Karen Tang, CFP®: Certified Financial Planner in Singapore

Retirement Planning in Singapore: Which Retirement Income Plan Best Fits You?


The article titled “Retiring Right … and Picking a Plan That Fits You” was published in the Sunday Times on 17 April 2016. It highlighted the concerns of a greying Singaporean population and that understanding one’s needs in retirement is vital prior to zooming in on suitable options.

So, how do you go about selecting a suitable retirement income plan?

1. Understanding your retirement needs is key
Your retirement planning deserves careful thought. It is not just about the numbers and longevity. It requires you to think deeper about the lifestyle you would like to engage in in order to determine how much you really need to spend your silver years purposefully. The common mistake is to think that you will spend less in retirement. Be realistic. You will have lots of time on your hands and everyday will seem like a holiday. Do you spend less while on holiday? The answer is obvious. Planning for a buffer will ensure you have a decent standard of living and room to indulge yourself occasionally.

2. Retirement needs analysis to determine liquidity, available income sources and your retirement funding gap
The financial planner needs to do a thorough fact find and retirement needs analysis to arrive at the required retirement funding as well as affordability. If the financial planner skips this process altogether and dive straight into the product, it is apparent that he does not have your best interests at heart. When an Investment-Linked Insurance Plan (ILP) or a Universal Life product is ‘pushed’ as a retirement income plan, that should immediately trigger an alarm bell as these two products are ill suited and highly disadvantageous for retirement.

3. The finer details – What is best for one person may not fit the needs of another

  • How much income payout do you need?
  • When should payouts start? Would a monthly payout be more appropriate or an annual lump sum?
  • Do you need income for limited number of years (for example, for 10, 15 or 20 years) or a lifetime?
  • Do you need the annual payout to be fixed (guaranteed), fixed with a variable component, or increasing over time to mitigate inflation?
  • Do you wish to receive a non-guaranteed maturity payout?
  • Would you be using cash to fund the plan or through the money you have placed in the Supplementary Retirement Scheme (SRS)?
  • Premium payment duration – pay one lump sum or contribute over a period of time?

Remember – it is the product that fits you and not the other way round.

4. Your capital should ideally be guaranteed
A good retirement savings plan should guarantee your capital in case you wish to withdraw the money at retirement age. In other words, the plan’s surrender value should not fall below the total premiums paid.

Final thought:
Consumers are bombarded with a plethora of retirement-related insurance products and it is a challenging task to do their own comparison. This is even more so when every insurer tries to be unique. This DIY approach can be both frustrating and time consuming.

The solution to this would be to engage a comprehensive financial planner to help you plan. – We do a better and more accurate comparison. The plans compared are from insurers represented by financial advisory (FA) firms.

Are you actively cared for by a Certified Financial Planner who represents multiple providers (versus single company)? If not, call me for a chat over coffee today!