Core Concept
Income Stacking
Planning Horizon
10-40 Years
Goal
Financial Independence
Retirement planning is about replacing your working income with multiple sustainable income streams. This guide explains the framework for building financial independence through structured income stacking.
Retirement planning is the process of replacing your working income with multiple sustainable income streams that continue when you stop working. It's not about saving a lump sum - it's about building income that lasts.
Key Insight: Assets in old age can become liabilities (requiring maintenance, management, or liquidation). Regular income, on the other hand, provides ongoing financial stability.
Know you'll maintain a comfortable standard of living as you grow older
Live life on your terms without depending on work or others
The earlier you plan, the earlier you can choose to stop working
You decide how and when to spend your life meaningfully:
Forced to retire due to circumstances beyond your control:
Think of retirement income as layers that stack together. No single source is meant to cover everything - each plays a specific role.
Stack multiple income layers for financial security
Build From the Foundation Up
CPF LIFE forms your base. Add 2-3 additional layers above it to close the gap between basic needs and your desired lifestyle. The more stable layers you build, the more secure your retirement.
Income from property investment
Consider: maintenance costs, tenant management, renovation cycles, property taxes
Fixed income from debt instruments
Consider: issuer rating, reinvestment risk, default risk. Interest typically not taxable in SG.
Bank deposits with fixed terms
Consider: short maximum duration, reinvestment risk, low returns. Interest not taxable.
Income from stocks, REITs, unit trusts
Variable income but good inflation hedge. Dividends typically tax-exempt in Singapore.
Government lifetime income
Lifetime income from 65. Has contribution cap. May not cover desired lifestyle alone.
Learn more →Guaranteed income streams
Build predictable income. Annuity payouts typically not taxable. Choose between limited or lifetime payouts.
Tax-advantaged retirement savings
Only 50% of withdrawals taxable after 62. Annual contribution cap of $15,300. Invest in stocks, bonds, or insurance.
CPF LIFE (Lifelong Income For the Elderly) is a national longevity insurance annuity scheme that provides monthly payouts for life starting from age 65.
Standard Plan
Higher monthly payouts, lower bequest
Basic Plan
Lower monthly payouts, higher bequest
Escalating Plan
Payouts increase annually to combat inflation
Covered by CPF LIFE
Requires additional income sources
Reality Check: CPF LIFE provides a foundation, but most people need additional income streams to maintain their pre-retirement lifestyle.
The Supplementary Retirement Scheme (SRS) is a voluntary tax-deferred savings scheme to supplement CPF for retirement. It is a wrapper - not a product - that requires you to make investment choices within it.
Key Point: SRS is not an investment product. It's a tax-advantaged container. The money inside SRS needs to be invested to grow.
Contribute
Up to $15,300/year (Singaporean/PR)
Invest
Stocks, bonds, unit trusts, insurance
Grow
Tax-free growth until withdrawal
Withdraw
From age 62, only 50% taxable
Position: SRS is an accelerator, not a solution. It amplifies your retirement savings through tax benefits but requires you to make investment choices within it.
A retirement portfolio is structured differently from a growth portfolio. The focus shifts from maximising returns to ensuring sustainable income.
Income Stability
Regular, predictable cash flow
Inflation Protection
Maintain purchasing power
Liquidity
Access to funds when needed
Longevity Support
Funds that last a lifetime
1-2 years of expenses
Cash, savings accounts, money market funds. For immediate access and emergencies.
3-5 years of income
Bonds, fixed deposits, annuities. For predictable income with low volatility.
Long-term assets
Equities, REITs, unit trusts. For beating inflation and portfolio longevity.
Risk management
Insurance, healthcare coverage. For protecting against unexpected events.
Important: Portfolio structure depends on individual risk tolerance, time horizon, and income needs.
| Asset Type | Return Potential | Risk Level | Income Certainty |
|---|---|---|---|
| Cash / Fixed Deposits | ●○○○○ | Low | High |
| Government Bonds | ●●○○○ | Low | High |
| Annuities | ●●○○○ | Low | High |
| Corporate Bonds | ●●●○○ | ||
| REITs | ●●●●○ | ||
| Dividend Stocks | ●●●●○ | ||
| Growth Stocks | ●●●●● | High | Low |
Your portfolio emphasis should shift as you move through different life stages. What works in your 30s may not be appropriate in your 60s.
Building your nest egg with aggressive growth focus.
Save 10-20% of income
20-30 years to retirement. Growth with some stability.
Save 15-25% of income
10-20 years to retirement. Shift towards preservation.
Reduce volatility exposure
Focus on income generation and capital preservation.
Generate stable income
Important: These are illustrative guidelines only. Your actual allocation depends on personal risk tolerance, financial situation, and goals. Always consult a qualified financial planner.
Understanding and planning for these risks is essential for a secure retirement. Each risk requires specific strategies to mitigate.
Living longer than expected and outliving your savings. Singapore life expectancy is now over 84 years for females and 80 for males.
