You Won’t Retire at 65: Most Singaporeans Will Work Away Their “Golden Years”

Think having CPF LIFE to fully live out your golden years is enough? You might want to think again.

According to Singstat, almost half of Singaporeans (49.4 per cent) from 65 to 69 are still in the workforce in 2022. That’s up from 38.6 per cent in 2012.

While some will see this as a good thing as seniors can still keep active and earn a paycheck, the question that hit me was this:

“Still part of Singapore’s workforce? Shouldn’t it be about time to retire?”

Turns out, a very possible explanation is that the senior generation may not have a choice.

Here’s why.

TL;DR: Singapore’s Retirement Crisis

Jump to:

• Singapore’s History With Senior Employment
• How Much Is Needed For Retirement?
• Is CPF LIFE Enough For a Comfortable Retirement?
• Singapore’s Retirement Crisis
• What Can Singaporeans Do To Avoid a Retirement Crisis?

Singapore’s History With Senior Employment

Is working during our retirement years a want or a need? That has been the debate for a long time, but an even more pressing one now with high inflation.

Back in January, DPM Lawrence Wong said:

“There’s obviously a limit to how long we can work. But also we must recognize with rising longevity, with people living longer lifespans, when we do our surveys, the majority of people do want to work longer so long as they are healthy.”

Many netizens were quick to retort to his comments with some saying that it is not a want, but rather a need.

Some even went as far as calling it gaslighting.

Of course, DPM Wong can backup his claims.

A study commissioned by The Sunday Times in 2022,  found that three in four older workers don’t intend to retire before 65. The top reasons for wanting to remain employed were staying active, having a sense of purpose, maintaining social connections and saving up for old age.

However, it is seemingly odd that rising costs of living isn’t a top reason.

If I gave you $10 million, more than enough for you to retire now, would you keep your current job?

Surveys and opinions will always have some sort of bias, so let’s take a look at the numbers for a deeper insight to Singapore’s retirement situation.

How Much Is Needed For Retirement?

Disclaimer: As we only have access to data up till 2022, all figures will be based on 2022 unless stated otherwise.

Retirement for you will not be the same as it is for me as we have different retirement lifestyles in mind.

That said, there have been various studies done to give us a rough idea of how much we need based on what lifestyle we want.

A retirement study in 2019 by a team at the Lee Kuan Yew School of Public Policy, revealed how much a household needs to meet their basic needs:

According to the researchers, this sum not only covers basic expenses such as food, transportation, and accommodation but also includes money required beyond subsistence, such as money for a mobile phone or an annual holiday.

Since the study is a bit dated, we’ve used the MAS calculator to account for inflation. The $1,379 in 2019 would be worth $1,494.42 in 2022.

We’ll round that up to $1,500. Based on our previous calculations:

The amount required for a senior to retire is $288,000 in 2022 at 65. For those who hit 65 in 2056, that amount rises to $575,968 after factoring for inflation.

Remember, this is for a basic retirement that meets basic expenses and an annual holiday.

For those who want to retire comfortably and truly live out their golden years, here are the amounts (in 2022) that OCBC found we need:

Source: OCBC Bank, Singstat

Is CPF LIFE Enough For a Comfortable Retirement?

Comfortable is a subjective word, but let’s just take $288,000 in retirement savings for basic expenses and an annual holiday as a comfortable lifestyle for the average Singaporean.

Many Singaporeans believe that CPF alone would be enough for their retirement, with close to half planning to count on their CPF savings based on a 2022 Endowus survey.

So let’s take a look at how much CPF LIFE can give us each month:

As shown, just hitting the Basic Retirement Sum at 55 will not let you retire with your basic needs met and an annual holiday.

If you want to live a more comfortable lifestyle with two regional holidays, and/or international holidays, CPF LIFE alone is definitely insufficient even if you hit the Enhanced Retirement Sum, according to OCBC’s report.

Oh, and this does not include any unforeseen medical costs as you get older. So you better have your insurance settled.

Singapore’s Retirement Crisis

Now that we know the amounts we need for a comfortable retirement ($288,000), here’s the kicker:

Singaporeans are staring in the face of a retirement crisis, and many of us refuse to see it.

Because YOLO am I right?

To back up my point, here is the median CPF savings of the average Singaporean:

You can clearly see that the median CPF balance stands at for those aged 61 to 65 is $160,000 to under $180,000.

That is well below our recommended retirement amount of $288,000.

The counter argument is that Singaporeans could have their own investments for retirement, which we hope is the case.

BUT, OCBC also reported that 60% of Singaporeans say that they are not on track with their retirement plans. In other words, majority of us probably don’t have retirement savings aside from CPF because we think it’s a problem for future us, or we have other more pressing expenses such as weddings, housing, and so on.

It’s safe to say that most of us won’t be retiring at 65.

What Can Singaporeans Do To Avoid a Retirement Crisis?

If you are a young person reading this right now, it is only going to get worse from here thanks to high inflation. And while the government has given us guidance with retirement sum targets, it’s useless if you don’t try to hit! It’s a good idea to start topping up your CPF or investing to get to the Full Retirement Sum (FRS) for a comfortable retirement.

Here are the amounts after accounting for projected 3.5% p.a. inflation:

This means that if you were 28 years old in 2023, you would need approximately $486,410 to hit the FRS.

Otherwise, prepare to continue working through your golden years and retire later in life!

Or you could consider retiring overseas in countries like Malaysia.