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How Much You Need In Your CPF Retirement Account (RA) At 65 To Afford The Average Retiree’s Expenses With CPF LIFE Payouts?

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CPF LIFE is meant to provide a monthly lifelong payout throughout our retirement. While this is assuring, the question is whether our monthly CPF LIFE payouts will be enough to fund our retirement lifestyle.

This is a difficult question to answer because everyone leads different lifestyles and is in different life circumstances. The best way to estimate the amount we will need in retirement is to look at some of the studies done in this area.

Read Also: [Beginners’ Guide] Understanding CPF LIFE And Your Monthly Payouts When You  Retire In Singapore

How Much Does An Average Retiree In Singapore Need Each Month?

In the most recent Household Expenditure Survey 2017/18, we can find how much retiree households were spending based on their type of home. The average retiree household spent $1,154 per person a month.

However, we can also see that the amount a retiree spends varies substantially between the type of homes they were living in. On average, retirees living in HDB flats spent about $867 a month. Retirees living in condominiums & Others spent $2,680, or about three times more than the average retiree living in an HDB flat. Interestingly, retirees living in condominiums & Others also spent more than their peers who lived in Landed Properties – who spent $2,175.

Flat Type Monthly Expenses, Per Person, In Households Comprising Only Non-Working Persons Aged 65 And Over
HDB Flats (1- to 2-Room) $687
HDB Flats (3-Room) $786
HDB Flats (4-Room) $980
HDB Flats (5-Room and Executive) $1,062
Condominiums & Others $2,680
Landed Properties $2,175
Average $1,154

While it is understandable that those living in larger homes spend more, we should also account for inflation as these statistics are from 2017/2018.

For the sake of this article, we will apply the 20-year average MAS core inflation rate of close to 2% to estimate what retirees may be spending today.

Flat Type Monthly Expenses, Per Person, In Households Comprising Only Non-Working Persons Aged 65 And Over (in 2024, accounting for 2% annual inflation)
HDB Flats (1- to 2-Room) $789
HDB Flats (3-Room) $902
HDB Flats (4-Room) $1,125
HDB Flats (5-Room and Executive) $1,219
Condominiums & Others $3,078
Landed Properties $2,498
Average $1,325

Of course, inflation has spiked in recent years. Going forward, we may need to account for a higher level of inflation annually. For this, it may be wiser to review the retiree household expenditure in the next Household Expenditure Survey, which will likely be for 2022/2023.

Using the estimated figures for 2024/2025, we can determine what retirees, aged 65 today, need in their CPF Retirement Account (RA) to receive such a similar CPF LIFE monthly payout.

On average, a retiree will expect to spend $1,325 monthly. Retirees living in HDB flats will spend lower, while a retiree living in private property will expect to spend double that amount.

How Much Will A 65-Year Old Today Need In His Retirement Account (RA) To Afford The Average Household Retirement Expenses?

Even though the figures above are segmented based on home types, there will still be situations where individuals live different lifestyles and face different circumstances. At best, these are estimates for how much retirees in the respective households should be spending.

To find out how much retirees need in their Retirement Account (RA) to receive a payout worth the respective amounts, we can use the CPF LIFE Estimator tool.

Flat Type Monthly Expenses, Per Person, In Households Comprising Only Non-Working Persons Aged 65 And Over How Much You Need In Your Retirement Account (RA) Aged 65
HDB Flats (1- to 2-Room) $789 $155,000 (Basic Plan)
$137,000 (Standard Plan)
$177,000 (Escalating Plan)
HDB Flats (3-Room) $902 $176,000 (Basic Plan)
$156,000 (Standard Plan)
$200,000 (Escalating Plan)
HDB Flats (4-Room) $1,125 $220,000 (Basic Plan)
$200,000 (Standard Plan)
$254,000 (Escalating Plan)
HDB Flats (5-Room and Executive) $1,219 $239,000 (Basic Plan)
$215,000 (Standard Plan)
$274,000 (Escalating Plan)
Condominiums & Others $3,078 >$500,000 (Basic Plan)
>$500,000 (Standard Plan)
>$500,000 (Escalating Plan)
Landed Properties $2,498 >$500,000 (Basic Plan)
$454,000 (Standard Plan)
>$500,000 (Escalating Plan)
Average $1,325 $259,000 (Basic Plan)
$234,000 (Standard Plan)
$303,000 (Escalating Plan)

* Note that these figures are simply based on computations on the CPF LIFE Estimator tool. When setting aside our retirement sum, we are capped by the Enhanced Retirement Sum, which is $426,000 in 2025. This means that we cannot realistically receive the amount that average retirees living in Condominiums & Others and Landed Properties are spending.

As we can see from the table above, retirees may need a substantial amount of money in their CPF account to be able to receive the average amount that they will spend in their retirement.

Read Also: 1 Million at 65 Using CPF? Here’s The Math Behind The 1M65 Concept

By living below our means and trying to contribute more to our CPF accounts when we can, we may be able to supercharge our CPF balances. This may allow us to pay our entire retirement expenses from CPF LIFE alone. If we are able to achieve that, it will give us peace of mind without worrying whether our other investments will deliver their expected returns.

For those living in HDBs, their Retirement Account figures do look more achievable compared to those living in more luxurious housing types. For those living in condominiums and landed properties, their numbers can look unrealistic for them to accumulate more than $500,000 in their Retirement Account (RA) to achieve the average expenditure amount. This is not something we should be shocked to learn, as CPF LIFE has always stated that the intention is to provide payouts that are sufficient for a basic level of retirement.

Nevertheless, by accumulating or supercharging our CPF accounts when we are young, we will be able to achieve balances of above $500,000 and even into the millions. Of course, those living in more luxurious homes also tend to have other assets they rely on for their retirement income. While we can contribute up to the Enhanced Retirement Sum (ERS) in our Retirement Account, and subsequently contribute to CPF LIFE, we can still withdraw the rest of our CPF  balances on a monthly basis.

Read Also: How Older Singaporeans Can Continue Using CPF To Enjoy Higher Risk-Free Returns After Age 55

Looking At The CPF LIFE Escalating Plan For Payouts To Keep Up With Cost Of Living

Just like the Full Retirement Sum (FRS) increases each year to account for the higher cost of living in Singapore, we need to understand that this concern continues even after we retire.

On the Basic Plan and Standard Plan, we receive fixed payouts for the rest of our lives. On the Escalating Plan, we stand to receive a payout that increases by about 2% per annum each year. This should keep up with the 20-year MAS core inflation rate of close to 2% – with the caveat that inflation is spiking currently, and may rise above this level in the medium term.

Read Also: CPF LIFE Basic Plan: For Those Who Wish To Be On The “Old” CPF Retirement Sum Scheme (RSS)

The post How Much You Need In Your CPF Retirement Account (RA) At 65 To Afford The Average Retiree’s Expenses With CPF LIFE Payouts? appeared first on DollarsAndSense.sg.