Central Provident Fund (CPF)
The CPF was orignally introduced by the Singapore Government in 1955 to address the retirement needs of Singaporeans.
The CPF scheme requires working individuals to contribute a portion of their income on a monthly basis. Their employers are also required to make monthly contributions. These contributions can then be withdrawn to pay for housing, education, insurance, medical expenses, investment, and retirement.
Supplementary Retirement Scheme (SRS)
The SRS was set up in 2001. The main purpose of the scheme is to encourage working individuals to save for retirement, over and above their CPF savings. People who contribute to SRS also enjoy tax benefits, as their contributions are tax deductible in the following year.
While CPF and SRS are schemes we can take advantage of when planning for retirement, we shouldn’t stop there. Good retirement planning begins by understanding what are the potential threats and how you are guard against them. It is also crucial to know how and when important financial decisions should be made.
3 Myths of Retirement Planning
1. You do not need to spend as much money during retirement
This may not be true because of the rising cost of living. For example, $1 today is enough to buy a cup of coffee today, but that may not be true in 20 years time. As a result, it is important that you factor in inflation when planning your retirement.
2. You do not need worry about outliving retirement savings
This may not be true because the average lifespan of Singaporeans is gradually increasing due to advances in healthcare and medicine. It isn’t too far-fetched to think you may live till 100 years old, but are you financially prepared for that possibility?
3. You can start retirement planning a few years before your retirement
While it is better late than never, starting later will make it more difficult to compound your money and investments, due to the lack of time. There’s a popular Chinese proverb that says: “The best time to plant a tree was 20 years ago. The second best time is now.” Basically in the context of the conversation here today, this means that if you want success and growth in the future, the best time to act is now.
If you need help with Retirement Planning, please get in touch with your trusted FLA Organization financial advisor today.
