What does retirement mean?

The article below was compiled from excerpts in Heng Chee How’s speech on the President’s address.



Ahhh yes, retirement. It conjures up the image of travels, gardening, beach holidays and lots of playtime with grandchildren.

The picture of reality however, may not fit the frame many Singaporeans have about retirement.

Heng Chee How of the NTUC discussed retirement adequacy at length during a recent session of Parliament.


Heng Chee How



Much has been said about the Pioneer Generation, but it is not enough. “This goes beyond the Pioneer Generation. Citizens of all ages must prepare for their eventual retirement. Every person hopes to be able to enjoy a good standard of living in retirement, preferably not too different from that before retirement.” says Heng.

In the earlier years, like say the 60s and 70s, life expectancy was around 65 years. If a person started to work at the age of 20 and retires at age 55, he would have worked 35 years and must provide for his remaining 10 years in retirement. This means the working years to retirement years ratio is 3.5.

Life expectancy in the 21st century however, is around 82 years. If a person starts work at age 22 and works till he retires at 62, he would have worked 40 years to provide for his remaining 20 years in retirement. The working years to retirement years ratio has changed to 2.

This basically means a Singaporean now has to maintain longer retirement years.

The later years of life is also when medical fees would be incurred the most. Medicine, hospital stays, medical consumables, special treatments. All these need financing.

Retirement also doesn’t mean that life is smooth sailing. Emergencies can, and you can bet your last CPF dollar, will crop up.

So what can one do?

Here are 4 ways one can prepare for lengthier retirement years: 1.) Do your best to earn more and save during working life. This increases the chance for savings to be accumulated, and for savings to be interest compounded.
2.) Maximise the pool of savings meant for retirement and spend less.

3.) Invest like a maniac. CPF alone may not be enough and in most cases, is adequate only as a final piece of social security. One must supplement CPF with retirement plans.

4.) Monetizing assets. For example, renting out your rooms or downgrading to smaller apartments.

It all boils down to careful planning. In fact you must have some form of retirement plan. However, I know too many people that live their life status quo – leaving their fate to circumstance.

Although CPF provides for basic retirement funds, it is still very necessary to have plans of your own.







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