High CPF Life payouts should mean less need for more savings

If you have planned for higher monthly payouts from CPF Life, you will probably not run out of money in your old age, even if you don't have a large amount saved.

- Tan Ooi Boon

This is because payments of up to $3,300 a month should help retirees meet most of their expenses without having to dip into their nest-eggs.

The issue of retirement adequacy was highlighted in a recent poll which suggested that a person needs at least $600,000 to retire comfortably, as this amount would allow for spending of $2,500 a month from age 65 to 85. But those who live beyond 85 will need even more.

That people are living longer should be a compelling reason why all Singaporeans should make CPF Life their basic retirement plan because its payouts are, as its name suggests, for life.

For instance, a person turning 55 in 2025 can set aside the Enhanced Retirement Sum of $426,000—a third less than $600,000—so they can receive $3,300 a month from age 65. If they can save that, they would have received $792,000 by 85, or $192,000 more than those who just rely on their $600,000 savings.