The Buzz over Retirement Adequacy: Can I really, really retire?

Updated: Feb 18

By Wong Shiying


Singapore has the oldest society in Asean. Bet you didn’t know this. The median age of its people stands at 40.5 years old. In contrast, the projected median age for Asean in 2020 is a young 29.8 years old.

Which is why you keep hearing about terms like life-long employment, re-employment and retirement.

First, the two Rs means different things.

Retirement: You can work up to this age, now set at 62, and no boss can use your age as an excuse to fire you. That’s illegal. This retirement age is set to go up to 65 by 2030. Now, this doesn’t mean you can’t quit your job early to smell the roses.

Re-employment: You can still carry on working up to re-employment age, which is 67. This is also set to go up to 70 by 2030. What happens in between? Your boss will have to offer you some form of employment, and it’s up to you to say yes or no.

The two Rs are important because they’re not the same as the two other milestones in the life of a Singaporean adult: when they can withdraw their CPF savings and when monthly pay-outs will kick in.

CPF withdrawal: This is still at 55 and die, die won’t change. You can withdraw your CPF savings provided you have set aside a certain minimum sum set for your cohort. So you can take out a lump-sum, or just leave the money in the CPF to chalk up better than bank interest rates.

CPF payout: This is set at 65 and you should be getting monthly sums from then on because your minimum sum has been pooled with those of your cohort and past cohorts into a fund that can pay out interest. It’s an annuity and it lasts for life. Hence, CPF Life.

Stick this on your desk : 55 (collect CPF, yay!), 62 (you can retire, or you can continue working which means you still have CPF coming in), 65 (CPF monthly pay-outs and if you are still working, you still have CPF coming in), 67 (stop working and start smelling the roses).

Most people, especially if they are still young, have dreams of retiring early. But the sticking point is whether they have enough to live on for the rest of their life or whether society (taxpayers) will have to step in to help them.

What’s enough to live on anyway? And is relying on the CPF a safe bet?

A study by researchers at the Lee Kuan Yew School of Public Policy (LKYSPP) found that a Singaporean senior citizen aged 65 and above and living alone presently needs about S$1,379 a month to meet basic standards of living. That, according to a Straits Times survey, would mean that 41 per cent of retirees don’t have enough to live on. Of this group, 28 per cent say they fall short by at least half the recommended amount.

But maybe the LKYSPP researchers set the bar too high. The budget they developed not only covers expenses for food, transportation and accommodation, but also money required for a mobile phone, an annual holiday, and to buy gifts for social gatherings. Among the different expenses, food accounted for the largest component, while recreational activities made up the smallest share.

Another survey, the more extensive Household Expenditure Survey published in 2019, gives a more optimistic picture. It found that retiree households living in public flats receive an average of $1,522 each month for their retirement needs, with the bulk of it coming from their children or relatives. Not CPF.

The breakdown is as follows:

$280 from Central Provident Fund (CPF) payouts

$485 from familial transfers

$180 from personal investments

$178 from rental income including proceeds from subletting or Lease Buyback Scheme; and $399 from other sources, including pensions and government aid.

In an interview with TODAY, Ms K Thanaletchimi, the president of the Healthcare Services Employees' Union (HSEU) and a former Nominated MP (NMP), said: “The message should be stark and clear. CPF payouts should not be the main source of income for a retiree. It must be regarded as a complementary or supplementary source of income for Singaporeans.”

However, the message has not quite sunk in. A poll of 1,000 residents by market research consultancy Blackbox released in June 2019 found that 43 per cent of respondents said they were relying mainly on CPF, while 38 per cent said personal savings and 17 per cent said investments.

The CPF scheme has been tweaked many times to ensure that retirement sums are adequate and pay-outs can keep pace with projected inflation. But announcements, especially on the yearly minimum sum that will become a person’s retirement account, have always been greeted with derision.

You can read this for more information on the minimum sum scheme.

Are the minimum sum figures realistic? Will the majority of working Singaporeans be able to set aside the sum at 55?

A 2014 survey by DBS Bank showed that many Singaporeans only think about retirement after 40, which gives a shorter time for retirement funds to grow. Coupled with other financial imperatives such as funding a home and paying for the children’s education, retirement planning often takes a backseat. It may therefore pose a challenge for people to hit the Full Retirement Sum by the time they turn 55. However, if they pledge their property, the minimum retirement sum can be halved and that would be more easily achieved.

Over the years, several misconceptions over the CPF fund have surfaced, prompting replies from the CPF Board. It goes to show how highly Singaporeans regard their CPF, so much so that any sign of supposed “short-changing’’ can go viral.

a. Man who wanted to use CPF for daughter’s studies

He said he had $70,000+ in his CPF account and wants to withdraw $15,000 to pay for his daughter’s school fees. He is 60 years old and doesn’t have a stable job.

