Manage your cashflow

by | October 21, 2009

Build your nest egg for at least 20 years or more and enjoy a comfortable retirement.


Most of us strived hard during our working years to build our retirement nest egg. However, we must also not neglect the importance of managing our money prudently during our golden years. This is so that the funds can last us for at least 20 years or more from the time we retire. Here are a few tips on how to do that:


TIP 1: Draw up a monthly budget and stick to it

You should work out how much you can afford to spend each month. First, create a list of all your sources of income that will form your total retirement funds. This should include your CPF savings, investment holdings and personal savings.

Second, divide your total retirement funds by the number of years you want your funds to last, then divide by 12 months. This is a quick estimate of the maximum amount you can spend each month without taking interest and inflation into consideration. For a more comprehensive calculation, you can refer to the “Managing your retirement funds” worksheet on the MoneySENSE website, use the retirement calculators on the CPF website or seek professional advice.

Third, use the template below to record your current monthly expenses and see how you can cut back. Ask yourself these questions before buying anything:

  • Do I really need it?
  • What if I don’t have it?
  • Are there alternatives that may be cheaper?


My current monthly expenses

My targeted monthly expenses





  • Set aside savings for emergencies and medical care. Consider maintaining or taking up medical insurance.
  • Clear all debt quickly and avoid borrowing more money so as to minimise paying interest.
  • Reduce your utility bills by using less water and conserving electricity. For example, rinse vegetables in a washtub and re-use the water to water your plants.
  • Take advantage of concessionary or free services. For example, enjoy senior citizen discounts when you use public transport during off peak hours. Also check for senior citizen discounts when you head for recreational activities like movies, theatre and even when dining out.
  • Use your handphone only for important messages or during off-peak hours, and not for chit chatting.

Rental or home loan payments
























Ensure that your total monthly expenditure does not exceed your monthly budgeted amount.

TIP 2: Manage your CPF savings carefully

Just before you reach 55 years old, you should decide how you wish to manage your CPF savings.

Withdrawing your CPF

You have two options: 
1) You can withdraw a lump sum from your Ordinary Account (OA) and Special Account (SA) after setting aside the full Minimum Sum in your Retirement Account. You should carefully consider what you intend to do with the funds upon withdrawal. Do note that the CPF savings are for your old age needs. If you withdraw your CPF savings, make sure that you manage the money carefully so that these savings together with your non-CPF savings should see you through your retirement years.

2) Or you can do nothing and simply leave your savings in your CPF accounts to earn guaranteed risk-free interest. This is especially so if you are financially-independent or still working. It is generally advisable to postpone your withdrawal until a later date as this means you can continue to build a larger nest egg as your CPF savings continue to earn interest.


Managing your CPF Minimum Sum

The CPF Minimum Sum provides you with a monthly income to support a basic standard of living during retirement. The Minimum Sum is currently $117,000 (as of 1 July 2009). It will be raised gradually until it reaches $120,000 (in 2003 dollars) in 2013, and will be adjusted yearly for inflation.

Depending on your year of birth, you can either: 
i. Join the CPF LIFE Scheme which will give you a monthly payout for as long as you live; or
ii. You may remain on the Minimum Sum Scheme.

Birth Year

What You Can Do

1954 and earlier *

  • You can apply to join CPF LIFE from September 2009, or
  • You can remain on the Minimum Sum Scheme.

1955 – 1957

  • You can apply to join CPF LIFE when you reach 55 years old, or
  • You can remain on the Minimum Sum Scheme.

1958 and later

  • If you have at least $40,000 in your Retirement Account at 55, you will be automatically included under CPF LIFE
  • If you have less than $40,000 in your RA at 55, you can apply to join CPF LIFE; otherwise you will be on the Minimum Sum Scheme.

* Those who were born before 1930 have up to 31 December 2010 to join

You will receive a monthly payout from your Draw Down Age, which is between age 62 and 65 depending on your year of birth. A member who turns 55 now can expect to receive 1,040 per month for about 20 years if he sets aside the $117,000 fully in cash as his Minimum Sum with the CPF Board . If he joins, for example, the CPF LIFE Balanced Plan, he could get between $912 and $1,007 per month for life, depending on interest rates.

More information on CPF LIFE is available at You may also like to attend the talks conducted by CPF Board. Information and registration details are at


TIP 3: Consider housing matters

As a general guide, you should aim to pay off your housing loan by the time you reach 55 so that you minimise your debt obligations in your golden years. However, if you have an outstanding housing loan upon reaching 55, do consider how you intend to continue paying the instalments:

i. Do you intend to continue working? Do note that the total CPF contribution rate for members aged 50 and older will be reduced to 28.5%; and then reduced further ie. to 20% for those aged between 55 and 60. This means that there will be less CPF for housing purpose, especially when you consider that only about 45% and 57% respectively of the total CPF contributions above will go into the Ordinary Account .

ii. The need to set aside the CPF Minimum Sum. This may reduce the CPF savings available for housing.

iii. Do you intend to make a lump sum withdrawal of your CPF at 55?

Depending on your situation, you may need to use more cash to pay your housing loan if the CPF available for housing is reduced after 55. Visit the CPF website at find out the factors affecting homeowners aged 55 years and above when using CPF to repay housing loans.


TIP 4: Consider post-retirement employment

There are many advantages in being employed during your golden years, be it part-time or full-time. Working keeps you active and helps you to be mentally alert. It also provides a source of income, which can help you grow your retirement funds.

If you are thinking of starting a small business, do remember that there are risks involved. Ask yourself if you know enough about the business prospects and if you can have the capacity to stomach losses and risks. You should also note that many businesses take several years to break-even to stabilise.

** This article was contributed by MoneySENSE, a national financial education programme for Singapore.



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