Planning for retirement in Singapore can easily be overlooked. Between long working hours, shouldering the financial stresses of the rising cost of living and spending time with family, there is precious little time to dedicate to retirement planning.
Even for those who consider retirement planning, many of us may be (falsely) comforted by the retirement safety net of CPF. By taking a chunk out of our monthly salary to put into our CPF accounts during our working years, we can receive CPF LIFE monthly payouts in our retirement, for as long as we live.
For those who understand CPF LIFE, we may be acutely aware that its primary purpose is to provide a basic retirement income in retirement. Many of us may be currently leading a lifestyle in excess of “basic”, and wish to continue living a similar lifestyle in retirement. We have to build other sources of retirement income during our working years to continue enjoying a lifestyle beyond just the basics.
For example, those who turn 65 this year can expect to receive about $1,410 in monthly CPF LIFE payouts – if they had saved the Full Retirement Sum of $166,000 when they were 55. What’s great about CPF LIFE is that we can use its Monthly Payout Estimator to crunch the numbers for ourselves – and tweak it to see how our CPF LIFE payouts can rise with further top-ups.
Read Also: [Beginners’ Guide] Understanding CPF LIFE And Your Monthly Payouts When You Retire In Singapore
How Much Do We Need in Retirement Today?
So, we can estimate that someone who turns 65 this year will receive about $1,410 a month in CPF LIFE payouts if they had set aside the Full Retirement Sum in 2015. But how much do we really need to spend in our retirement today?
Minimum Income Standard (MIS)
In 2019, a team of researchers from the Lee Kuan Yew School of Public Policy (LKYSPP) conducted focus group discussions to understand what a basic elderly household budget may look like.
Since then, they’ve updated their numbers – and the latest Key Findings (2023) report suggests that single elderly households require $1,492 a month as of 2022. This is slightly higher than what their CPF LIFE payouts (on the Standard Plan) of $1,410 per person would provide today (i.e. not accounting for inflation from 2023 to 2025). In the report, elderly couple households require $2,551 a month to meet their basic needs – which may be sufficient if both individuals receive $1,410 in CPF LIFE payouts.
Note that this figure is for 2022, and applying the 20-year average MAS core inflation rate of about 2.1% per annum will increase the figure to $1,588 a month and $2,715 a month for single and coupled elderly households respectively. However, in the Minimum Income Standard report, the change in monthly budgets for elderly households was closer to 2.5% per annum (from 2020 to 2022). Given the current elevated inflation level, there’s reason to believe elderly households may need even more today.
Read Also: CPF LIFE VS Retirement Sum Scheme: What’s The Difference?
Retiree Household Expenditure
Another way to look at how much those in retirement may need for their monthly expenses would be to dive into Singapore’s Report on the Household Expenditure Survey 2023 which is compiled every five years.
Apart from just giving us some statistics, the figures found in this report can also be extremely valuable as it is classified by housing-type, which can provide some indication on the standard of living we would like to achieve given the type of home we are currently living in or are accustomed to.
In this survey, it was found that household members, in households comprising only non-working persons aged 65 and over, spent an average of $1,383.60 each month.
| Flat Type | Monthly Expenses per Person, In Households Comprising Only Non-Working Persons Aged 65 And Over |
| HDB 1- & 2-Room | $892.70 |
| HDB 3-Room | $1,058.30 |
| HDB 4-Room | $1,159.10 |
| HDB 5-Room and Executive | $1,464 |
| Condominiums & Others | $2,840.30 |
| Landed Properties | $2,444.20 |
| Average | $1,383.60 |
Source: Report on the Household Expenditure Survey 2023
Of course, these figures are again based on 2023 data and need to be updated to reflect what someone retiring in 2025 may need to spend each month. Simplistically, this is what may be more representative in 2025 – applying the inflation rate of 2.1% over the last 20 years.
| Flat Type | Monthly Expenses per Person, In Households Comprising Only Non-Working Persons Aged 65 And Over |
| HDB 1- & 2-Room | $930.59 |
| HDB 3-Room | $1,103.22 |
| HDB 4-Room | $1,208.29 |
| HDB 5-Room and Executive | $1,526.13 |
| Condominiums & Others | $2,960.85 |
| Landed Properties | $2,547.93 |
| Average | $1,442.32 |
Extrapolated from Report on the Household Expenditure Survey 2023
On average, each retired person, living in a household comprising only non-working persons, would need to spend $1,442.32 per month.
Quite logically, those who live in HDB flats will spend less. Those living in the smallest 1- & 2-Room HDB flats will need to spend approximately $930 each month. Even those living in 5-Room and Executive HDB flat can expect to spend quite close to what their estimated CPF LIFE payouts would be if they kept the Full Retirement Sum when they turned 55 in 2014.
On the other hand, those living in private properties can expect to spend close to double their counterparts living in HDB 5-Room and Executive flats each month. In particular, those living in condominiums and other private apartments spend more than even those living in landed properties.
Are Our CPF LIFE Monthly Payouts Enough?
From a numbers perspective, it looks like those living in HDB flats could use their CPF LIFE monthly payouts to fund their retirement lifestyle entirely, if they had kept the Full Retirement Sum when they turned 55 in 2014. They may be receiving $1,410 and spending just over that amount even if they are living in a 5-Room or Executive HDB flat.
However, looking into actual figures in the Report on the Household Expenditure Survey 2023 revealed that retirees were drawing only $724 from Annuities and Monthly Payouts from CPF Retirement Sum Scheme, CPF LIFE.
Source: Report on the Household Expenditure Survey 2023
It may be logical that those living in the smallest housing-types may not have been wealthy enough to build up the Full Retirement Sum to receive a monthly payout valued at $1,410. However, from the data, even those living in landed properties, with the highest CPF LIFE income, only received $1,331 each month back in 2023. This is still below the average monthly amount needed among all retiree households, and about half of what they are actually spending.
Of course, some of these people may have had much smaller CPF balances as contribution rates may have been lower because of their age. Nevertheless, we should also take heed that active management may be required for us to ensure our CPF LIFE payouts can afford a basic retirement living standard.
Younger cohorts are more likely to reach their Retirement Sums. In 2022, 70% of the cohort who turned 55 managed to save the Basic Retirement Sum (BRS). About 7 in 10 of these individuals also managed to save the Full Retirement Sum. Looking ahead, we should expect CPF LIFE to play a bigger part in retirement income in Singapore.
Taking a leaf from the wealthier households, investments made up their biggest source of income during their retirement years. We should also look to actively build our investment portfolio over the long-term so we can enjoy the fruits of our labour during our retirement.
Read Also: Here’s What Your Full Retirement Sum Might Look Like When You’re 65
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