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Retirement planning: different options to suit individual needs

While CPF can form the base option for your retirement, you will likely need to supplement with other options, and not solely rely on your CPF LIFE Scheme alone.

PREPARING for retirement is akin to embarking on one of life's most important journeys. The goal may be far into the future, and there may be unknown threats and potential dangers along the way. Thus, good retirement planning is important and it takes ownership and personal responsibility.

Thankfully, there are many options around. When evaluating which option best works for you, you need to consider concentration risks, risk appetite, and investment horizon. In addition, there may not be one single solution that cater to your overall needs. You may need to consider having a combination of options.

So what are the options that can be considered?


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CPF should be a key option in planning for retirement. For example, CPF LIFE Scheme can help provide for a basic standard of living. CPF savings from your CPF Savings Account (CPFSA) and CPF Ordinary Account (CPFOA) will be transferred into your CPF Retirement Account (CPFRA), which will be used to fund the CPF LIFE Scheme.

Yet many of us do not even have enough to meet even half of the prevailing CPF Minimum Sum - the amount calculated to provide a basic standard of living in Singapore. Therefore, it is important to make sure that you have sufficient CPF to fund your retirement and not divert too much to mortgage repayments.

While CPF can form the base option for your retirement, you will likely need to supplement with other options, and not solely rely on your CPF LIFE Scheme alone. For example, you can future proof your retirement with sufficient savings through the Supplementary Retirement Scheme (SRS), or a series of endowment policies which mature at different times. The cash flow from SRS withdrawals and maturing policies will supplement your CPF LIFE Scheme payout, ensuring an adequate amount to live at your desired level of comfort.

Equities, ETFs and Reits

Compared to savings, investments can help achieve your financial goals in a shorter period of time. When deciding to embark on investing for your retirement, consider key factors such as your risk profile, objective and time horizon.

For those who are prepared to take a higher level of risk, investing in blue chip shares, Exchange Traded Funds (ETFs) and real estate investment trusts (Reits) for passive income and potential capital gains could be an alternative. The ease to liquidate the equities, ETFs or Reits when opportunities abound is an added advantage. However, investors must be prepared for market volatility and downside risks resulting in the need to hold the shares, ETFs or Reits over a longer period of time.


For those with a lower risk appetite and still want a yield greater than pure bank savings rate, products providing a stable stream of income can be an excellent choice, for example, government and corporate bonds and insurance products. These lower-risk products can form the additional foundation of your retirement portfolio regardless of market environment.

You can buy bonds from the government and corporates which will pay interest at regular intervals such as quarterly or semi-annually and this forms a steady pattern of cash flow to fund your retirement lifestyle. At maturity of the bonds, you will still receive the principal amount that you have invested, thus allowing capital preservation of your investment. At that point in time, you can also reinvest in another tranche and continue to enjoy the steady income stream. While the returns of corporate bonds are relatively higher than government bonds, the risk is also correspondingly higher.


If you are looking for certainty of an income stream to fund your retirement lifestyle, supplementing CPF LIFE Scheme with additional annuities may be a good option. This is a type of life insurance policy which gives a regular monthly income upon retirement. It has the flexibility of allowing individuals to choose when they want to receive the monthly payout and for how long.

Annuities can weather market volatility and is a good hedge against longevity risks, that is, you are living longer than you expect. Annuities provide the assurance that you do not outlive your wealth because it pays you an income stream as long as you live. Through this type of product, you are basically transferring your longevity risk to the insurance company.

Monitoring your investments takes extra time and effort, as well as the knowledge and aptitude to make savvy choices. If you need assistance, consult financial planning professionals who could better advise you. A session with the right financial adviser could help you identify your investment profile and recommend the types of investment vehicles available.

In conclusion, be open to other options but do bear in mind the risks associated with each asset class. What is suitable for you depends very much on a few factors and these include your risk appetite, your existing portfolio mix, your planning horizon and your financial resources, taking into consideration your existing financial commitment.

  • The writer is Singapore head of Financial Planning Group, DBS Bank