Building Financial Independence: Retirement Planning in Your 20s and 30s

While planning for retirement in your 20s or 30s may seem like a distant concern, the rising inflation rates in Singapore make early legacy planning a necessity, not a choice.

Singaporeans are blessed with one of the highest life expectancies in the world, which is incredible news. It also means that you need more savings to cover your expenses during your retirement years to maintain your ideal quality of life.

The rising impact of inflation adds urgency to the need to start your retirement savings journey earlier. This article shares retirement savings tips to give you a head start on securing your future.

Related Story: How to Plan Your Finances for Short, Medium and Long Term Goals

It’s now a norm to plan for early retirement—here’s why

The older generations’ financial concerns generally involved working extensively to build wealth while adapting to manage rising living costs. That’s not the case for the younger generation.

Millennials and Gen Zs ‌are geared towards gaining financial independence for early retirement. The Financial Independence, Retire Early (FIRE) movement spurred this mindset, gaining popularity on social media platforms and online communities.

The younger generation has wired themselves to speed up retirement goals through supercharged savings (driven by frugality) and investments. The increasing opportunities for remote work, freelancing, and online businesses help them grow their finances in a shorter time span.

What’s the Financial Independence, Retire Early (FIRE) movement about?

Coined from the book Your Money or Your Life by Vicki Robin and Joe Dominguez, the FIRE movement asks its readers one core question: how much are you willing to trade to get more money?

FIRE aims to educate people to spend thoughtfully instead of making rash purchases. It pushes the idea of having sufficient income to cover your needs and saving enough funds to retire early, and on your terms, too.

Tips FIRE movement followers follow include purchasing used goods, DIY projects, and having a side income (like remote work, freelancing, and online businesses) to grow wealth in a shorter time span.

Related Story: FIRE Movement: How to Retire Early Without Financial Worries

How much money does a millennial need to retire comfortably in Singapore?

According to OCBC’s Financial Wellness Index 2022, a person’s monthly income for retirement could range between S$2,550 to S$5,760, with most respondents opting for a comfier yet pricier retirement lifestyle.

42% of respondents were on track to achieving their desired retirement plans. They had these three distinct characteristics:

Contributed to retirement funds regularly
Had a more accurate perceived estimate of their monthly expenses
Used a range of sources to accumulate retirement funds, including endowment plans and regular investment plans

Your monthly retirement income number depends on your preferred retirement lifestyle. If you prefer an active social life with a few vacations thrown in (plus some other perks), you’ll need to set aside higher retirement reserve funds.

Singapore grants for retirement planning

The Singapore government has introduced several grants and subsidies to assist retirees in managing their finances effectively. Here are a few initiatives worth considering in your early retirement planning.

Enhancement for Active Seniors (EASE)

This programme provides subsidies to seniors in installing home improvement items like slip-resistant bathroom flooring and safety rails, features that help make the home elderly accessible.

In order to qualify for this HDB programme, one family member within the household should either be:

65 years of age or above, or
Between 60 to 64 years but need help in one or more Activities of Daily Living (washing, bathing, mobility, and more)

Find more information on EASE here.

Majulah Package

Announced in August 2023, the Majulah Package comprises three CPF top-ups for those born in 1973 and earlier and with lower income or less wealth.

Earn and Save Bonus

Provides support to lower- and middle-income earners, irrespective of their employment type. A

S$400 to S$1,000 annual top-up is credited to the eligible person’s CPF Retirement Account or Special Account, depending on their age.

Retirement Savings Bonus

A one-time S$1,000 to S$1,500 bonus for those with CPF savings below the CPF Basic Retirement Sum threshold. The funds will be credited to either the CPF Retirement Account or Special Account, depending on the beneficiary’s age.

More details on the Majulah Package benefits will be available in 2024.

MediSave Bonus

A one-off bonus of S$500 to S$1,000 is credited to the beneficiary’s CPF MediSave account.

Related Story: Best High Interest Savings Accounts Singapore 2023

ComCare Long Term Assistance (LTA)

This programme aims to help senior Singaporeans through monthly cash assistance between S$640 to S$1,940, but specifically for those who cannot work due to old age, disability or illness and lack family support or substantial savings for their daily needs.

