Read? Retiring in Comfort - An SGX and Oliver Wyman paper on retirement savings
Singaporeans face a retirement challenge – how to ensure a desirable lifestyle post retirement
without overreliance on external sources. Historically, many retired Singaporeans have relied on
their children as the main source of financial support. However, shifting demographics due to
increases in life expectancy and low birth rates put limitations on the extent to which this model is
sustainable. It is therefore paramount that Singaporeans can adequately plan, save and invest for
retirement.
The CPF plays a central role in addressing this challenge and has established a mandatory
retirement saving scheme for Singaporeans, bringing together employers and employees to
contribute up to 36% of income into the scheme for retirement, housing and healthcare purposes.
According to the analysis used in this paper, the average Singaporean in full time employment
today can expect an income replacement ratio (expected post retirement income vs. pre-retirement income) of around 68%. This is within the range recommended by the World Bank and comparable to those seen in OECD countries. However, some Singaporeans may aspire to a higher replacement ratio. This can be achieved through both increasing savings rates and/or targeting
higher rates of return on these savings.
Case study of Uncle8888's Replacement Income vs Average Singaporean of 68%
Yearly Household Expenses
Read? Historical Lowest Annual Household Expenses Was Bad For Health Or Life Threatening Environment!!!
Replacement Income : CPF, Investment Income and Mini freelance income (Ad hoc)
Average replacement income over 4 years = 66%
Average pre-retirement yearly household expenses since 2002 = 58%
Average post-retirement yearly household expenses over 4 years = 54%
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