Life Stages / Personal Finance

Singaporeans’ Roadmap: Key Personal Financial Schemes And The Decisions You Have To Make At Every Age In Singapore

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January 25, 2024

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We look at how average Singaporeans navigate key personal financial schemes and decisions in our lives in a uniquely Singaporean way. Along the way, and usually when we hit certain milestones, we can expect financial support levers and, often, even having to make financial decisions. Think of this read as the “Game of Life” from a Singaporean perspective.

When You Are Born

Even before you can start walking, your CPF accounts are opened. As a brand-new Singaporean baby, you receive a MediSave grant of $4,000. This isn’t just some arbitrary amount either. It is enough for Singaporean babies to pay for your own MediShield Life premiums until you turn 21. These funds can also be used for Integrated Shield Plan (IP) premiums and approved medical expenses.

Of course, this means you come under Singapore’s mandatory basic health insurance – MediShield Life – from birth.

All Singaporean children will also receive a First Step Grant of $5,000 in their Child Development Account (CDA). Parents can open a CDA for their children at one of the three local banks in Singapore – POSB, UOB or OCBC. The government will provide additional dollar-for-dollar matching whenever parents top up their children’s CDA, up to $4,000 for the 1st child, $7,000 for the 2nd child, $9,000 for the 3rd and 4th children, and $15,000 for the 5th and subsequent children.

Read Also: Complete Guide to Baby Grants in Singapore

About 3 Years Old

At the 50th percentile, boys and girls in Singapore reach 0.9m between the age of 28 and 32 months.

Once children hit the height of 0.9 metres (and below 7 years old), you have to present a child concession card when travelling on public transport. This enables children to travel for free on public transport, except on Premium Bus Services and NightRider services.

After this, you have to upgrade your travel concession cards each time you progress to an older milestone (i.e. Student, Adult, Senior Citizen).

Source: TransitLink

6 Years Old

Compulsory education kicks in for you. You have to attend a national primary school as a pupil, unless you have been granted an exemption, to attend Designated School or to be home-schooled. From 2019, children with moderate to severe Special Education Needs will also be required to complete Compulsory Education.

13 Years Old

For all male Singapore Citizens and Permanent Residents, you need to take note of your exit permit and bond requirements if you are leaving Singapore for more than three months after you turn 13. This is a consideration if you are intending to study abroad before you enlist for National Service (NS).

Source: CMPB

At 13, you are also legally able to start working (with restrictions) in Singapore.

Your Post Secondary Education Account (PSEA) will be opened at the end of the year you turn 12 (aka, when you are 13). If you have any remaining balances in your Child Development Account (CDA), it will be transferred to your PSEA.

15 Years Old

The minimum age required to apply for a SingPass is 15 years old. Your SingPass allows you to access and transact with over 60 government agencies, including CPF, IRAS, HDB, Immigration and Checkpoints Authority of Singapore (ICA), MINDEF (for those enlisting), MOE, MOH, PUB and many others.

You also have to apply for your Identity Card (IC) before your 16th birthday.

16 Years Old

When you turn 16, you can start working as an adult, without any special restrictions, in Singapore.

18 Years Old

You can open a Central Depository (CDP) account and brokerage account once you turn 18. This enables you to start investing in securities, including stocks and bonds, on the Singapore Exchange (SGX), as well as in the Singapore Savings Bonds (SSBs) and other relevant financial instruments.

You can also get a driving license in Singapore once you turn 18. You can also start drinking at 18, so make sure you don’t mix the two!

You can also get married, but will require the consent of a parent or legal guardian.

If you are a male Singapore Citizen or Permanent Resident (PR), enlisting for National Service is mandatory upon turning 18.

19 to 21 Years Old

Male Singaporeans and PRs may defer their National Service to pursue full-time studies, up to GCE ‘A’ Level, polytechnic diploma, or their equivalent.

21 Years Old

You become an “adult” at 21. This means you start being able to vote in elections to decide how Singapore should be governed. It is also the age when you start receiving government payouts, such as cash from the GST Voucher scheme.