The assistance covers medical expenses and public healthcare institutions and also provides free or highly subsidised social support services.

The rates vary according to the senior’s household size.

Household Size	Rates
1- person	S$640
2-person	S$1,080
3-person	S$1,510
4-person	S$1,930

Source: SupportGoWhere Singapore

Find more information on LTA here.

Seniors’ Mobility and Enabling Fund (SMF)

Offered by the Agency for Integrated Care (AIC), this scheme benefits seniors who need assistive and mobility devices to live independently. The Singapore government will also supply funded homecare and healthcare items, as well as subsidies for purchases like adult diapers, milk supplements, nasal tubing, and more.

In order to qualify, the senior needs to:

Be 60 years and above in age
Go through a financial assessment
Undergo a clinical needs assessment to identify the mobility aids required before devices can be prescribed
Not concurrently receive or apply for any other public or private grants or subsidies that exceed the co-payment under the SMF scheme

Find more information on AIC here.

Lease Buyback Scheme (LBS)

This scheme assists senior citizens who stay in a 4-room flat or smaller by selling part of their flat’s lease back to HDB. In return, the seniors get a stream of income to support their retirement years while they still reside in the same unit.

Proceeds from the sale go towards topping up the senior’s CPF Retirement Account (RA) to initiate CPF LIFE, providing them with a monthly income for life.

Find more information on LBS here.

Silver Support Scheme

The Silver Support (SS) scheme provides cash supplements quarterly to seniors who had low incomes when they were working, resulting in fewer savings in their retirement years. In order to qualify, the total CPF contributions made by the age of 55 years should be up to S$140,000. The total CPF contributions comprise the total sum in Ordinary and Special CPF accounts, inclusive of funds withdrawn for investment, education, and housing purposes.

For self-employed individuals, the average net income of up to S$27,600 applies between the ages of 45 to 54 years. The table below illustrates SS benefits per quarter, based on the household monthly income per person and HDB flat type.

HDB flat	Household monthly income per person up to S$1,300	Household monthly income per person over S$1,300 and up to S$1,800
1 to 2 rooms	S$900	S$450
3 rooms	S$720	S$360
4 rooms	S$540	S$270
5 rooms	S$360	S$180

Find more information on SS here.

How can you ensure financial wellness?

There are three key elements to pay attention to in ensuring your financial wellness to persevere through an adverse economic outlook and other factors.

Spend prudently, save extensively

The general rule of thumb is to save a minimum of six months’ worth of your monthly expenditure as an emergency fund for a rainy day. It also pays to spend within your means and only take on necessary debt and no more, especially in today’s high-interest rate/high-inflation environment.

Have adequate insurance coverage

With the current challenging economic environment, it’d be tough to survive an unexpected health situation. Save your emergency funds as the ultimate last piggy bank to dip into, and ensure that you’re financially covered with life and personal accident insurance.

Make sound investment decisions

Conduct your due diligence before investing and exercise extra caution towards short-term, high-risk investments. It benefits you more to have long-term investment goals via a well-diversified investment portfolio than short-term, high-risk investments. If need be, seek advice from investment professionals to get an objective opinion.

Enquire more and contact us today!

Want to know more about AMTD PolicyPal Group insurance plans?

Compare Insurance Plans

Cannot find what you are looking for? Please reach out to us at Contact AMTD PolicyPal

How Do You Get the Most Value Out of Your Insurance Plan?

Everything to Know About the Great Eastern Endowment Plan

Insuring Your Future with the Right Insurance Coverage

5 Financial Mistakes That Single 30-Somethings Make

Tips You Need to Know Before Buying Term Life Insurance

Protected up to specified limits by SDIC. This content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. Nothing contained on our Site constitutes a solicitation, recommendation or endorsement by AMTD PolicyPal Group in this or in any other jurisdiction in which such solicitation or offer would be unlawful under the securities laws of such jurisdiction. You may wish to seek advice from a qualified adviser before buying the product.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Under AMTD Digital, AMTD PolicyPal Group consists of PolicyPal Pte. Ltd., Baoxianbaobao Pte. Ltd., PolicyPal Tech Pte. Ltd., and ValueChampion.