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Best Retirement Plan Singapore: Which is Right for You?

best retirement plan singapore
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The minimum retirement age in Singapore recently increased from 62 to 63 – but that doesn’t mean you should put off finding a retirement plan until later. In fact, sensible Singaporeans should start retirement planning as soon as possible. 

This is true for anyone who wishes to secure a guaranteed monthly income or beneficial lump sum payout that will enable you to live comfortably in your retirement years – especially if you lead a luxurious lifestyle.

For most people, a combination of retirement annuity plans and CPF Life will make for a solid retirement plan. But with literally tons of different retirement plans on the market, each with its own income payout period and retirement income rules, how do you find the right one for you?

How Much Does Retiring Cost in Singapore Ahead of Retirement Age?

The first step toward making a dependable retirement plan is to determine how much retirement funds you will need to have accumulated by the time you reach that minimum retirement age of 63 (or sooner, depending on your retirement goals).

There are several factors that can ultimately affect how much your overall retirement will cost. These are:

1. Your Life Expectancy and Intended Retirement Age

As your retirement income will need to fund your life until death, you’ll want to start by considering your ideal retirement age and your expected longevity.

At the time of writing, the average life expectancy in Singapore is around 83.5 years old – which would require most people retiring at the regular retirement age of 63 to plan for a comfortable retirement lifestyle that will last from 18 to 22 years.

2. Any Children and Other Dependents You Have

All retirement planning should factor in any dependents or children you have, particularly if you have a child with special needs or a spouse who’s out of work.

Consider everyone’s current living expenses and incorporate these, plus a few extra thousand dollars as a safety net, into your overall retirement plan. 

3. Your Desired Retirement Income and Retirement Lifestyle

Next up, you’ll need to calculate what level of retirement income you’ll want to receive monthly (or as a lump sum) to fund the kind of post retirement lifestyle you have envisioned for yourself.

Recent research suggests the average Singaporean couple will need $2,300 minimum monthly to cover basic living expenses, but if you intend to live a lavish, luxurious lifestyle in your retirement years, you’ll need to consider the extra costs this lifestyle may incur – and how much overall retirement income will be required.

4. Any Fixed Outgoings or Debts You Have

Any debts held in your name that will not be paid off in full by the time you hit retirement age should also be factored into your overall retirement plan. The same goes for any insurance coverage costs and future premiums or investments you’ll need to pay out, too.

5. Your Ability to Plan Ahead

Retirement planning is ultimately all about planning ahead, and how much attention you give to this task will ultimately determine how much you’ll need to stash away as a retirement saver – as starting to save later will inevitably require more work.

How Much Guaranteed Monthly Income Will You Need for Your Retirement?

Taking into account everything we’ve mentioned above, you should be able to calculate a monthly retirement savings figure that will cover your retirement goals, needs and expectations.

You can achieve this by adding together:

  • Monthly income
  • Monthly expenses (including dependents)
  • A “buffer budget” for healthcare, which will become more important as you grow older

From here, we’d recommend multiplying your “ideal monthly retirement income” figure by 12 months, and then again by your estimated number of retirement years, using the following formula:

  • Ideal Monthly Retirement Income x 12 Months x Estimated No. Of Retirement Years = Overall Retirement Cost

This simple procedure will help you to determine an annual figure covering what you can roughly expect retirement to cost you overall.

Cheerful elderly couple at Pacific Park in Santa Monica, California

What Kind of Retirement Lifestyle Do You Desire? And Is Monthly Income or a Lump Sum Best?

Your expectations and preferences for later life can have a huge impact on the retirement income you will ultimately require – as well as on how that retirement income will ideally need to be paid. For this reason, you should think carefully about your preferred lifestyle and be sure to set aside enough spare cash.

It’s important to note that different retirement plans offer different benefits and perks, as well as different methods of paying you over the course of your retirement period. Based on the following information, you should think carefully about whether a one-off lump sum payout or regular monthly income is a better fit for your desired lifestyle:

Monthly Income

  • Receiving a guaranteed monthly income can help you to take care of regular monthly expenses and provide you with the certainty of frequent monthly payouts.

Lump Sum Payments

  • Drawing down a lump sum can enable you to access a large sum of money to spend or invest as you see fit.

In addition to preferred lifetime payout methods, you should also consider what specific perks you might want your retirement annuity plan to include.

For example, some annuity plans offer a care income benefit or disability care benefit, which can prove crucial for retirees suffering from poor health or a permanent disability, while a more expensive private annuity plan might be a good fit for wealthy Singaporeans who want more flexibility to live a luxurious lifestyle in their later years.

asian elderly couple enjoying on the sofa watching tablet

When is the Best Time to Start Retirement Planning?

