What if … you live a long life?

You may need to plan for the possibility of living much longer – perhaps 30+ years – in retirement. This underscores the importance of saving adequately and investing a portion of your portfolio for growth to maintain your purchasing power over time.

Life expectancy for Singapore's resident population has been trending higher 

With advancements in technology and medical science, chances are you will live a longer life. And the longer you live, the longer your investments must last so that you can maintain a comfortable lifestyle post-retirement.

According to data from the Singapore Department of Statistics, life expectancy for Singapore's resident population has been trending higher since the 90s, with the exception of the last few years due to higher mortality rates as a result of the COVID-19 pandemic. Babies born in 2022 are expected to live to a ripe old age of 83, up from 78 years at the turn of the century1.

Average life expectancy is a mid-point, not an end-point

While the average life expectancy for Singapore's resident population continues to increase, this is merely a mid-point, not an end-point. Digging deeper, we find that at least one member of a 65-year-old couple in Singapore has a 56% chance of living to 90 years or beyond and a 5.1% chance of reaching 100 years or more^.

This underscores the need to plan for the probability of living much longer than expected, and accordingly, with more years in retirement.

Don’t let longevity become a financial concern

Living longer invariably affects key decisions such as when to retire, how to make the most of your time, how to invest and what kind of long-term care you may want or need when you are older. 

If you are in good health at 65 and have a family history of longevity, your retirement plan should conservatively account for 30 or more years of living expenses~

This means your investments need to continue growing long after you stop working, to provide you with income while also keeping pace with inflation. This can help mitigate the risk of you outliving your financial resources.

So, start early

It is not advisable to start planning for retirement only when you approach the statutory retirement age. Retirement planning is a long-term process that evolves over time.

Social security programes like Singapore’s Central Provident Fund (CPF) provide a strong foundation to build up one’s retirement coffers. However, proactively supplementing these programmes with your own private savings and investments can help maintain the lifestyle you desire in retirement.

Our retirement savings checkpoint presents a useful guidepost or gauge to check if you are adequately saving towards maintaining your current lifestyle in retirement, subject to certain assumptions2.  

Ultimately, the earlier you start saving and investing for retirement, the better you can benefit from the power of compounding.