This also means you can get married, without requiring parental approval. With this privilege, comes you ability to apply for your first BTO home.

At 21, you can also start applying for your first credit card. However, you will likely only be able to continue applying for student credit cards as you would not likely have started working and earning a wage. It is also when you turn 21 that you can apply for most other banking services, such as car loans, home loans, personal loans and others.

25 Years Old

Many Singaporeans would already be working in their first or even second jobs by the time they turn 25. This means they should have some ideas on how to upgrade themselves or if they want to seek a new career path. Thankfully, as part of the government’s initiative to promote lifelong learning, all Singaporeans receive $500 in SkillsFuture credits to use on training courses of their interest when they turn 25.

30 Years Old

CareShield Life will compulsorily and automatically kick in for all Singaporeans turning 30 from 2020. CareShield Life is Singapore’s long-term care insurance scheme providing financial aid to those afflicted with severe disability.

At age 30, your PSEA or post-secondary education account will also be closed. Any remaining funds in this account will be transferred to your CPF Ordinary Account.

You can also apply to be a taxi driver or get a private-hire driver licence only upon hitting 30.

Of course, you now also look vastly different to when you first received your Identification Card (IC). This is a good time (and also a compulsory time) to get a new IC.

35 Years Old

Turning 35 can be a little less depressing for singles! To cheer you up, you can now finally buy an HDB flat on your own.

When you turn 35, your CPF allocation rates also change. While you still contribute 20% of your salary and your employer still contributes 17% of your salary into your CPF accounts, how they are split into the individual account changes. A lower percentage (about 57% compared to 62%) goes into your CPF Ordinary Account, while more is channelled into your Special and MediSave Accounts to bolster your retirement and medical needs.

Source: CPF

40 Years Old

For enlisted men and specialists, you have now “MR-ed” (put into MINDEF Reserve list), which means you no longer have to go back for reservist. Officers, you have to continue serving our nation until you turn 50.

For your career, you can also enrol into the permanent SGUnited Mid-Career Pathways Programme after you turn 40. This provides an attachment to a host organisation, lasting between four to six months, to help widen your professional networks and gain industry-relevant skills and experience.

45 Years Old

As depicted in the graph above, your CPF allocation rates change again, with more emphasis on your retirement, via your Special Account, and medical costs, via your MediSave Account, and less on your housing needs, Ordinary Account.

Apart from when you turn 35, this also happens when you are over 45, 50, 55, 60, 65 and 70.

50 Years Old

Commissioned officers, you have now reached your statutory age, and will be put into the MR list.

55 Years Old

Retirement is on the cusp – your CPF Retirement Account (RA) is opened for you. Once your RA is opened, your combined balances in your Ordinary Account (OA) and Special Account (SA) balances will be transferred in.

You are also able to withdraw a minimum of $5,000 from your CPF accounts.

At this juncture, we also choose our retirement sum– Full Retirement Sum (FRS): $205,800, Basic Retirement Sum (BRS): $102,900 or Enhanced Retirement Sum (ERS): $308,700 – and will be able to withdraw any excess funds beyond these levels.

When you are over 55, your total contribution to your CPF account decreases from 37% to 31% – your employer contributes 15% (2% less) and you contribute 16% (4% less). This 7.5% decrease in wages shows that companies need encouragement to keep ageing workers in their teams.

Source: CPF

Senior Singaporeans above 55 can also tap on the Silver Housing Bonus when they downsize (or right-size) to a smaller HDB flat, once their children move out. You can look forward to receiving a cash bonus of up to $20,000 on this scheme.

60 Years Old

You are now a senior citizen in Singapore. Two weeks before your 60th birthday, you can apply for your senior citizen concession card, also known as the PAssion Silver card. This allows you to travel on Singapore’s public transport at subsidised fares, as well as “a suite of merchant benefits and privileges”.

