How to Save for Retirement in Singapore
Get rich easy schemes are popular because most people still want the shortcut to building wealth. While it might be invigorating to hope you’ll win a lottery or strike it big with some new currency, an appreciation for saving the right way is still important, especially if you’re preparing for retirement.
Every time the word retirement is mentioned, young professionals zone out, thinking they have many years to prepare for that stage in their lives. Unfortunately, decades fly fast. In no time, you’ll be in your late 40’s scrambling to save so you can cover your post-retirement lifestyle. Who would have thought living costs were this expensive? Well, you would have known that had you kept an open mind.
To save yourself from that trap, we’ll be delving into the right mindset Singaporeans should have towards retirement. Our goal is to open your eyes to how incremental changes in your life can make retirement significantly better. This should also make saving for the future easier for you.
What You Need to Know About Retirement in Singapore
Before we proceed to the rest of the article, listed below are some key points that you need to consider when thinking about saving up for retirement in Singapore:
- Singapore’s minimum age for retirement is 62. Although, in some instances, the government allows an individual to be re-employed until the age of 67.
- The average lifespan in Singapore is 83 years. That gives a retiree somewhere between 16 to 21 years in retirement.
- Based on a research, Singaporeans normally live in good health until the age of 73.
- Most Singaporeans only start to plan for their retirement at the age of 38. That gives them only 24 to 29 years to save.
- Singaporeans have to wait until they’re 65 years old for their Central Provident Fund (CPF) and/or Supplementary Retirement Scheme (SRS) to kick in – a retiree’s monthly payout. This is the reason why most people delay their retirement until they can claim their payout.
- The total average expense for a Singaporean retiree is $1,200.00 a month. This sums up to $14,400.00 annually.
Tips on Saving for Retirement in Singapore
Knowing all these, here are some of the key changes you can welcome into your like, so you can better prepare for retirement:
Look at the Big Picture
The main secret to saving is mindset. Singapore is one of the most expensive countries in the world to live in, on par with Luxembourg, Norway, and Switzerland. Think about how you’ll be able to maintain your lifestyle when you’re no longer earning a steady salary.
Planning how you can enjoy retirement – whether that involves travel or a house in a specific neighborhood – allows you to look forward. If you’re looking at the big picture, and you’re seeing your goals and ideal life, it’s easier to spend on the right things or avoid unnecessary splurges.
Stop procrastinating. Clearly, to pay for the 2 decades worth of living expenses that you’ll be incurring as a retiree, you need to start saving as early as possible. Don’t wait until you’re 50, cramming your way to put some fund together.
The process of saving and growing money is like planting a seed and hoping that it would turn into a sturdy and bountiful tree someday. The earlier you start, that more chance it has to grow. A person’s average earning peak is during his prime, from ages 25 to 40. During this time, you are more likely to get promotions and salary raises. Take advantage of that time to start saving for retirement.
It’s a common practice in Singapore to rely on the Central Provident Fund CPF) or Supplementary Retirement Scheme (SRS) to get them through retirement. What they don’t realize is that these funds don’t amount to a lot of money. They can cover the day-to-day of someone with a simple lifestyle, but if you’re looking to travel, move or do something interesting after retirement, they won’t do.
A great way to remedy that is to find other ways to save for retirement, maybe invest in property or shares. There are a variety of investment options, depending on how risky you want to be, your starting capital and how much you want to earn. You can approach financial planners or investment managers to help you with this. You just need to be clear with them that the goal is to have enough saved, so you can retire comfortably.
Rein in Spending
Young professionals in Singapore are overwhelmed with luxuries they can now afford because of how much they’re earning. It’s normal. You suddenly feel the urge to spend on yourself or on your family. While spending itself is no issue, overspending is. If every time you’re promoted and get a raise, all your expenses go up, you will never end up saving anything for your retirement.
That’s why it’s so important to have a budget and to commit to it. List down everything you regularly spend on – rent or mortgage, utilities, food, healthcare, and transportation. Make sure you include small splurges you know you’ll make, dinner at an upscale restaurant, a new laptop or a quick trip abroad. This way, you won’t feel deprived. You get to enjoy what you worked for without overspending.
Add Savings to the Budget
Most people who want to save for their retirement are extremely motivated at first, but they end up falling up off the wagon. Starting a retirement fund is easy, but keeping it up, with all the temptations of spending money on other things ever present, is a tall order.
The most effective strategy that most successful savers implement is adding the savings for their retirement fund on their budget as if it was an expense. Some of them even set aside money for their retirement fund before paying their other bills which prevents them from spending it on other things.
Retiring should be a great time in your life. This is when you should be enjoying all the luxuries you worked so hard for. However, most of the time, retirees don’t have enough saved. They end up settling for a life less comfortable than when they were still working, unable to do things they’ve been looking forward to you. Is that the type of retirement you want? If it isn’t, then today is a great time to start a retirement fund.