Singapore is an expensive place to live, work and play. When we eventually retire and stop receiving an income, we will then feel the full brunt of just how much we need to live in Singapore.
If we’re living hand-to-mouth each month, having to survive on an allowance from our children and relatives or are unsure of whether our retirement funds will last as long as our lifespans, that might just a pretty stressful retirement. We may even be forced to come out of retirement to work and receive an even lower pay, since our knowledge and skillset would have been outdated just a few years into our retirement.
This is why some Singaporeans are considering moving to another country that has a lower cost of living, allowing us to live a more comfortable retirement. Here are four countries that could fit the bill if we’re considering such a move.
How Are We Paying For Our Retirement?
Let’s get some assumptions out of the way before we delve into the four countries that we can live in for under $1,500 a month. This statement assumes two main things:
1) When we turn 65, we’ll have close to $1,500 in disposable income every month without having to work
2) We have a shelter over our head, which we can rent out and move overseas when we’re 65
For the first part, Singaporeans and Permanent Residents (PRs) have our CPF Lifelong Income For the Elderly (LIFE) to rely on. This works similar to an annuity paying us a monthly sum based on our accumulated Retirement Account balances when we turn 65.
Based on the current Full Retirement Sum (FRS), we will receive a payout of between $1,320 and $1,410 every month. This means that if we are able to hit our FRS when we eventually retire, we should be able to have a similar level of spending power compared to what these amounts can buy today.
For the second point, we assume that when we turn 65, we’ll own a fully paid HDB flat that we do not need to service any mortgage for. Let’s assume we have a 4-room HDB flat, and are able to rent it out to fund our overseas retirement.
Based on the latest statistics released by HDB, the average 4-room flat in Singapore can be rented for $2,120 a month, or $25,440 a year. Dividing this with our partner leaves us with close to $1,060 a month, or $12,720 each a year. Again, we’re assuming that we’ll be able to maintain this level of spending power when we eventually retire and want to rent out our home.
[Update: A reader pointed out that we would have to pay taxes on our rentals. There are two main taxes: income tax and property tax. For income tax, the first $20,000 of income is not taxable. In this example, since our property is equally shared with our spouse, we would not have to pay any income tax on the $12,720 we each receive. Do note that if you receive more than $20,000 in rentals, you will have to pay income tax on it. For property tax, the first $30,000 is charged at 10%. In this example, we have to pay $2,544 in property tax.]
With this in mind, our disposable income comes up to $2,274 per person per month, or $4,548 as a couple per month.
# 1 Malaysia
Sure, you may think we’re being really uncreative by suggesting Malaysia as the first option to retire at.
The truth is, that many Singaporeans may already be asking themselves if they should move to Malaysia to enjoy a more comfortable retirement. This is mainly because of its proximity to Singapore, and by extension our old lives if we do move across the border.
According to the department of Statistics Malaysia, the median monthly salary of Malaysia was RM1,703 (S$578). We have to assume that this is a fair amount to live on in Malaysia, and any additional spending power we may have when we move to the country is a perk.
Apart from the monetary calculations, Malaysia is very close to Singapore allowing us to easily return here to visit family and friends. The country is also much larger than Singapore (actually most countries are, and all the rest of the countries on the list applies!), this will enable us to enjoy various activities including travelling to other parts of the country.
# 2 Croatia
This is where the list gets a bit more creative. Eastern Europe offers a very scenic and refreshing place for retirees to move to, especially if our aim is to get away from this side of the world.
Croatia, which sits on the coastline of the Mediterranean Sea, offers all the charms and beauty of its neighbour across the coast, Italy, without the high cost of living. While English may not be the main language spoken in the country, it’s widely spoken in the main cities and the country itself presents a new adventure for retirees.
According to the Dubrovnik Times, a local daily in Croatia, the median salary in Zagreb, its capital, is close to 6,217 Kuna (S$1,357) a month. It is reasonable to assume that living standard in other cities or the outskirts will be even lower.
If we’re retiring in a country, we should try to live like a local rather than to assume we’re on a holiday for the rest of our lives. Travelling to Croatia may be expensive, but living like a local should not cost much more than what the locals earn.
# 3 Portugal
Over in Western Europe, Portugal comes out as a desirable place to retire for many Europeans. Similar to Croatia, English isn’t the main language, but getting by in the big cities should not be a problem.
Portugal is also one of the safest countries in the world, ranked by the Global Peace Index as the 3rd safest country in the world. For reference, Singapore is ranked 21st on the index.
According to PORDATA, a database tracking Portuguese statistics since 2009, the average earnings of Portuguese were EUR1,108 (S$1,793) per month.
# 4 Mexico
Within the Americas, Mexico offers good accessibility to both North and South America. According to the International Living Global Retirement Index, Mexico ranks 2nd best place to retire. The country is already home to more North American expats than any other country.
Along with diverse activities you can participate in, as well as travelling in the region, Mexico is an affordable city to live in. According to a Mexican news report, anyone earning more than US$1,250 (S$1,654) a month would be considered in the top 2.5% of earners in the country.
You Don’t Have To Live In One Single Place
Honourable mentions that we didn’t put on the list include Thailand, Indonesia and Vietnam within our familiar South East Asia region as well as other parts of Eastern Europe and the Caribbean.
We may be drawn to familiar countries in the South East Asia region, which we likely have visited more than once and are quite aware of what to expect, especially in terms of living standards, day-to-day life and activities we can do.
Eastern Europe and the Caribbean nations offer us some adventure if we have the appetite for it.
The best part about retirement is that we don’t have much anchoring us down. If we’re unhappy with the living conditions in a certain place, we can easily uproot and come back to Singapore or try out another city.
You Can Actually Retire In Singapore With $1,500 A Month
One other thing we should note is that we can actually live in Singapore spending only $1,500 a month. According to this Singapore Department of Statistics survey, retirees in Singapore within the 41st to 60th percentile spent close to $720 a month. In fact, even retirees within the 61st to 80th percentile spent $1,055 a month.
If we look at the lowest end, retirees in the 1st to 20th percentile were spending just $317 a month. At the highest end, $2,451 a month. This is probably the only quintile who would struggle to keep up with.
So, if we think moving to another country is not for us, or want to just return home after exploring certain parts of the world, we can always come back to Singapore.
DollarsAndSense.sg aims to provide interesting, bite-sized and relevant financial articles.
Learn together with like-minded Singaporeans at the Personal Finance Discussion SG Facebook Group by discussing a range of personal finance topics.
If you have not done so, subscribe to our free e-newsletter to receive exclusive content not available anywhere else.