All Singaporeans should start planning for retirement early. We at Loan Advisor would recommend making a start in your 20s or 30s. There are several reasons we think you should become a retirement saver at this age, such as:

1. Single Premium and Annual Costs Will Be Lower

Taking out retirement annuities or related insurance coverage is generally cheaper when you are younger and deemed “low risk.”

2. Saving is Simpler When You Have More Funds

In our 20s, we generally have fewer responsibilities and expenses than in, say, our 40s and 50s. Having more disposable income to hand makes saving that little bit easier.

3. Retirement Savings Will Have a Longer Accumulation Period

The earlier you start saving, the longer your accumulation period – i.e., the more money you’ll be able to put toward your eventual retirement plan.

4. You’ll Have a More Relaxed Transition into Retirement

The best retirement plans are those that are mapped out from an early date. Once you hit your age of retirement, everything will be arranged, and you’ll enjoy a smooth transition.

5. It Makes it Easier to Retire Earlier

The longer you’ve been saving and the more you’ve organized your retirement and life insurance plans, the easier it is to retire at your preferred retirement age.

elder couple and family kids

What is a Retirement Plan or Retirement Annuity Plan?

Retirement plans are essentially a combination of life insurance plans and endowment policies rolled into one. They provide a guaranteed income in the form of a lifetime payout, which will be distributed either as monthly payouts or as a lump sum, depending on the type of policy you choose.

How Do Retirement Plans Work? Monthly Income vs Lump Sum Payout Explained

Every retirement plan will require you to pay either a monthly or single premium towards your later-life savings. These payments will be made during your working years and before you hit retirement age.

At this point, you’ll receive a lifetime payout either as a monthly payout or as a lump sum for a fixed number of years, which is often referred to as your “retirement pay out period”.

Most Singaporeans are automatically eligible for our country’s national annuity scheme, CPF Life, but CPF savings should not be treated as the be-all-and-end-all of retirement. While CPF Life will provide you with a basic monthly guaranteed income, most Singaporeans will need to supplement this monthly cash benefit with a dependable retirement plan that offers a sufficient lifetime payout for later life.

Read to learn more about the differences between CPF Life and Retirement Sum Scheme.

Why Do You Need a Retirement Plan?

There are five key reasons that all Singaporeans need a solid retirement plan. These are:

1. CPF Life Offers Only Basic-Level Retirement Income

This is insufficient for most Singaporeans’ needs – particularly if you wish to lead a luxurious lifestyle in old age.

2. Retirement Plans Double-Up as Life Insurance Plans

They also offer other great benefits, too – such as complement health coverage and disability benefit, covering all eventualities for your future.

3. Retirement Annuities Enable you to Achieve your Dream Retirement

If you invest enough money over a long enough accumulation period, retirement plans can go a lot further than you might think.

4. You’ll Get a Lifetime Payout and Cash Value for the Rest of Your Life

Retirement Plans are without doubt the best way to secure monthly guaranteed payouts for the rest of your life.

5. Retirement Plans Prepare You for Unforeseen Emergencies

Whether you opt for a lump sum or a monthly payout, retirement plans ensure you’ll always have the cash you need to cover unforeseen circumstances or unpredictable later-life costs.

What is the Best Retirement Plan Singapore for You? Top Retirement Planning Tips from Loan Advisor

Finding the best retirement plans to suit your unique needs requires a sound understanding of exactly how much money you’ll need monthly (or annually) once you hit retirement age.

Naturally, everyone’s circumstances and retirement goals are different, but when shopping around for retirement plans or annuity plans, there are a few general things everyone can look out for to get the best possible value.

Try to find a retirement plan that offers you:

1. A Consistent Stream of Income After Retirement Age

Finding a retirement plan that offers monthly guaranteed income in later life should be your main objective when you compare retirement plans. Check that the guaranteed payout and monthly cash benefit terms on offer meet (or exceed) your needs.

2. A Shorter Retirement Plan Premium

Retirement plans that offer a shorter premium will always offer better yields at the point of maturity.

3. Unique Product Features That Are Beneficial to You

Whether you desire complement health coverage, a flexible income payout period or other customisable policy options, you should keep an eye out for retirement plans that come with bonus perks that specifically suit you.

