5 Steps To Help You Start Investing for Retirement in Singapore

This post was originally posted on Planner Bee.

Retirement planning in Singapore is becoming crucial with the rising cost of living, longer life expectancy, and evolving economic policies. It might seem early to think about retirement in your 20s or 30s, but starting sooner gives your money more time to grow.

According to a CIMB survey, 71% of respondents have some form of financial planning, only 48% have started planning for retirement. Many said they face challenges like other financial obligations, depending on CPF, or not knowing where to start.

There’s no need to worry. This guide will help you understand how to invest for retirement with a clear five-step plan designed to help you build a more secure future in Singapore.

Life stages from accumulation to decumulation

For most of our working lives, we are in the accumulation phase. This means growing our wealth through earning, saving diligently, and investing strategically. Over time, it becomes natural to keep building our assets year after year.

That is why transitioning into the decumulation phase, when we start spending what we’ve accumulated, can feel unfamiliar. After decades of saving, many retirees struggle with the idea of drawing down their wealth. Some even end up spending less than they need to, often out of fear that they might run out of funds.

A clear and thoughtful decumulation plan ensures that you can enjoy the lifestyle you’ve worked hard for. It lets you spend in a sustainable and intentional way that aligns with your retirement goals.

5-step plan to investing for retirement

There are many ways to invest for retirement, and there is no one-size-fits-all solution. Here is Planner Bee’s 5-step plan to help you get started. You can adjust it to suit your personal goals and financial situation.

Step 1: Determine your retirement needs

The first step is to work out how much you’ll need to retire comfortably.

According to the 2019 What Older People Need in Singapore household budgets study, the average retiree expects to need about S$1,379 per month. With inflation at 3% a year, this would be around S$1,638 in 2025.

These are only general estimates. Your actual needs will depend on:

• Lifestyle: Will your retirement be modest, or do you plan to travel or enjoy more luxuries?
• Health: Do you have insurance? Are there any chronic conditions to manage?
• Housing: Is your home fully paid for, or are there mortgage payments to consider?
• Activities: What hobbies, interests or daily needs do you want to include in your plans?

Action plan: Take advantage of Planner Bee’s Retirement Calculator to estimate how much you’ll need each month and in total. It also helps you understand any shortfall, based on an assumed 2.5% inflation rate.

Read more: Understanding Lifestyle Creep and How To Break Free

Step 2: Maximise CPF and SRS contributions

Singaporeans have access to two useful retirement schemes: the Central Provident Fund (CPF) and the Supplementary Retirement Scheme (SRS).

Central Provident Fund (CPF)

CPF forms the base of most Singaporeans’ retirement plans. It also helps with housing and healthcare needs. CPF has three main accounts: Ordinary Account (OA), Special Account (SA), and MediSave. These accounts earn interest between 2.5% and 6%.

Here’s how you can make the most of your CPF:

• Top up your SA early, ideally before age 55, to benefit from compounding interest.
• Use the Retirement Sum Topping-Up (RSTU) Scheme to enjoy up to S$8,000 in tax relief annually (or S$16,000 with family top-ups).
• Consider transferring funds from your OA to your SA to earn higher interest. Keep in mind this transfer cannot be reversed.

Read more: Key CPF Changes in 2025 and How They May Affect You

Supplementary Retirement Scheme (SRS)

SRS is a voluntary savings scheme to boost your retirement income. It offers tax benefits on contributions, and investments made through SRS are tax-free before withdrawal. At retirement, only 50% of your withdrawals are taxable.

SRS contributions are capped at S$15,300 annually for Singaporeans and PRs. Every dollar you contribute reduces your taxable income.

Action plan: If you’re in a higher income bracket and comfortable setting aside funds for longer-term investment, consider contributing the maximum to your SRS each year. You can invest your SRS in a range of options such as ETFs, individual stocks, bonds, and REITs.

