I just resigned after working for 11 years and is currently 39 years old .. I had savings of around $350k .. Have no property.
Let’s assume you *have* savings of S$350K.
I am still single and already hit my CPF Full retirement sum ..
OK, the FRS is good.
I am currently living off with my passive income of about $600 per month and spend less than $3,000 per year and thinking of retirement ..
You omitted a really important detail: housing. I assume you’re not living in a bunk bed in a foreign worker dormitory at an approximate cost of $300/month for the housing alone, which is the only common way I know of to survive independently in Singapore on a total budget of under $600/month. (That ~$300/month is going up soon, we can safely assume.) What’s the housing arrangement? Parents? Is the plan to live indefinitely there, and to be the sole heir? How long is the remaining leasehold? Is it paid off, or would it be?
Is it advisable to do so at age 39 ?
“Advisable,” probably not, but I think you’re asking whether it’s financially possible to do so. One way to sanity check that assessment is to run this exercise:
1. Take $300K and find the best annuity you can find from a high quality insurer that pays for 25 years starting from your 40th birthday. That’ll generate a guaranteed monthly income of $X, and $X will surely be at least $1,000/month (since that’s what 0% yield would generate). Note that if the monthly payout is flat (non-escalating) then you have to be careful about inflation. $1,000 in 24+ years won’t buy anywhere near as much as $1,000 does today.
2. At age 55 you’ll have the option to withdraw some amount from CPF, so that’ll help adjust your trajectory.
3. Estimate your future CPF LIFE Escalating Plan payout starting at age 65 in real 2020 dollars. You have to bridge to this, and the Escalating Plan is the inflation fighting one.
4. Check to make sure you’re adequately insured, which in your case is probably only CareShield Life (available from mid 2021 for you) and an “as charged” public hospital B1 ward Integrated Shield plan with rider. Take the current Integrated Shield plan premium table and add 3%/year to the figures for your cost estimate. Plus the increases as you age, of course.
5. Adjust for the housing costs you’re not presently bearing that you will, such as electricity, water, Internet, maintenance, insurance, etc.
6. Take a look at whether you can transfer OA to a parent’s Retirement Account, especially if you need to bolster a parent’s financial resiliency. If you are the parent’s CPF nominee any residual will come back to you when the parent passes.
What I think you’ll find is that you might make the math work, but it’ll be tight and very lean, without much margin for error or bad luck. And do you/would you want to? Are you happy? What would you do for the next 60+ years, and how would you spend your time for the next 60+ years? Are you volunteering for a human services charity, for example?
