WHY DOES THIS MATTER TO ME? RETIREMENT IS STILL FAR OFF
Young adults may be inclined to feel they have 30 or 40 years before they hit retirement age and thus feel little urgency to immediately search for an alternative for the higher Special Account yields. But the changes to the CPF scheme are as relevant to young adults, if not more so.
First, it’s important to keep in mind that the CPF scheme with its structure and rules may continue to evolve, as the Singapore government tries to help citizens secure their retirement and financial future.
Second, young adults have time on their side to make hay while the sun shines. With a longer horizon, they can take proactive steps to take control, protect and grow their retirement nest egg, including their CPF funds, to sufficiently support their future.
INVESTING ISN’T FOR ME. I’M REACHING THE RETIREMENT WITHDRAWAL AGE SOON
The dangers of inflation eroding one’s nest egg is not isolated to young adults.
Singaporeans are not just getting older; we are also living longer. When Singapore became independent in 1965, the life expectancy at birth was 65 years. Residents can now expect to live, on average, to about 84 years of age.
With a longer runway, even “young seniors” in their 50s and 60s will have decades to live, necessitating careful retirement financial planning amid the rising costs of living.
Also announced in Budget 2024, the CPF contribution rates for those above 55 years to 65 years will be increased by a further 1.5 percentage points in 2025. These are funds that should be continually managed to beat inflation.
The truth is, there are ample investment options that can align with one’s goals. Markets do not discriminate as everyone benefits from investing in a balanced and diversified portfolio and compounding will do the heavy lifting for one to grow the returns over time.