How Much Do You Need to Retire in Singapore? A Grounded Approach to Estimating Your Budget

Alevin Chan
Last updated Sep 18, 2022
how to grow your cpf retirement income

Trying to work out how much you need to retire comfortably in Singapore can be an exercise in frustration. Here’s a sensible approach you can use to plan your retirement budget. 

Like you, I have often wondered how much money it takes to retire in Singapore. But after bingeing the entire new season of Netflix’s Selling Sunset just last week, I threw all prior expectations out of the window. 

You see, Selling Sunset is a reality series about the lives and drama of a group of ultra-successful real estate brokers who sell multi-million dollar homes in America. An average commission is around six figures, and the first few times those figures popped up on the screen, I remember thinking “waaah, I can retire on that one sale alone.” Then the next round of drama and gossip begins and I go from feeling sorry for myself right back to judging those on my laptop screen. 

Even taking into account the brokerage’s cut, the modelesque stars of Selling Sunset are well on their way to millionairedom (if they aren’t already there), so it boggled me to hear them complaining about worrying for their families and future. 

“I don’t get it,” I muttered to myself. “Just stop shopping at Prada and Gucci for a week and you can probably stock your fridge for like, three months?” Then it hit me. 

Retirement for them looks very, very different compared to retirement for me (and the average person). And therein lies the crux. 


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S$1 million to retire in Singapore. Really?

Between the 1M65 movement, to reports like this April 2021 survey by Fullerton Fund Management, Singaporeans seem to think that they need to hit the million-dollar mark by age 65 – or else!

But is the figure relevant for the average Singaporean?

Assuming you live for another 25 years after retiring at 65, you’d reach the ripe old age of 90. The average life expectancy of Singaporeans is 81.1 for males, and 85.9 for females, so we’ve given ourselves a generous buffer here. 

With a retirement budget of S$1 million over 25 years, that works out to S$3,333 per month.

Now, the median gross monthly income for Singporeans is S$4,680, and in financial planning, we’re taught that a general rule of thumb is to aim for a monthly budget that is around 75% of your working income. 

Using the median monthly income, we have a target monthly retirement budget of around S$3,500. That’s a figure that is very close to the S$3,333 budget from our S$1 million, so does this prove that you actually need S$1 million, or close? In any case, putting your savings into a high-yield savings account and investing them could accelerate your progress.

At retirement, financial obligations are vastly reduced

Well not exactly, because we haven’t factored in two crucial considerations.

Retirement also means the end of one’s economic productivity, and in most cases, takes place after two important financial obligations have been discharged – dependants, and housing. 

In fact, many people can only retire after their children have grown up and reached financial independence, and they no longer have to service a mortgage. 

This is simply because bringing up children and paying for a house takes up a sizeable portion of household income, and once these obligations are no longer present, most people can make do with a much lower monthly income. 

There are even possible benefits that could arise. Grown-up children who do financially well may be able to offer financial aid or support. (If they don’t, you can always guilt-tip them with re-posts of all those Instas of them dressed up in designer baby clothes, accompanied by a vaguely passive-aggressive caption or two. Just sayin’).

Meanwhile, you may be able to flip your home for a smaller one that is just right for you and your spouse, and very likely collect a handsome profit in the process, if the rising trend of million-dollar HDB flats is anything to go by. 

And even if you don’t plan on selling your home, you can still choose to rent out your spare room(s) for passive income. Compare the best savings accounts to start funding your retirement goals.

But some financial needs go up

However, there are some increases in your financial needs you need to be prepared for during retirement.

One is insurance – specifically, your medical coverage

Medical insurance premiums go up with age, and the rate of increase accelerates steeply during our retirement years, in tandem with our risk of developing any number of serious illnesses and health conditions. 

For those on the basic Medishield plan, the increase in premiums may not be as impactful, as your CPF Medisave account is likely to cover 100% of your premiums. 

But those who have a low Medisave balance should take note that you may have to pay your Medishield premiums in cash somewhere down the line. (If you prefer not to deal with this eventuality, consider topping up your Medisave account regularly.)

For those who have an Integrated Shield Plan – which combines your basic Medishield with a layer of additional coverage and benefits from a private insurer, the premium for which is paid in cash – you’ll need to be careful to match your coverage to the premiums you can afford to pay. 

