How Much Do You Need To Save To Meet Your Basic Needs Upon Retirement?
How Much Do You Need Per Month For Basic Needs?
Singaporeans who are not planning to settle down, do take note. It is actually more expensive to stay single.
According to Lee Kuan Yew School of Public Policy’s latest finding, here’s how much a household needs to meet their basic needs:
| Demographic of household | How much you need for basic needs |
|---|---|
| Single elderly household | $1,379 per month |
| Coupled elderly household | $2,351 per month |
| Single person (aged 55 - 64 years old) | $1,721 per month |
source: Lee Kuan Yew School of Public Policy
To break this down even further, here’s a breakdown of where a typical Singaporean elder spends on, every month.
| Category | Retired (Percentage of monthly expenses) | Single Elderly (Percentage of monthly expenses) | Elderly as a couple (Percentage of monthly expenses) | Single before retirement from age 55-64 (Percentage of monthly expenses) |
|---|---|---|---|---|
| Food and non-alcoholic drinks | 17% | 14% | 20% | 11% |
| Food serving services | 11% | 15% | 15% | 16% |
| Clothes and shoes | 2% | 4% | 5% | 4% |
| Transport | 8% | 8% | 9% | 12% |
| Housing and utilities | 16% | 18% | 12% | 14% |
| Furnishing, maintenance | 9% | 7% | 4% | 8% |
| Healthcare | 13% | 6% | 7% | 5% |
| Communication | 3% | 2% | 2% | 2% |
| Recreation and culture | 8% | 20% | 19% | 19% |
| Others | 13% | 7% | 7% | 9% |
Source: Department of Statistics Singapore (2014)
Fun fact!
Elderly couples spend more on food in general.
TL;DR: Are You Saving Enough To Afford Basic Needs Upon Retiring
What Are The Basic Needs?
According to the study that was done, the criteria for basic living:
- Meals that are healthy and nutritious
- Household goods based on a two-room HDB apartment such as clothes and personal care items.
- Basic healthcare needs (assuming good health)
While the above research is optimistic enough to assume an individual having good health, in reality, that is hardly the case. Should our health deteriorate as we age, which is very likely, our basic healthcare cost goes up.
Life Expectancy and Healthy Life Expectancy Of Singaporeans
A Singaporean’s existence on Earth can be broken down into two metrics:
- His life expectancy
- His healthy life expectancy
Our life expectancy and healthy life expectancy is different.
You can live up to the age of 90 years old (life expectancy) but only manage to stay healthy till 60 (healthy life expectancy).
The difference between the two life expectancy and healthy life expectancy is the number of years which medical expenses will increase tremendously.
In Singapore, life expectancy and healthy life expectancy depends on the year which they are born.
| Life Expectancy | Healthy Life Expectancy | Difference between Life Expectancy and Healthy Life Expectancy | ||||
|---|---|---|---|---|---|---|
| Years born | 1990 | 2017 | 1990 | 2017 | 1990 | 2017 |
| Males | 73.5 | 81.9 | 65.6 | 72.6 | 7.9 | 9.3 |
| Females | 78.8 | 87.6 | 68.5 | 75.8 | 10.3 | 11.8 |
| Difference between males and females | 5.3 | 5.7 | 2.9 | 3.2 | 2.4 | 2.5 |
Source: Healthdata.org
For those who are born in the year 1990,
- The Life Expectancy of Males and Females are at 73.5 years old and 78.8 years old respectively.
- The number of years both genders gets to enjoy good health is till the age of 65.6 years old and 68.5 years old respectively.
Those who are born in the year 2017 get to live longer on average.
- The Life Expectancy of Males and Females are at 81.9 years old and 87.6 years old respectively.
- The number of years both genders get to enjoy good health is at 72.6 years old and 75.8 years old respectively.
This means that healthcare cost for Singaporeans after their Healthy Life Expectancy will be higher.
How Much You Need To Save To Meet Your Retirement Basic Needs?
Ever wondered how much you need to save up, in order to meet your retirement basic needs?
Before we proceed with the calculation, here are some of our assumptions:
- Assuming zero inflation
- Assuming good health throughout
Now that we have the Life Expectancy of both Male and Female Singaporeans, we calculate how much they need upon retirement based on the findings of the survey.
How Much Should I Save Up If I Wish To Retire At Age 64?
I’m aware that the official retirement age in Singapore is 62 years old.
