If you are one of those who are not comfortable to invest in shares/property, the gahmen has put in place several schemes that can help you prepare for a comfortable retirement.
They are:
1.
CPF - contributing regularly to your
CPF accounts not only helps you build up your nest egg safely, it also allows you to save on taxes. Once you turn 55, and after you have met the Full Retirement Sum for your cohort, you can withdraw all your OA and SA money. Or you can leave the money with
CPF to earn interest and just withdraw the yearly interest for spending.
2. SRS - contributing to the SRS allows you to save further on taxes each year. You can withdraw from it anytime but you will have to pay extra taxes. For most of us, we can withdraw the SRS from age of 62 to avoid paying the extra taxes.
3.
CPF Life - This is the best annuity plan currently. It will start paying out a monthly sum when you reach 65 up to your last breath. The amount of payout will depend on how much you save in the
CPF RA.
4. SSB - This is perfect for those who are really scared of putting money into stocks and commercial bonds. The interest is low but is guaranteed by the government and you can withdraw the money anytime without penalty.
This is how we are are planning to utilize the above schemes to fund our retirement:
At age 58 to 61
1. Interest from
CPF (OA & SA): $50k pa
2. SSB drawdown: $40k pa
Age 62 to 64
1. Interest from
CPF (OA & SA): $50k pa
2. SRS drawdown: $30k pa
Age 65 to 71
1. Interest from
CPF (OA & SA): $50k pa
2. SRS drawdown: $30k pa
3.
CPF Life payout: $48k pa
Age 72 and beyond
1. Interest from
CPF (OA & SA): $50k pa
2.
CPF Life payout: $48k pa
The above will form our basic retirement funding blocks.
Any other investments income (such as dividends from stocks and rental income) that we may have will be a bonus and augment your retirement income.
One important "ingredient" to building up a solid foundation is not to retire early. Because your
CPF accounts needs time to build up and for the interests to compound.