SINGAPORE – Like many countries, Singapore has an ageing population, with many people concerned about having enough retirement savings.
Financial advisers recommend an early start to retirement planning to take advantage of the longer runway for savings to grow over time.
Many people will typically start retirement planning with their Central Provident Fund (CPF) savings.
From Monday, to encourage those aged below 55 to plan for retirement early, DBS Bank has incorporated a new feature – “Your CPF” – in its digibank app to give users a clearer picture of their CPF savings.
Ms Lorna Tan, head of financial planning literacy at DBS, said the new tool will enable CPF members to benchmark their retirement savings against the projected CPF retirement sums for their age cohort.
This will allow them to take steps to close the gaps in their retirement savings, she added.
For instance, a 29-year-old individual who earns about $6,000 every month has $75,000 in his CPF balances – $45,000 in his Ordinary Account and $15,000 each in his Special and MediSave accounts.
From inputs based on his personal circumstances, which include withdrawing his savings from the Ordinary Account to buy a Housing Board flat, the “Your CPF” tool projects that at age 55, he will have $100,000 in his CPF balances – short of his cohort's basic retirement sum of about $114,100.
The tool then recommends him to top up his Special Account by $58 every month so that he can reach his basic retirement sum by the time he is 55.
Being able to track the progress towards the required CPF retirement sums has taken on greater importance as people are living longer after they retire.
Department of Statistics data shows that total life expectancy at 65 years old rose to 21.2 years in 2021, up from 20 years in 2011. This means a 65-year-old with this life expectancy can expect to live for another 21.2 years.
As people live longer, they may worry about not having enough savings to last through their golden years. Inflation is exacerbating the problem by eroding the value of money and raising the cost of living.