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Answering Singaporean’s Question: Is it possible to retire with S$0 savings in your bank account?

The topic of retiring comfortably in Singapore makes a really good icebreaker topic. As one ages, the frequency of retirement being discussed increases to a point where it becomes the only topic one can talk and think about.

A quick snapshot of Singaporeans’ main concern when it comes to retirement:

  • 2 out of 3 Singaporeans fear that they will not have enough for retirement.
  • From a survey conducted on 1,000 Singaporeans, here is the breakdown of their total asset allocation: 47% in cash, 26% in equities and bonds, 16% in insurance-linked investments and 7% in property.

While most Singaporeans dream of retiring with a substantial balance in his bank account, allow us to offer you an even prettier picture for retirement.

Imagine retiring with a bank balance of ZERO and still manage to live as comfortably as your peers.

Is that even possible?


How much you need for retirement in Singapore?

How much do you need to retire in Singapore?

Based on 4 assumptions:

  • Basic monthly expenses for Singaporeans after retirement is at S$1,200 per month, working out to be $14,400 per year.
  • No inflation for easier illustration.
Retirement AgeAverage Life Expectancy Of SingaporeansYears Left To Enjoy RetirementRetirement Savings Required
5082.9 32.9$473,760
5527.9$401,760
6220.9$300,960
6715.9$228,960

We took inflation out of the picture for the above table in hope of individual being able to beat inflation.

Hence, the cost should be higher if we factor in inflation:

  • Assuming a core inflation rate of 1.9% on average moving forward
  • A Singaporean age 35 now, looking to retire at age 60 will have 25 years to save up.
  • When it is time for him to retire, the S$1,200 monthly expenses required will increase to S$1,921.04.
  • That works out to be S$23,052.48 per year.

Master plan: Is it still possible to retire with a bank balance of zero?

Now that we have a rough estimation of the cost of living in mind, we need a master plan!

In order to retire comfortably, here are 3 criteria:

  • We need to be hedged against unforeseeable circumstances which can result in an unexpectedly huge amount of spending
  • The need for recurring income to ensure a constant influx of cash to spend
  • We need to be asset rich. Having assets that can be sold off in exchange for money.

retiring with no savings


For protection upon retirement

Whoever told you “men age like fine wine and women age like milk” can take it back.

Men’s health deteriorates faster given the lower life expectancy compared to their female counterparts.

Hence, it is important to defend ourselves against these unexpected costs. Even more so if we were to retire with a bank balance of zero, like a boss!

With that said, here are some policies one should be getting to offset the risk of old age:

  • Health insurance
    To cover the increasing hospital and surgical bills and outpatient care.
    It is recommended to enhance your plan to at least a public A ward.
  • Critical Illness
    Usually comes as a rider where one get a sum assured for a list of 37 critical illnesses.

For recurring income upon retirement

Meeting Basic Retirement Sum for CPF

Now that you have retired (zero income from work) with a bank balance of zero, it is necessary to have a constant source of income from other channels.

For Singaporeans, this can be achieved with the help of our Central Provident Fund (CPF).

Regardless of whether you are a fan of the system or not, hitting the Basic Retirement Sum gives us a recurring income of at least S$700 per month.

CPF Payout Scheme (3 Tiers)Minimum Sum To HaveAction:Monthly Payout
Basic Retirement Sum$83,000If you own a property, you can withdraw the difference (CPF minus $83,000)$700 - $750
Full Retirement Sum$166,000If you have no property or Choose not to withdraw$1,280 - $1,380
Enhanced Retirement Sum$249,000Top-up into CPF Life$1,860 - $2,000

This is especially important when you have zero money in your bank account! On top of that, this payout will be for life, which gives one a base income for life.

Dividend Investing

Dividend investing is a process of investing in a portfolio capable of giving out dividends regularly.

By cultivating a habit of investing in dividend-paying financial products while working, one will be able to accumulate a pool of stocks that give out dividends to help with the cost of retirement.

Of course, there are some important pointers involved when it comes to building a good dividend paying portfolio:

  • High investment instruments consist of high-dividend stocks, Business trusts, and REITs.
  • The portfolio has to be well diversified in various sectors and countries if possible.
  • The amount of dividends payout should be substantial for this portfolio to be useful.

In one of our previous interview with a retired investment blogger, the amount of dividend received adds up to S$146,097 for the first three-quarters.

That amount can even be spread across 12 months to give us more than S$10,000 per month.

This is an example of his portfolio:

CounterWeightageCounterWeightage
Accordia Golf T6.9%First REIT6.9%
Keppel Corp6.7%Frasers Comm6.4%
Soilbuild REIT4.3%AIM3.7%
Lippo Mall3.6%ESR-REIT3.3%
SembCorp Ind3.3%Capital-comm3.2%
OCBC3.1%CDL-HT2.7%
M12.6&Ascendas HT2.5%
Global Inv2.5%Croesus RT2.4%
Singtel2.2%Frasers H Trust - FHT2.0%
Viva Ind T2.0%Hotung Inv1.9%
DBS1.6%Frasers L&I Trust1.6%
Design Studio1.5%Suntec1.5%
Far East H Trust1.3%ComfortDelGro1.2%
Mapletree GCC1.0%TTJ Holding0.9%
Manulife REIT (USD)0.8%Asian Pay TV0.8%
Thai Bev0.8%BHG R REIT0.7%
SIA Eng0.7%Starhub0.7%
I REIT Global0.6%SPH0.6%
UOB0.6%Fu Yu0.6%
Singpost0.6%Starhill0.5%
KSH0.5%ST Eng0.3%
Mapletree Comm0.3%
Total: 100%

Having children

While having children has a lot of costs up front, children form a financial safety net when they assume the responsibility of supporting their parents.

This support can come in form of a monthly monetary income or even having someone to take care of you.

Editor’s note: The risk involved in this includes the uncertainty when it comes to the degree of filial piety.

Retirement plans

A retirement policy might have been offered to you by your financial advisors.

A retirement policy has certain features:

  • It is a savings and investment plan
  • Most of the time, it can be paid using your Supplementary Retirement Scheme (SRS)
  • It gives out annuity every month upon retirement for a number of years.
  • They are created by insurance companies

The premium for such policies, however, can be quite expensive.

Asset

With zero savings in his bank account, one can still be asset rich despite not being cash rich.

Property

Most Singaporeans favour property as their go-to investment due to historical track records.

As one retires, his needs for housing differ from when he is starting his own family.

  • After all, the children have grown up and moved out to start their own families.
  • One may physically not be able to maintain a home that is physically too big in size.
  • Moving to a smaller home seems like a fair decision.

Benefits of downsizing:

  • By downsizing, one will be able to receive liquid cash should they purchase a cheaper property
  • Silver Housing Bonus by the government also allows Singaporeans aged 55 and above, intending to downsize to a 3-room and below up to S$20,000 in cash.

Talking about retiring with zero balance in your bank account? This move just puts some money in your bank balance.

Entrepreneurship

On average, 50,000 new businesses are formed in Singapore every year. This is all due to Singapore’s competitive tax system, infrastructure and stable environment for business to thrive better.

Should one be able to kick off a successful business that brings in recurring income for retirement, that will be living the dream!

Alternative form of investments

Due to individuals having different interest, some managed to convert their hobby into an investment.

An example will be Rolex watches, art pieces or collectibles. It is, however, important to be an expert in these fields to be able to do so.


While it seems possible to retire with a bank balance of S$0, we realised that it is important to have an important base of assets. Personal finance planning starts young, even better if one can kick-start his journey even before he starts working.

“The best time to plant a tree was 20 years ago. The second best time is now.”

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