Firstly, I’d like to say that the below is something that I believe in very strongly.

Retirement plans seems like a big and complex subject.

If I can reduce it to the irreducible minimum, it means this – that when you retire, you must have three things.

  1. You must have a fully paid house.
  2. You must have a good medical expense insurance.
  3. And of course, you must have a lifelong stream of income.

At its most basic level, you must have these three things. And the good news is, our CPF takes care of all these three things, right?

  1. Because your CPF gives you the Medisave account that allows you and help you to buy your medical expense insurance.
  2. Your CPF, when you are retired, will give you that annuity for life – stream of income.
  3. Your CPF, if you don’t have enough cash, helps you buy the house.

And so, if you are a young working adult and you have got conflicting needs and priorities – need to buy a property, need to get married etc and if you really want to throw away retirement planning out the window and your motivation is not there, then I only ask you to do one thing.

Keep your loans for the house low.

Just do that one thing. Your retirement planning is taken care of.

Yeah? Because once you keep your housing loan low, don’t overextend yourself – don’t buy .. Don’t get indebted with a one million dollar loan just when you start life – I see that condo and want to buy that condo, you know .. and all that.

Just start small, just by buying, say for example, a 4-room HDB BTO, you take a low loan, your CPF is protected and on its own, the system on its own takes care of your retirement and by the time you’re 35 or 40 years old and you say, I really need to sit down and look at my retirement, you’ll be so glad that you didn’t take up such a big loan because your CPF is actually quite healthy.

A large part of your retirement is actually done. So, just do this one thing for retirement planning – keep your housing loan low, and your retirement planning has started.

I typed out the above video transcript based on the Seedly (many thanks to the the team) community special video (start around 48-minute mark) and Christopher from Providend shared the above about retirement planning.

Nice and friendly guy. I first saw him when he spoke at a MoneySense event at SMU (one that I sat in probably one or two years ago) and immediately, I thought – damn, this is the type of advice I would have wanted to get when I was just starting out six years ago.

In the video, it’s almost as if he was talking about what I did for real. *shiver*

More of my HDB related posts here.

Seedly’s second “Ask Me Anything” on insurance, CPF and retirement is now live! Tune in to find out more!Comment any question you may have in the comment box below!

Posted by Seedly on Thursday, October 12, 2017