
73 per cent of Singaporeans are unprepared for their retirement, are you one of them?1 With a life expectancy rate of 83.6 at birth2 and an official retirement age of 62,3 Singaporeans are expected to spend an average of 21.6 years of our lives in retirement. This translates to a quarter of our lives being spent retired thus making planning for our retirement imperative in order to ensure that we can enjoy our retirement with financial certainty. In this article, we break retirement planning down into two phases: pre-retirement and the actual retirement, and guide you through this process of planning for your retirement in Singapore.

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Pre-retirement
With the average Singaporean starting to plan for his/her retirement at age 38, the first part of your retirement planning starts from this period and will last until you eventually retire4. Assuming the official retirement age of 62, your pre-retirement phase will therefore last for a total of 24 years.

During pre-retirement, your focus should be placed on building your nest egg so as to ensure that you can continue to receive a regular stream of income in retirement. This can be done using CPF Life and/or annuities.
#1 CPF Life
A government initiative, CPF Life was designed to help Singaporeans prepare for their retirement with CPF Life pay-outs scheduled to commence from age 65. However, with Singaporeans relying on monthly pay-outs from CPF for just 18% of their retirement income funds, this shows that it is not enough to rely solely on CPF Life pay-outs for your retirement expenses.5
(See "I Already Have CPF Life, Do I Still Need Annuities?")
#2 Annuities
With CPF Life pay-outs unable to cover your entire retirement expenses, you may wish to consider using annuities to complement your CPF Life pay-outs and/or retirement savings. Providing a regular stream of income from your specified retirement age, annuities are typically used for retirement planning and can offer financial stability in retirement.
Additionally, you may also use annuities to create an automatic retirement pay cheque. This refers to the strategy of purchasing multiple smaller annuities over a period of time. Doing so allows the individual the flexibility to change or cancel each smaller annuity plan if or when necessary.

With most annuities offering pay-outs on an annual basis, having multiple plans would also allow you to determine the frequency of pay-outs. This can be done by scheduling them to ensure that you receive a constant stream of retirement income throughout the year.
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Entering retirement
While many may only think of planning for their retirement income, it is also equally important that you review and plan for your own protection needs in retirement. Without the need to provide for your dependents, insurance for income replacement will be less important with focus shifting to your medical and/or long term care needs.
#1 Hospital insurance
As we age, our body's immunity decreases thus making us more susceptible to illnesses6. This therefore makes medical care a priority in retirement with hospital insurance offering coverage for medical expenses that we may incur.
While Singaporeans and Permanent Residents (PRs) have basic hospital coverage through MediShield Life, we recommend enhancing your coverage through the use of Integrated Shield Plan and riders. This allows for a more comprehensive coverage with integrated shield riders covering up to 95 per cent of the cost of co-insurance and deductibles in your medical bills.
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#2 Long term care insurance
Also known as disability insurance, long term care insurance will pay-out in the event of a disability. With long term care plans designed to help with the cost of long term nursing treatments this differs from hospitalisation insurance that covers for inpatient and selected outpatient treatments.

While ElderShield and CareShield Life offers Singaporeans access to basic long term care insurance, these coverage requires the individual to be unable to perform 3 out of 6 Activities of Daily Living (ADL) in order for pay-outs to commence. For coverage that commences from the inability to perform the first ADL, you may wish to consider other long term care plans.
(See "What Happens If I Don’t Have Long-term Care Insurance?")
#3 Personal accident insurance
Lastly, personal accident (PA) insurance covers for accidents and infectious disease and may be beneficial to have in old age. Unlike hospital insurance that covers for inpatient treatments, personal accident insurance also covers for outpatient medical expenses and treatment by licensed Chinese physicians and chiropractors. This could offer some financial protection against injuries and/or medical expenses incurred from slips and falls. Moreover, as medical underwriting is not required for personal accident insurance, PA plans can also be used by individuals with pre-existing conditions.
(See "Best Personal Accident Insurance Singapore 2020")
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1Source: https://www.ocbc.com/simplyspoton/financial-wellness-index.html
3Source: https://www.mom.gov.sg/
4Source: https://www.manulife.com.sg/en/insights/
5Source: https://www.singstat.gov.sg/-/media/files/publications/households/hes201718.pdf
6Source: https://www.webmd.com/healthy-aging/guide/seniors-boost-immunity#1
