Retiring in Singapore
Every household varies in their lifestyle, meaning how they live, and eventually retire, will differ in every case. But, for comfort when retired, most people are going to require 70 to 80% of the salary they were making while they were working. This is of course in addition to medical costs, utilities, food, and the other essentials every family is going to require to live day to day. Further, many will have to pay off their mortgage and other loans, such as from Credit Excel Money Lender, prior to their retirement. So, this also has to be accounted for in your retirement planning.
A majority of people living in Singapore start to save for retirement at age 38, while the average retirement age in the country is 62; this means not as much as should be saved, is actually saved by a majority of inhabitants. Those who are working, as well as non-residents, are paying into their CPF account, which is a pension and retirement plan system that is available to those who do work in the country. A high fixed rate of 4% is earned annually on the CPF and it covers medical, as well as retirement savings for workers in the country.
Employers will contribute anywhere from 5 to 20% of their salaries to the CPF fund; rather than the previous ‘minimum fund’, today employees can choose from the basic, full, or enhanced retirement fund. This is going to influence the percentage which is placed in their retirement fund annually. So, this not only allows more room to save, it also gives Singapore residents who are working, more flexibility to plan for their retirement early, to ensure they are going to have what they need, in order to survive, when the time finally does arrive for them to retire.
Voluntary schemes are also offered, and the Singapore government does encourage those who do work to also add to these retirement accounts. It not only provides more flexibility and room to save, but lets employees deem how they are going to plan for, and put money aside, for their retirement. Supplementary Retirement Scheme is one such voluntary retirement option that is offered to those who are working in Singapore. It allows for tax-free contributions, up to a certain annual cap. This means those who contribute, are not going to pay taxes each year, and they can put away more money as necessary, in planning for their retirement.
Tax efficient vehicles and other voluntary retirement plans, are some of the most beneficial to workers. For such reasons, the government does promote the use of these funds, in planning for, and in trying to set aside as much as possible, without taking a huge tax hit on these funds when the time comes to put money into the account, as long as you are working.
Assuming your CPF or other voluntary accounts are being used, you are going to be putting away quite a large amount annually as you are planning for your retirement. You can add in an STI account, which will expose you to the stock market, providing one more vehicle for your retirement planning. A regular saving plan where you contribute money to your savings is yet another vehicle you can take advantage of; although the earnings are low, it is free to open, and a great way for you to set aside an ’emergency’ fund, in lack of a better term. Many people are leaving funds in stocks longer, as the age of retirement is getting older, as is the average lifespan. So, people are a bit more liberal and willing to take on this risk exposure a bit longer. All of these accounts working together are going to allow for greater savings, and mean you are spreading the retirement dollars, to ensure optimal growth as you are planning for your future after you retire.
Insurance products are also available, depending on your situation and how much you earn, this might be an option you consider. A money manager will not only guide you in choosing the right insurance, and vehicles to help you plan for retirement, but also inform you how much you should be allocated to each of the funds you are setting aside. In turn, you are putting more away, you are saving responsibly, and you know that you are earning the highest amount of interest, while paying the lowest tax amounts, on the funds which you are setting aside as you are planning for retirement. A money manager can provide greater depth, insight, and their expertise. So, you know you are making the right moves, and you know they are going to point you in the right direction, to help you save safely and efficiently, when you are planning for your impending retirement.
Inflation and other factors should also be accounted for as it comes to these different accounts. And, as there is no guarantee in how the market will move, or what will happen to your money, it is important to ensure the funds are properly spread throughout different vehicles when planning for retirement. This is the ideal way to know you are not going to over-allocate or put too little in one account, and it is the best way to avoid too much risk when you are deciding which places are best for you to put the most amount of money for your retirement savings.
When it comes to retirement, the only sure thing is that you will eventually stop working, and need to kick into your pension and retirement savings. With this in mind, there are viable ways you can go about planning, to ensure you make safe moves, the right moves, and put as much as you possibly can aside. It will allow you to save more, to do more, and to know that when the time comes for you to retire, you are going to have exactly what you need, to ensure you can live comfortably after you stop working for your employer.