But based on the research, the cost of basic needs for age 62 and age 64 is different. Hence, we use age 64 for simplicity’s sake.
If a Singaporean is single and stops working only at age 64, here’s the amount required to retire with basic needs.
| Demographic | Born in the year 1990 | Born in the year 2017 | ||
|---|---|---|---|---|
| Single Elderly (Male) after age 64 | Single Elderly (Female) after age 64 | Single Elderly (Male) after age 64 | Single Elderly (Female) after age 64 |
|
| Number Of Years | 9.5 | 14.8 | 17.9 | 23.6 |
| How Much You Need Per Month? | $1,379 | |||
| How Much You Need Per Year? | $16,548 | |||
| How Much You Need In Total? | $157,206 | $244,910.40 | $296,209.20 | $390,532.80 |
- Depending on the year of which you are born and your gender, your retirement sum needed will range from $157,206 to $390,532.80.
How Much Should I Save Up If I Wish To Retire At Age 55?
55 years old is when you can withdraw a certain amount of money from your CPF if you’ve set aside the Full Retirement Sum in your Retirement Account.
If a single Singaporean chooses to retire at age 55 instead, he or she will need an additional $206,520.
| Demographic | Born in the year 1990 | Born in the year 2017 | ||
|---|---|---|---|---|
| Single Elderly (Male) after age 64 | Single Elderly (Female) after age 64 | Single Elderly (Male) after age 64 | Single Elderly (Female) after age 64 |
|
| Number Of Years | 9.5 | 14.8 | 17.9 | 23.6 |
| How Much You Need Per Month? | $1,379 | |||
| How Much You Need Per Year? | $16,548 | |||
| How Much You Need In Total to retire at age 64? | $157,206 | $244,910.40 | $296,209.20 | $390,532.80 |
| How Much You Need In Total to retire at age 55? | $363,726 | $451,430.40 | $502,729.20 | $597,052.80 |
The Power Of Growing Old As A Couple
To show you the power of teamwork, let’s look at how much you need to save up as a couple.
For a coupled elderly household, the amount per month an individual need drops drastically to $1,175.50 per month.
Using the same demographic and assumption,
- Retires at age 64
- Assuming zero inflation
- Assuming good health
- Married (Happily married, which led to good health)
- Assuming the cost of basic needs remains the same even after the wife/husband is no longer around
Here’s how much you will need to meet basic needs upon retirement.
| Demographic | Born in the year 1990 | Born in the year 2017 | ||
|---|---|---|---|---|
| Married Elderly (Male) after age 64 | Married Elderly (Female) after age 64 | Married Elderly (Male) after age 64 | Married Elderly (Female) after age 64 |
|
| Number Of Years | 9.5 | 14.8 | 17.9 | 23.6 |
| How Much You Need Per Month? | $1,175.50 | |||
| How Much You Need Per Year? | $14,106 | |||
| How Much You Need In Total to retire at age 64? | $134,007 | $208,768.8 | $252,497.40 | $332,901.60 |
Dealing With Your Retirement Basic Needs
If the cost above scares the hell out of you, then this article has served its purpose.
To quote a classic personal finance adage, “The best time to plant a tree was 20 years ago. The second best time is now.”
How Much Will I Receive In Monthly CPF Life Payouts?
For most Singaporeans and Permanent Residents, CPF Life payouts can help offset that monthly cost if you meet the Retirement sum.
| Retirement Sum (At Age 55) | Payouts At Age 65 | Payouts At Age 68 | Payouts At Age 70 |
|---|---|---|---|
| $60,000 | $540 - $570 | $640 - $680 | $710 - $770 |
| $85,500 | $720 - $770 | $850 - $910 | $950 - $1,030 |
| $120,000 | $960 - $1,030 | $1,130 - $1,220 | $1,270 - $1,370 |
| $171,000 | $1,320 - $1,410 | $1,550 - $1,680 | $1,740 - $1,880 |
| $200,000 | $1,520 - $1,630 | $1,790 - $1,940 | $2,010 - $2,170 |
| $256,500 | $1,910 - $2,060 | $2,260 - $2,440 | $2,530 - $2,740 |
Source: CPF
Depending on the monthly payout, the amount you need to fork out from your own savings account reduces.
Having Good Health Your Entire Life Can Be A Stretch
Your medical cost will increase drastically after your Healthy Life Expectancy.
Getting health insurance coverage is one way to “bulletproof” yourself from such an unexpected spike in expenses.
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