CPF’s response: He did not have sufficient CPF savings for a basic retirement in the first place — which is what the CPF is all about.

b. Man who wanted to use his own CPF for terminally ill wife

They claimed that only treatment at Mount Elizabeth Hospital (MEH), a private hospital, would give his wife a chance to stay alive. As a terminally ill patient, she had been allowed to withdraw all her CPF savings amounting to $25,000 for treatment. After the couple exhausted all avenues, the husband – age 47 – wanted to withdraw CPF funds from his Ordinary and Special accounts to pay for treatment at MEH but his request was rejected by the CPF Board as he had not hit the CPF withdrawal age of 55. His wife passed away in August 2019.

CPF’s response: Both the private hospital (Parkway Cancer Centre) and the National University Hospital had said that the cancer is terminal and not curable. Schemes such as Medishield Life and Eldershield had already been used to pay for the treatments. Furthermore, subsidised healthcare in a public hospital was available to them if they lacked the finances for treatment. The man could not withdraw his own CPF as he needs it for his own retirement.

c. Man who thought that pay-outs start at 70

He said on Facebook that Retirement pay-out age had been discreetly raised by 5 years from 65 to 70, with an opt-out required if one wanted to start the pay-out at 65. He based it on this line in a CPF letter “No action is required if you wish to start your pay-outs at age 70”.

CPF’s response: What the line basically means is that eligible pay-out remains at 65 (need to apply, this has always been the procedure), while automatic pay-out begins at 70. It started automatic pay-out at 70 in 2018 because some members did not start their pay-outs even after age 70.

d. Sick woman wants to use her CPF for medical treatment and daughter’s education

The woman said that she was diagnosed with lupus in 2011 and has been unemployed for the last 3 years. She is a single parent with a daughter in polytechnic and elderly parents who are dependent on her. Having exhausted all her savings, she requested for the release of her CPF funds from her Medisave and Special Accounts which she believes amount to $100,000. CPF rejected her withdrawal request as she had not hit the CPF withdrawal age of 55 and does not have a doctor’s certification to prove she meets the medical criteria.

CPF’s response: The woman’s medical expenses are fully covered by MediFund and her daughter’s education supported by government bursaries. The Board was unable to contact her from Nov 2019 as she was overseas and advised that her appeal to withdraw her CPF will be reassessed once a doctor is able to certify that she meets the medical criteria. Her request for financial assistance from the Social Service Office is also being reviewed.


Whose money is it anyway?

The examples above show that the tension arises because of the conflict between individual preference and society’s broader interest. People want more say over how they use their CPF – when to take out and how much. There are individuals who want to draw out all the balance in their CPF at 55 years old but there are also those who want to leave it inside their CPF accounts to collect interest because it is risk-free and the rates are relatively high. For the first quarter of 2020, Ordinary Account monies earn an interest rate of up to 3.5 per cent a year and Special Account monies earn up to 5 per cent.

What is the broader interest? If everybody wants to draw out their money early, then CPF LIFE would be dead in the water. The fund requires pooling together of Retirement Accounts, and sharing the interests earned among all members, including those who live longer than the average lifespan.

Despite its restrictions, the CPF scheme has evolved over the years to allow for more flexibility in the use of funds. A portion of it can be used to pay for public housing and private property, personal investments, education courses or children’s school fees via the Education Scheme, and medical bills using the MediSave account. There are conditions as to how much can be withdrawn and what the money is spent on to ensure that members have enough savings left for their own retirement – for example, MediSave withdrawal limits are capped at the charges incurred by a patient staying in a B2 or C ward in a public hospital.

“Even though there is this conception that CPF savings belong to individuals, placement of those funds in the CPF pool places a responsibility not just on the fund administrators to be provident, but also on its members who are beneficiaries of its collective strength. There is little point mandating that 37 per cent of our wages has to be saved for specific purposes, only to allow individuals to spend some or all of those savings on whatever they choose (however worthy or noble the cause).”

- Christopher Gee, senior research fellow at the Institute of Policy Studies said in a TODAY commentary.

Who is responsible for supporting the elderly if they can’t support themselves?

There’s the family, the community and the Government. Results from a poll of 2,000 Singaporeans showed that about 73 per cent of respondents said the family bears the primary responsibility for taking care of their senior relatives, while 69 per cent ranked the Government as either first or second in importance for this role. About 72 per cent ranked the community as either third or last of four choices on delivering such care.

The family as the first line of support might have worked better in the past, when families were bigger.

As for community help, the results also show that the public either thinks that it is not the community’s responsibility to bear the burden or that the community doesn’t have the capacity to bear this responsibility.