Retirement Annuity Plan vs CPF Life / CPF Savings Explained

Both CPF Life and private retirement plans offer savers the potential to enjoy guaranteed monthly income in later life, but there are several important differences between the two. These are:

CPF Life Private Retirement Plan

Lifetime monthly payouts guaranteed

Monthly or lump sum payouts are usually made up of a combination of guaranteed income and non guaranteed income

CPF Life Payout period is fixed

Payout period can often be decided by you

Risk-free interest rate of up to 6%

Interest rate depends on the plan you choose

Acts as an annuity scheme only

Whole life insurance plans, including death benefit and monthly disability payout, can be included with some policies as bonus perks

Premiums can be paid using CPF savings

CPF savings are not always allowed. Premiums must be paid over an accumulation period

5 Best Retirement Annuity Plans in Singapore Right Now

Let’s look at some of the top private retirement options currently available in Singapore. We’ll examine the key features you’ll want to be aware of first, followed by a more detailed review of each individual retirement plan afterwards.

Retirement Plan Key Features Payout Period Options Special Feature Best Retirement Plan For

ManuLife RetireReady Plus III

  • Retrenchment payout benefit
  • Premium Freeze service
  • Adjust your payout period anytime up to two years before retiring
  • Coverage for death and disability illness payout included
  • Fast application process

5, 10, 15 or 20 years

Retrenchment benefit of 50%

Monthly guaranteed income

NTUC Income Gro Retire Flex

  • Enjoy a monthly cash benefit
  • Get an attractive interest rate of 3.00% p.a. over your accumulation period
  • Receive extra disability, terminal illness, and accidental death coverage

5, 10, 15, 20, 25, 30, 35, 40

All customers guaranteed to be accepted regardless of health condition

Flexible pay out period

SingLife Flexi Retirement

  • 100% capital guaranteed
  • Enjoy flexibility to choose your monthly income and payout preferences
  • Get financial support and a premium waiver in the event of disability
  • Potential to reinvest your payout for higher returns
  • Add additional insurance riders as an optional extra

From 5 to 35 years

Get a lump sum payout at your chosen retirement age and convert it into a monthly cash bonus

Potential cash bonuses

AIA Retirement Saver IV

  • Receive a monthly payout over 15 to 20 years
  • Flexibility to choose to receive your retirement income at age 50, 55, 60, 65 or 70
  • Potential monthly dividends increasing 5% annually available
  • Get 12 months interest-free on your premium with the Premium Pass option
  • Ability to add on critical illness cover

15 or 20 years

Additional non guaranteed bonus at maturity with potential monthly dividends available

Regular retirement income

AXA Retire Treasure II

  • Guaranteed annual income
  • Re-deposit your returns for a non guaranteed interest rate of up to 3.00% p.a.
  • Competitive total yield
  • 100% capital guaranteed
  • Fully customisable

10, 15, 20, 25 or lifetime

Competitive total yield of 4.24% p.a. at maturity

Lump sum potential

1. ManuLife RetireReady Plus III – Best Retirement Plan for Monthly Guaranteed Income

The ever-popular ManuLife RetireReady Plus III retirement plan offers monthly guaranteed income for life, plus tons of incredible customisation options, making it a great all-rounder for anyone who wants their capital guaranteed. What’s more, CPF Life payments are accepted, and policyholders benefit from an additional guaranteed payout in the event of almost any kind of loss of independence or disability.

Premium Term: 5, 10, 15 or 20 years

Retirement Ages Available: 50, 55, 60, 65 and 70

Insurance Cover: Protection for death, terminal illnesses, and permanent/total disabilities

Payout: Guaranteed income, loss of income benefit and retrenchment benefit

Special Feature: Retrenchment Benefit of 50% of annual premium

Promotion: N/A

2. NTUC Income Gro Retire Flex Best Retirement Plan for Flexible Payout Period

If you’re looking for a retirement plan that’s flexible, easy to set up and offers guaranteed acceptance even if you have a pre-existing health condition, look no further than NTUC Income Gro Retire Flex Pro. You’ll get monthly cash payouts combined with non-guaranteed bonuses, a great interest rate during your accumulation period and tons of additional insurance coverage. Plus, there are lots of retirement pay out period options to choose from.

Premium Term: 5, 10, 15, 20, 25, 30, 35 and 40 years

Retirement Ages Available: Flexible

Insurance Cover: Death benefit, disability care and accidental death

Payout: Guaranteed income, non guaranteed cash bonus and retrenchment benefit

Special Feature: All customers accepted under “guaranteed acceptance” policy terms listed here

Promotion: Up to $350 Cash Rewards

3. SingLife Flexi Retirement – Best for Potential Cash Bonuses

Savers on the hunt for cash bonuses and the ability to reinvest their monthly payouts for higher returns will love SingLife Flexi Retirement. With this increasingly popular retirement plan, 100% capital is always guaranteed at the end of your chosen accumulation period. What’s more, SingLife Flexi Retirement offers a generous care income benefit and lots of payout and retirement age flexibility, too.

