When I read that some Singaporeans believe S$600,000 is enough to retire, I did a double-take. Really? In one of the world’s most expensive cities, with inflation creeping up and healthcare costs soaring, how does that add up?
As someone with no debt or mortgage, I still find S$600,000 a risky bet for retirement. For me, a monthly withdrawal of S$3,000–S$4,000 feels safer to sustain a decent lifestyle. So, let’s unpack this: Is S$600,000 truly enough, and why do some people think it is? Spoiler: It’s not as simple as it seems.
At first glance, S$600,000 sounds like a hefty sum. If you’re 65 and plan for a 20-year retirement, that’s S$2,500/month (S$600,000 ÷ 20 years ÷ 12 months).
According to a 2019 study by the Lee Kuan Yew School of Public Policy, a single retiree needs about S$1,379/month for basic needs—think hawker meals, public transport, and a modest HDB flat. A couple needs S$2,351.
On paper, S$2,500/month seems to cover this with a bit of wiggle room. But here’s where I get nervous:
- Inflation is a silent killer. At a conservative 2% annual inflation rate, S$2,500 today could be worth only ~S$1,600 in 20 years. If inflation spikes (like the 4.2% we saw in 2023), your purchasing power erodes even faster. That hawker chicken rice might cost S$8 instead of S$4 by 2045.
- Healthcare costs creep up with age. Life expectancy in Singapore is 83 for men and 87 for women. If you’re retiring at 65, your savings need to last 20–30 years. Healthcare expenses for those over 70 can easily hit S$4,000/year or more, even with MediShield Life. A single hospital stay could wipe out your buffer.
- Life isn’t just about “basic needs.” I don’t know about you, but I want to enjoy retirement—maybe take a budget trip to Japan, treat my family to a nice meal, or join a bouldering class. S$2,500/month leaves little room for these joys, especially if unexpected costs pop up.
For me, a monthly withdrawal of S$3,000–S$4,000 feels more comfortable. It’s not lavish, but it covers essentials, some leisure, and a cushion for surprises like medical bills or helping out family.
Here’s the thing: Keeping S$600,000 in cash or a low-yield savings account is a recipe for trouble. Inflation will eat away at it, and you’ll be left scrambling. To make that money last, you have to invest it to generate passive income.
Here’s how I think about it:
- CPF LIFE as a foundation. If you set aside the Full Retirement Sum (S$213,000 in 2025) in your CPF by age 55, you could get ~S$1,600/month from age 65 for life under CPF LIFE’s Standard Plan.That’s a decent start, but it’s far from enough for my target of S$3,000–S$4,000/month, especially if you want more than a bare-bones lifestyle or retire early.
- Invest the rest for passive income. After setting aside the FRS, you’re left with ~S$394,200 to invest. This chunk needs to generate S$1,400–S$2,400/month to hit my target.For example:
- REITs or dividend stocks: A portfolio yielding 5–6% annually could generate S$19,710–S$23,652/year (S$1,642–S$1,971/month). Think Mapletree Logistics Trust or DBS shares.
- Balanced ETFs: A mix of stocks and bonds (e.g., Vanguard’s VWRA) might yield 5–6% long-term, adding S$19,710–S$23,652/year while balancing growth and stability.
- Bonds or fixed-income funds: Safer options like Singapore Savings Bonds offer ~2–3% returns, adding S$7,884–S$11,826/year, but you’d need to mix with higher-yield assets to reach your goal.
By combining CPF LIFE (~S$1,600/month) with investment income (~S$1,642–S$2,000/month), I could hit S$3,242–S$3,600/month, just shy of or within my target range. But this assumes I invest wisely, diversify, and accept some market risk. Keeping S$600,000 in cash? That’s a hard pass.