I am a pre-retiree: Planning for retirement to secure my golden years

“You can relax now,” my friends tell me, knowing that my two kids are now either working or pursuing tertiary education. This got me to do a reality self-check: Can I really afford to retire soon? At what age would I have enough to do so?

In Singapore, the current minimum retirement age is 63, and the maximum re-employment age is 68¹. There are plans to raise both the retirement and re-employment age over the next few years.

Being in my early fifties means that I have only 10 years to put my financial retirement plan in place. Here are some essential points I considered.

Identifying the ideal retirement lifestyle

We often dream about all the things we want to do when we retire. Spend more time with our loved ones, travel to new destinations, take up new hobbies, exercise more, enjoy leisurely meals, work with a charity, or perhaps, help care for grandchildren. The list goes on.

However, whatever we aim to do comes with a price. Knowing the kind of retirement I want helps me understand how much money I need to support that lifestyle.

Building retirement income

My primary retirement income will come in the form of CPF Life², which begins payouts when I turn 65. Based on my needs, I plan to choose the Standard Plan for fixed payouts till I die, and top up to the Enhanced Retirement Sum³ to ensure a higher monthly income. I have calculated that this will cover necessities like utility bills, groceries, and daily transportation, with some funds to spare for overseas holidays.

Besides CPF Life, I am aware that I can take advantage of schemes like the Silver Housing Bonus⁴ and Lease Buyback Scheme⁵ to monetise my property and unlock value from my HDB flat, should I need to. Another option for my retirement income is to rent out a spare room⁶ for extra cashflow when my kids have moved out of the family home.

While the CPF Life payout is decent, I will need additional income to afford more travel and to combat inflation. My current cash investments, including those in my Supplementary Retirement Scheme⁷ account, will mainly be allocated to short-term fixed deposits, Treasury bills (T-bills) and Singapore Savings Bonds⁸, as well as diversified multi-asset funds for the longer term. What I earn from these will partly be used to supplement my retirement income, with the rest reinvested to hedge against inflation.

Planning for contingencies

As we approach retirement, planning for contingencies becomes crucial. This includes preparing for medical emergencies, major household expenses, or helping a close family member.

I am glad to have put in place robust insurance coverage for medical emergencies, combining both government schemes and private plans. An Integrated Shield Plan⁹, which combines MediShield Life¹⁰ with private medical insurance, can cover a portion of large hospital bills. Meanwhile, CareShield Life¹¹ provides monthly income for basic long-term care. I also have a private critical illness insurance plan that offers a lump sum payout for medical expenses not covered by other plans.

Any other insurance plans that do not support my contingency plans can be either cashed out or terminated, except for those I intend to keep for legacy purposes.

I intend to maintain an emergency fund that covers about three to six months’ worth of expenses for unexpected costs, such as replacing faulty appliances or home renovations. Situations like these can happen more often than you might expect.

Setting up end-of-life and legacy plans

Addressing end-of-life matters early is a key aspect of comprehensive retirement planning as well. I have already made a Lasting Power of Attorney (LPA)¹², and appointed my loved ones to make decisions on my behalf should I lose mental capacity. I plan to also prepare an Advance Care Plan (ACP)¹³ to communicate my future healthcare preferences to my loved ones while I still have the mental capacity to do so.

Regarding legacy planning, my will¹⁴ has already been written, and my CPF nomination¹⁵ made. This will take care of how my estate and CPF funds will be distributed after I die. I did this early for peace of mind, as you never know when your time on earth ends.

Retirement planning is an ongoing process. I still need to build a larger nest egg to meet my retirement goals. As I review my retirement savings and investments regularly, I may even have to manage expectations of my desired retirement lifestyle and adjust my plans along the way. By planning early, I can factor in my changing needs and circumstances to secure my golden years.

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