Premium Term: From 5 to 35 years

Retirement Ages Available: Flexible

Insurance Cover: Care income benefit

Payout: Guaranteed income and a monthly cash bonus

Special Feature: Use your lump sum as a monthly payout to get a regular cash bonus

Promotion: Add optional insurance riders to your basic plan

4. AIA Retirement Saver IV – Best for Regular Retirement Income

Singaporeans who opt for the AIA Retirement Saver IV as their preferred plan get to enjoy an interest rate of 4.17% p.a. until their policy matures, by which point you’ll be eligible to receive a monthly cash benefit in the form of monthly payouts for either 15 or 20 years. Capital is always guaranteed, and future premiums can be waived if ever you’re diagnosed with a critical illness – but only as an optional add on.

Premium Term: 15 or 20 years

Retirement Ages Available: 50, 55, 60, 65 or 70

Insurance Cover: Comprehensive critical illness cover optional

Payout: Guaranteed income plus a non guaranteed bonus

Special Feature: Additional non guaranteed bonus upon maturity with potential dividends increasing 5% annually

Promotion: N/A

5. AXA Retire Treasure II – Best for Lump Sum Potential

High income individuals seeking a lump sum-based retirement plan get to enjoy lots of flexibility and a whole bunch of fantastic benefits with the AXA Retire Treasure II plan. You’ll get to take advantage of guaranteed payouts over a period of either 10, 15, 20 or 25 years – or potentially even longer depending on your unique retirement goals.

Premium Term: 10, 15, 20, 25 or lifetime

Retirement Ages Available: Flexible

Insurance Cover: 101% of total premiums paid against death or terminal illness

Payout: Guaranteed income as a lump sum

Special Feature: Competitive total yield of 4.24% p.a. at maturity

Promotion: N/A

What Should You Consider Before Buying a Retirement Annuity Plan?

When you compare retirement plans, be sure to look out for those that offer:

1. Consistent Retirement Income Streams

Ask yourself whether you prefer a higher guaranteed or overall non guaranteed monthly income.

2. A Good Annualised Yield

You should calculate and compare which plans offer you the best value.

3. Total and Permanent Disability Benefit and Health Perks

Life can be unpredictable, which makes policies that offer a disability care benefit and other health perks more valuable.

4. An Income Payout Period That Suits You

Some policies are more flexible than others, so be sure to find one that’s compatible with your desired retirement period.

5. A Lucrative Accumulation Period

Similarly, you should look out for retirement plans that allow you to accumulate savings over a longer period.

Which Retirement Plan is “Right” for You?

Every saver has different circumstances to the next, which means deciding which of our recommended retirement annuity plans is right for you will depend on your individual goals and preferences. For example, while the ManuLife RetireReady Plus III and AIA Retirement Saver IV are an excellent fit for those who wish to enjoy a dependable monthly payout, the AXA Retire Treasure II will be much more suitable for savers who’d prefer a lump sum payout.

In contrast, if you’re the kind of saver that values flexibility, NTUC Income Gro Retire Flex is a no-brainer, while SingLife Flexi Retirement is most probably the right choice for anyone who values bonus potential or the ability to add-on optional insurance riders. Ultimately, you should think carefully about your retirement expectations and your own personal definition of a “comfortable retirement”, as well as what level of insurance cover you require. From here, it’s up to you to make sure you’re signing up for a policy that properly meets your needs.

Retirement Planning in Singapore – Pin Down Your Perfect Retirement Plan Today

Choosing the right retirement plan in Singapore might appear complex on the surface, but underneath all the jargon, retirement planning is really all about identifying and managing your expectations, then shopping around to find a product that’s the right fit. When you come to compare retirement plans, don’t forget that:

  • You’ll need to start out by calculating your ideal monthly retirement income and overall anticipated retirement cost.
  • Next, you’ll want to determine whether receiving a monthly cash benefit or less-frequent lump sum is right for you.
  • Finally, you’ll need to figure out what additional retirement plan perks – such as disability care benefit or retrenchment benefit – are most suitable for you and look for a plan that provides you with the best possible value.

Loan Advisor brings you all the latest news regarding retirement plans, loans, and financial planning. We also offer an easy-to-use loan comparison service where you can compare loans from licensed moneylenders in Singapore. Request loan quotes now, free of charge.

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