Refer to this Ministry of Health’s webpage, which contains a comprehensive summary of all available Integrated Shield Plans, to help you decide if you need to alter your existing plan. 

Remember that even with the most expensive Integrated Shield Plan, you’ll still need to pay some costs out of your own pocket. This could run up to several thousand dollars, depending on your coverage, treatment and severity of condition. 

Hence, the key is to strike a balance between how much you pay each month, and potentially how much you need to pay out of your own pocket should you need medical attention. 

The other boogeyman to look out for is inflation, which is often accused of being the nefarious force that will make your chicken rice cost S$20 per plate by the time you retire, because isn’t that how compounding interest works?

Actually, no. Singapore’s inflation rate goes up and down from year to year, so it’s not a straightforward hike upwards. 

But yes, things tend to get more expensive over time, but unless we’re seeing runaway inflation like what’s happening in Turkey, it is highly unlikely that you will find yourself priced out of your favourite hawker meal in the 20 or 30-odd years you likely have before reaching retirement.

Here’s how to really estimate how much you need for retirement

Ok, in the name of offering a practical, grounded way to work out your retirement needs (and yours alone – as Selling Sunset has taught me, everyone’s retirement sum is different), here’s a four-step process to estimate how much you likely need for retirement.

One caveat though – this isn’t a one-and-done type of exercise. Rather you should periodically reassess your sums to make room for changes in your life. 

Step 1: Calculate your necessary expenses

Add up how much you are spending for necessary things, i.e., needs, not wants. By retirement, this will mostly comprise living expenses (food, utilities, etc) and insurance. 

If you have children and a mortgage, subtract the cost of upbringing and mortgage payments. If you don’t currently have them, leave them out. 

Also subtract any other expenses that expire by the time you retire, such as insurance endowment funds or investments that you plan to stop funding. 

Don’t forget to subtract your CPF Life payouts; use this calculator to get a sense of how much your payouts will be. 

Similarly, if you have any other sources of retirement income, such as insurance annuity plans, dividends, rental income etc, subtract the corresponding monthly figures as well. 

Step 2: Add a 10% buffer

Once you have your estimated budget that covers all your necessary expenses at retirement, add a 10% buffer.

This buffer is to help you cope with fluctuations in costs of living, but is best paired with making necessary lifestyle adjustments as you go along. 

Think of it as short-term savings, and not an excuse for you to suddenly start an exotic pet collection; that’s what the next item is for.

Step 3: Add a discretionary budget 

In retirement, it is important to maintain control of your finances, and one of the best ways to do so is to have separate budgets for your needs and your wants. 

The figures in Steps 1 and 2 are reserved for catering to your needs, while your discretionary budget is to cater to your wants. 

This is the budget you set for yourself that you can use anyway you want, as long as you don’t exceed it.

So if you envision a retirement spent jet setting around the globe trying out as many Michelin-starred restaurants as you can, this is how you’re going to pay for it.

Step 4: Beat inflation with investing 

Tally up the figures in Steps 1, 2 and 3, and the result is your monthly retirement budget, which is the sum you’ll want to set aside for your retirement. 

In order not to let inflation erode your purchasing power (which means you’ll end up with significantly less money, throwing off your entire plan), you should invest the sum with the aim of beating inflation – hence, aim for annualised returns of around 3%.

Of course, higher returns will furnish a much bigger nest egg, but you should focus on less risky assets and stable returns, especially if you have a shorter time frame to invest. 

Also, the earlier you start the better. Compounding interest really adds up over the long term, but you need to give it time to work its magic.

Read these next: 
Guide To Supplementary Retirement Scheme (SRS) And Tips To Maximise It
Endowus Review: Investing Your Cash, CPF And SRS Money At Low Fees
StashAway Review: Goal-Getting Investments Through ETFs
DBS, SIA & Sheng Siong: Beginner’s Guide To Blue Chip Stocks In Singapore
Guide To Real Estate Investment Trusts (REITs), And Whether You’re Ready For It


By Alevin Chan
An ex-Financial Planner with a curiosity about what makes people tick, Alevin’s mission is to help readers understand the psychology of money. He’s also on an ongoing quest to optimise happiness and enjoyment in his life.


Alevin Chan September 18, 2022 96432