Mitigation: CPF LIFE, lifetime annuities, diversified income sources
Medical expenses increase with age. Chronic illness, critical illness, and hospitalisation can drain retirement savings quickly.
Mitigation: MediShield Life, Integrated Shield Plans, critical illness coverage
Purchasing power erodes over time. At 3% inflation, $1,000 today is worth only ~$550 in 20 years.
Mitigation: Growth assets, CPF LIFE Escalating Plan, inflation-adjusted income
A market crash just before or during retirement can significantly impact your nest egg when you need it most.
Mitigation: Diversification, gradual de-risking, liquidity bucket
Disability or severe illness requiring long-term care assistance. CareShield Life provides basic coverage from age 30.
Mitigation: CareShield Life, ElderShield supplements, family planning
Poor returns in early retirement years can permanently damage your portfolio, even if markets recover later.
Mitigation: Cash buffer (2-3 years), flexible withdrawal strategy
Cash, Savings, FD
Bonds, REITs, Unit Trusts
Annuities, Endowments
Higher commitment typically offers better returns or guarantees, but reduces access to funds.
Fixed payouts for a defined period or lifetime. Provides guaranteed income streams with low risk.
Variable income products combining insurance with investments. Good for long-term growth with flexibility.
Life insurance with lump sum payout at maturity. Good for building wealth to convert into annuity later.
| Feature | Annuity | ILP | Endowment |
|---|---|---|---|
| Income Type | Guaranteed | Variable | Lump Sum |
| Risk Level | Low | Low | |
| Flexibility | Low | High | Low |
| Best For | Stable income | Growth | Wealth building |
| Ideal Age | Near/In retirement | 30s-50s | Any age |
Healthcare costs typically increase with age. A robust healthcare plan is essential to protect your retirement savings from being depleted by medical expenses.
CPF account dedicated for healthcare needs. Can be used for hospitalisation, outpatient treatments, and insurance premiums.
Basic health insurance for all Singaporeans and PRs. Covers large hospital bills for subsidised wards (B2/C).
Private insurance upgrades for higher ward classes (A/B1) and private hospitals. Paid with Medisave + cash.
Severe disability insurance providing monthly payouts for those unable to perform 3+ activities of daily living.
Lump sum payout upon diagnosis of covered conditions like cancer, heart attack, or stroke. Covers income loss and treatment.
Fixed daily payout during hospitalisation. Helps cover out-of-pocket expenses, lost income, and family costs.
The first step in retirement planning is understanding how much income you'll need versus what your current sources will provide. This helps identify if there's a gap to address.
Step 1
Estimate desired monthly income
Step 2
Calculate CPF LIFE & other sources
Step 3
Identify potential shortfall
A common recommendation is to save around 20% of your income towards retirement. Starting early allows compounding to work in your favour, potentially achieving around 50% income replacement at age 65.
Key Principle: The earlier you start, the less you need to save monthly due to the power of compounding. Starting at 25 vs 35 can mean saving significantly less each month for the same retirement outcome.
This depends on your desired lifestyle. A basic retirement may require $1,000-$1,500/month, while a comfortable lifestyle could need $2,500-$4,000/month or more. Key factors include housing situation, healthcare needs, and lifestyle expectations. Focus on building income streams rather than a fixed lump sum.
CPF LIFE provides a reliable foundation layer, but payouts typically cover basic needs only. Most people who want to maintain their pre-retirement lifestyle will need additional income sources such as investments, annuities, or other savings. CPF LIFE is best viewed as one layer in your income stack, not the complete solution.
CPF is mandatory and managed by the government with fixed interest rates. SRS is voluntary and requires you to make your own investment choices. CPF contributions are automatic while SRS requires active management. SRS offers tax benefits on contributions and withdrawals, making it attractive for higher-income earners.
As early as possible. The power of compounding means that starting at 25 can require saving far less monthly compared to starting at 35 or 45. Even small amounts early on can grow significantly over decades. However, it's never too late - the best time to start is now, regardless of your age.
It's not either/or - both can play roles in your retirement plan. Annuities provide guaranteed income (stability bucket), while investment portfolios offer growth potential and flexibility. The right mix depends on your risk tolerance, income needs, and whether you prioritise certainty or growth potential.
Inflation erodes purchasing power over time. What costs $1,000 today may cost $1,500-$2,000 in 20 years. This is why your retirement plan needs growth assets to maintain purchasing power, not just fixed income. Consider inflation-adjusted annuities and equity exposure to combat this effect.
Involuntary retirement can happen due to health issues or industry changes. Having multiple income streams and adequate insurance coverage provides a safety net. Maintain liquidity in your portfolio (1-2 years of expenses) and ensure you have comprehensive health and disability coverage to handle unexpected early retirement.
Retirement planning connects to every other aspect of your financial security
Everyone's retirement looks different. Let's discuss your goals, current position, and what combination of CPF LIFE, SRS, and investments makes sense for you.
No commitment required. All discussions are confidential.