As Singaporeans live longer, can their retirement savings and investments keep pace?
Target-date funds can be one way to enhance retirement savings and financial security.
Singaporeans are living longer, which raises concerns about whether their retirement savings and investments will be sufficient to cover potentially extended years in retirement. A new study by the TIAA Institute and the Global Financial Literacy Excellence Center found that 32% of US adults underestimated their lifespan at age 65, while 13% overestimated it, 22% were unsure, and 22% did not know.
In Singapore, residents who reach age 65 have an average life expectancy of 86.6 years, with males living to an average of 84.9 years and females up to 88.1 years. According to a Manulife survey, 78% of Singapore respondents worry about outliving their money, and 70% are concerned about future care needs. 46% of respondents have financial responsibilities for family members, and 62% said these commitments impacted their ability to achieve long-term financial readiness.
CPF LIFE, Singapore's national longevity insurance annuity scheme, provides retirees with monthly payouts from their chosen start age between 65 and 70 for as long as they live, but some may seek higher returns or worry about inflation eroding the value of their savings. CPF members can invest their CPF funds in the CPF Investment Scheme (CPFIS), which offers lower-risk options like unit trusts and insurance products.
A new "life cycle" investment scheme will be introduced in 2028 to help members who lack financial expertise or prefer not to manage their investments actively. This scheme will offer simplified, low-cost, and diversified funds managed by commercial providers, automatically adjusting asset allocation as members grow older. However, management fees and other fund charges can erode net returns, so the CPF Board has capped all-in fees to retain more investment returns for members.
CPF members should be aware that investment returns are not guaranteed, and they may not match or beat the baseline interest rates on their Ordinary and Special Accounts. For those uncomfortable with market volatility, keeping savings in CPF accounts to earn risk-free rates or making cash top-ups or transfers to higher-yielding Special Account can help boost CPF LIFE monthly payouts.
Written by urgent.news from Straits Times Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