Read more: Why You Should Set Up a Supplementary Retirement Scheme (SRS) Account

Step 3: Invest strategically for growth

CPF alone may not be enough if you’re aiming for more than just a basic standard of living in retirement. To build a more comfortable nest egg, you’ll need to invest for growth.

Here are a few ways to do that:

• Target-Date Funds (TDFs): These funds combine different asset types. They are designed to take more risk when you’re younger and shift to safer investments as you near retirement.
• Equities: Stocks or exchange-traded funds (ETFs) offer higher long-term growth potential. If you start investing early, you can take advantage of dollar-cost averaging and the longer time horizon.
• Bonds: More stable options such as Singapore Savings Bonds (SSBs) offer lower risk and steady returns, suitable as part of a balanced portfolio.

In your 20s and 30s, you can afford to take on more risk. A larger portion of your investments can go into growth assets like stocks and ETFs, while keeping a smaller share in bonds for stability.

Action plan: Talk to a financial advisor when you start earning. Begin a regular investment plan with manageable monthly contributions. Automate the process and apply dollar-cost averaging to help reduce the risk of timing the market.

Read more: Retirement Planning: Is S$1 Million Enough?

Step 4: Create a withdrawal strategy

Knowing how to withdraw your funds in retirement is just as important as how you build them. A good strategy helps your money last longer and reduces unnecessary tax.

CPF Life provides monthly payouts for life. You can start receiving them at age 65, and choose from the Standard, Basic, or Escalating plans, depending on your needs. You can delay payouts until age 70, with payouts increasing by up to 7% for each year of delay.

If you withdraw from your SRS after reaching the statutory retirement age (currently 63 as of 2025), only 50% of the amount is taxable. You get a 10-year window from your first withdrawal to enjoy this benefit. Spreading your withdrawals over these 10 years can help you stay within a lower tax bracket.

As Singapore does not tax capital gains, profits from selling stocks, bonds, or property are not taxed. Consider dividend-paying stocks or REITs to provide steady income in retirement.

Action plan: Plan your withdrawal sequence early. A mix of CPF Life payouts, SRS withdrawals, and investment income can offer both stability and flexibility in your retirement years.

Read more: Can You Retire on CPF LIFE Payouts Alone?

Step 5: Build a solid decumulation strategy

Decumulation is the final phase of retirement planning. It involves carefully drawing down your savings so that your money lasts while still enjoying the lifestyle you’ve planned for.

Two key risks to manage are:

• Lifestyle inflation: This is when your spending rises as your income or wealth grows.
• Longevity risk: This happens when you live longer than expected and risk running out of funds.

Start by tracking your current spending. Know what is essential and what is luxury. In retirement, aim for a safe withdrawal rate of 3 to 4% each year. For instance, with $1 million in savings, a 3% withdrawal rate gives you about S$30,000 a year, or S$2,500 a month.

You may also want to look into annuity products or retirement income insurance plans to provide income beyond CPF Life. Even in retirement, keep an emergency fund to avoid dipping into your long-term investments during unexpected events.

Action plan: Develop mindful spending habits now. Use budgeting tools or work with a financial planner. Enjoy the money you’ve saved, but do so in a way that’s sustainable over the long term.

Retirement planning starts today

Most people spend decades saving and investing, but when retirement comes, they often don’t know how much they can safely withdraw, how to do it in the right order, or how to manage risks and taxes. Starting with a clear retirement plan, even in your 20s, can make a big difference.

Retirement planning doesn’t need to feel overwhelming. By breaking it down into clear steps, such as knowing your needs, investing wisely, and planning your withdrawals, you can build a strong foundation for financial freedom in your later years.

Small, steady investments in your 20s and 30s can grow significantly over time, thanks to the power of compounding interest. With Singapore’s longer life expectancy and changing economy, investing for retirement is no longer optional. It is essential.

Start planning today. Begin your retirement investment journey now. If you’d like to find out more, reach out to the Planner Bee team at [email protected]

Read more: Beginners’ Guide to Sustainable Investing in Singapore