Those who want a bigger role for the government might not realise that the expenditure must come from somewhere, that is, their own pockets as taxpayers. Smaller families also mean fewer taxpayers, who would have to pay even more if this responsibility was passed to the Government.

This is not to say that the lower-income elderly do not get help. In addition to CPF payouts, the elderly may also receive additional retirement support from the government through the Silver Support scheme which provides an average income supplement of about $600 per quarter. In addition to that, the Pioneer Generation and Merdeka Generation package offers MediSave top-ups for those aged 65 and above to pay for approved insurance plans, hospitalisation, day surgery and approved outpatient treatments.

Starting from mid-2020, ElderShield – a severe disability insurance scheme that provides about $300 to $400 a month in payouts for up to five or six years – will be upsized to CareShield which provides higher payouts starting from $600 to a maximum of $1,200 over a person’s lifetime. Singaporeans as young as 30 have to start paying annual premiums to ensure universal coverage for future generations and are also covered early before aches and pains set in at a later stage.

The boost in healthcare support schemes don’t come as a surprise as one big part of elderly expenditure is healthcare costs. In Singapore, they are projected to rise tenfold over the next 15 years to more than US$49 billion ($66 billion) annually, according to a report by risk management firm Marsh & McLennan (which is supported by the Economic Development Board). By 2030, the healthcare expenditure for each senior is estimated to rise from US$8,196 in 2015 to US$37,427. This means an average of US$37,427 will be spent on healthcare for each elderly person by 2030. This is the highest in the Asia-Pacific region, just ahead of Australia.

Do people really want to work till they drop? And can companies really afford/want to hire them if they do?


In Singapore today, one in four seniors are still working. The employment rate for those aged 65 and older jumped from 13.8 per cent in 2006 to 26.8 per cent in 2018. As the number of people aged 65 and above is expected to double from 500,000 today to 900,000 by 2030, the employment rate for older workers is set to rise even further.

However, these workers may find employment harder to come by because of negative perceptions towards older workers. Numerous comments online claim that older workers can “only be employed in security and cleaning” companies, and are “more expensive to hire”.

The stereotypes suggest that older workers contribute less than their fair share and are not worth the extra money compared to younger workers. Such attitudes can fuel the disenfranchisement of seniors which goes against the spirit of lifting the retirement and re-employment ages.

Contrary to these beliefs, the Institute of Policy Studies has found that older workers can be just as productive as younger workers even in a more physically demanding job like car assembly. Researchers from the University of Mannheim also reported that “while older workers make more errors, perhaps due to declining physical attributes, they hardly make any severe errors, perhaps due to more experience; it is experience that prevents severe errors.”

Employers should look out for unhealthy attitudes towards ageism which could morph into the subconscious exclusion of an older colleague from projects and social activities to more serious cases of workplace discrimination.

Ageism aside, some businesses, especially the smaller enterprises, may have practical concerns about being able to pay their older workers additional CPF contributions.

The increase in CPF contribution rates was introduced by the government this year to lure older workers back into the workforce and encourage them to stay on. The contribution rate for those aged between 55 and 60 will be gradually increased from 26 per cent to 37 per cent by 2030, on par with that of younger workers. The rates for those aged 61 to 70 will also be raised accordingly.

To help employers manage cost increases, the Special Employment Credit scheme was introduced in 2011 as a wage-offset to employers hiring Singaporeans aged 50 and above and earning up to $4,000.

The SEC will come in handy since more than half of the 300 older workers in a survey conducted by the Centre for Seniors in August indicated that they want to continue working full time. At critical age junctions of 55, 62 and 67 years old, life coaching is available to help seniors address concerns of career, retirement, health and family.

While such help is undeniably a well-intentioned change to help older workers stay in the workforce, the sad reality is that it is the only way forward for some people. Elderly citizens with lower educational qualifications often have no choice but to do lower-paying and less desirable jobs without necessarily earning enough to support their daily needs.

A 2015 research paper on elderly poverty by Assistant Professor Ng Kok Hoe of LKYSPP found relative poverty has been rising dramatically among the elderly in the workforce. Between 1995 to 2005, the poverty rate among the working elderly jumped from 13 per cent to 28 per cent. In 2011, the figure hit 41 per cent.

In the face of rising inequality, targeted help schemes are available in Singapore but they usually come with varying criteria and limiting conditions attached. The elderly may find it difficult to navigate the system themselves and inevitably fall through the bureaucratic cracks.

While the national elderly healthcare packages introduced in recent years is a move towards dignified ageing in Singapore, more needs to be done to reach out to seniors who are struggling to make ends meet. Preemptive measures to keep them active and engaged in the workforce is one option, but a tighter social safety net will need to be in place to ensure that retirement can be a reality for Singapore’s rapidly ageing population.

Read Shiying’s take here.

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