Singaporeans have strong advantage in retirement through CPF Life -government created retirement annuity.
The important factor in retirement is to have consistent monthly income cashflow to cover monthly living expenses
Average Singaporeans from 2025 onwards, can get monthly income of
Three retirement expenses that one will need to fund:
1) Basic living expenses
Most people will have paid off their mortgage loan by the time they reach age 65.
Living expenses continues nevertheless, that includes your day-to-day food, transport, groceries, utility bill, handphone billes etc.
CPF Life payouts fall perfectly to cover the above basic living expenses for your daily needs.
2) Long term medical expenses
As we get older, medicines and supplements often become part of our daily necessities. Common old age ailments include high blood pressure, cholesterol, gout etc. And such ailments often do not induce hospitalisation nor critical illness. It is important to have separate fund to create passive income to take care of your long term medication needs.
Hospitalisation coverage and critical illness coverage are imperative to have as it helps to provide funding for big medical expenses in event of serious illness. Medical inflation grows at 8% p.a. We can only expect medical treatment cost to get higher as we grow older. Leveraging such expenses through insurance is wisest decision that you can make for your retirement.
3) FUN expenses
Unlike the ancient notion that retirement means slowing down and boring,
today retirement can be FUN and EXCITING with sufficient FUNDS.
It goes without saying that proper planning for FUN expenses would be required.
Yes inflation will always persist, but that doesn't mean you can't have fun.
Mona's adage:
RETIREMENT CAN BE FUN WHEN YOU HAVE THE FUNDS!
So, plan your passive income wisely! Create different buckets of passive income for different purposes.
Consider CPF Life, Dividend-generating funds, Bonds and Annuities for capital preservation and passive income preservation!
And keep 20%-30% of your capital in growth equities to beat inflation!