As depicted in the chart above, our CPF contribution rates go down again, from 31% to 22%, with employers paying another 3.5% less and employees contributing another 5.5% less.

63 Years Old

You’ve reached the official retirement age in Singapore. From 1 July 2022, the retirement age goes up from 62 to 63. Fret not, there’s no real need or requirement to retire immediately, and you can continue working (also known as re-employment) until the end of re-employment age (at 68) and even beyond.

You can also start making withdrawals from your Supplementary Retirement Scheme (SRS) account when you hit the statutory retirement age, which is 63 at the moment. You will enjoy a 50% tax concession for withdrawals from your SRS account. For those who contributed to their SRS in the past, you can still withdraw your SRS monies at the statutory retirement age that applied when you made your first SRS contribution.

65 Years Old

You can choose to enter the CPF LIFE scheme and start making monthly withdrawals. Alternatively, you can wait till you turn 70 before joining CPF LIFE. If you choose to enter CPF LIFE, you need to decide between three available plans – the Basic Plan, Standard Plan and Escalating Plan.

You also have the option to withdraw a lump sum of up to 20% (which includes the $5,000 that can be withdrawn at 55) of your Retirement Account savings when you reach 65.

Depicted in the chart above, your CPF contribution rates go down again. When you turn 65, your CPF contributions decrease from 22% of your salary to 16.5% of your salary. Of this 5% decrease, employers pay 2.5% less, while employees contribute 3% less.

At 65, you can also tap on the HDB Lease Buyback scheme, unlocking value in the HDB flat you are living in by selling extra years of your HDB flat lease that you will unlikely need.

At 65, you will no longer be covered by the Dependants’ Protection Scheme (DPS), which is an opt-out term insurance scheme automatically extended to eligible CPF members, offering coverage of a maximum sum assured of $70,000.

Source: Great Eastern

67 Years Old

You stop paying for CareShield Life premiums at 67, but continue to receive lifelong coverage.

68 Years Old

From 1 July 2022, the re-employment age ceiling in Singapore rises to 68 (from 67). Hitting this ceiling doesn’t mean you are not allowed to work anymore, it just means employers are not obliged to offer you employment even if you are fit enough to work.

70 Years Old

You must start making CPF LIFE withdrawals, if you haven’t already started at any point after turning 65.

Your CPF contribution rates also goes down for the final time. By this time, the majority of workers would have retired, and this is reflected in CPF contributions as well – with employers paying just 7.5% and employees contributing just 5%, for a total of 12.5% contributions to your CPF accounts. The bulk of these contributions (84% of it) goes to your MediSave Account, while 8% goes into each of your Ordinary Account and Special Account.

84 Years Old

Congratulations! You’ve beat the average life expectancy in Singapore – which currently stands at 83.2 years old, according to the Singapore Department of Statistics.

99 Years Old And Above

You will soon be joining an exclusive club – there are about 1,100 centenarians in Singapore.

Many of your term insurance plans will lapse between the age of 99 to 101. This means even though you’ve been paying your insurance premiums all along, your family will not get an insurance payout after you pass on. This isn’t as bad as it sounds, you shouldn’t have any dependents or family members relying on your insurance payouts to get by after you pass on.

Living past 99 years should not worry you as CPF LIFE will continue giving you a monthly payout regardless of how long you live.

Growing Up, And Growing Old In Singapore

While important, financial consideration are only one aspect of our life growing up in Singapore. We need to enjoy the process in each of our life stage, as children receiving education, as economically contributing adults and as seniors.

At the same time, approaching the final stretches of our life stage in Singapore should not be seen as the end, but rather as a point in our life that we can look back on our journey and say “yes, I enjoyed growing up in Singapore”.

This article was updated on 15 May 2019 with additional information.

The post Singaporeans’ Roadmap: Key Personal Financial Schemes And The Decisions You Have To Make At Every Age In Singapore appeared first on DollarsAndSense.sg.

December 25, 2024

Invest 101Life Stages / Personal Finance