off to a late start in retirement planning?

While it’s beneficial to start planning for retirement as early as possible, it’s not too late to get on the right track. These two tips can help you catch up and ensure you have enough support in your golden years!

Get a steady retirement income with your CPF savings

First off, figure out the kind of retirement income you want. Under CPF LIFE, you can choose from 3 CPF LIFE plans — the CPF LIFE Escalating Plan, CPF LIFE Standard Plan and CPF LIFE Basic Plan.

Deciding the kind of retirement lifestyle you want is key to choosing the right CPF LIFE plan for yourself. 

For example, if you're worried about things getting more expensive as years pass, you will need a retirement income that increases every year. The Escalating Plan has this feature. If you prefer to keep within a fixed budget, even if it means you can afford to buy less as things get more expensive in the years ahead, the Standard Plan has a level payout. If you don't mind starting with lower payouts that will be progressively lower, the Basic Plan is good enough! Learn more about the 3 CPF LIFE p​​lans and decide on the one that suits you best. 

After deciding on your plan, work out how much you need for your retirement expenses every month. You can then use the CPF LIFE Estimator to estimate how much retirement savings you need in your CPF for your desired CPF LIFE monthly payout. 

If your ​CPF savings can't provide you with the monthly retirement payouts you need, you can consider making cash top-ups to your Special Account (SA) or Retirement Account (RA)¹ to grow your savings with attractive interest rates of up to 6% p.a². You can also choose to start your payouts later, up to age 70, to allow your savings to continue growing with interest. For every year that you start later, your payouts can increase by up to 7%. This means that your payouts will increase by up to 35% if you choose to start your payouts at 70!

If you're eligible for the Matched Retirement Savings Scheme, every top-up you make will be matched by the Government, up to $600 yearly, in 2021-2025!

Know the options you have to monetise your HDB flat

Did you know that you can unlock the value of your flat to supplement your retirement income in your golden years? Here are three options you can consider. 

Lease Buyback Scheme: If you are aged 65 and above, the Lease Buyback Scheme allows you to monetise your flat to receive a stream of income in your retirement years while continuing to live in it. 

You can sell the tail-end of your lease, and the net proceeds will be used to top up your RA savings up to the prevailing Full Retirement Sum (FRS)³, which will in turn give you higher monthly CPF LIFE payouts.

As long as the total top-up to your RA from the net sales proceeds is at least $60,000, you will also receive a cash bonus of up to $30,000, depending on your flat type! 

Sell your flat and buy a 3-room or smaller flat: If you are aged 55 and above, and are considering moving to a 3-room or smaller flat, you can supplement your retirement income with the Silver Housing Bonus (SHB) scheme.

With the proceeds from the sale of your flat, you can top up your CPF RA for higher CPF LIFE payouts, while enjoying a cash bonus of up to $30,000 per household⁴!

Rent out your flat or spare bedroom(s). You can also consider renting out a spare bedroom in your flat while earning regular rental income from it. Alternatively, if moving in with your children is a viable option, you can rent out your entire flat — this will also give you a higher rental income compared to renting out a single bedroom. 

Learn more about monetising your HDB flat for your retirement needs.

¹Members below age 55 can top up their SA, up to the prevailing Full Retirement Sum (FRS). For members aged 55 and above, top-ups can be made to their RA, up to the prevailing Enhanced Retirement Sum (ERS).

²Includes extra interest. Members who are below 55 years old are paid an extra interest of 1% p.a. on the first $60,000 of their combined balances (capped at $20,000 for Ordinary Account (OA)). Members who are 55 years old and above are paid an extra interest of 2% p.a. on the first $30,000 and 1% per annum on the next $30,000 of the combined balances (capped at $20,000 for OA).

³If the household has 2 or more owners, each owner will have to use his/her share of the proceeds to top up his/her RA to the prevailing age-adjusted Basic Retirement Sum (BRS). After topping up their RAs, the household may retain the proceeds in cash, up to $100,000. If there are any remaining proceeds (after the top-up and setting aside of $100,000 cash), they will be used to further top up the owners’ respective RAs to the prevailing FRS, before they can retain any balance in cash as well.

⁴You can qualify for the Silver Housing Bonus as long as you unlock proceeds from selling your existing home (either an HDB flat or a private property with an annual value that is $13,000 or less), top up their RA and join CPF LIFE. You can receive a maximum cash bonus of $30,000 (per household basis) if you top up $60,000 to your RA. For top-ups less than $60,000 to RA, you will enjoy a cash bonus of $1 for every $2 top-up.

Information accurate as at 3/12/2020.