Married couples in Singapore are increasingly choosing not to have children for various reasons. These couples are often referred to as DINKs, which stands for “Dual Incomes, No Kids”.
DINKs enjoy more quality time with each other, want the freedom to pursue their personal interests, and the savings that come with not needing to raise a child. This financial flexibility can be a valuable asset in the long term, especially when planning for retirement.
Retirement Challenges for DINKS
However, where retirement planning is concerned, DINKs also face unique challenges. As we age and grow more vulnerable to illness, healthcare expenses and caregiving costs also tend to increase. On top of all that, there is also the issue of inflation and rising cost of living.
Social support networks in Singapore often revolve around family. Without children, not only might DINKs feel isolated, they could also be left without the extra financial assistance that other couples may receive from their adult children.
How can DINKs overcome these challenges for a worry-free retirement? Here’s a step-by-step guide to how DINKS can go about their retirement planning.
1. Set clear retirement goals
Define what retirement looks like for you
Retirement can mean different things to different people. Couples should consider factors like desired retirement age, ideal lifestyle, and the financial resources needed to sustain that. It’s crucial to have these conversations together, so you can work to align expectations early on.
Here are some questions that might help: Do you want to retire in Singapore or abroad? How often will you travel? Will either of you continue working part-time? Will you need to care for other family members?
Assess your current situation
In order to plan for the future, you need to have oversight on your current financial situation. This includes (but is not limited to) keeping tabs on savings, investments, assets and debt. For instance, keep track of the values of any assets you may have and monitor the value of your stocks. If you’re paying off a housing loan, calculate how long it will take to clear them.
It’s also never too late to understand how your CPF monies can help in retirement planning, but more on this later.
Create a future-proof budget
Once you’ve mapped out your retirement goals, start developing a realistic budget that aligns with your retirement outlook.
If you intend to travel frequently, your budget needs to account for travel expenses. Similarly, if you have a pre-existing medical condition, the costs of your healthcare needs should be factored into your budget. It would be helpful to account for inflation and any potential changes in living expenses wherever possible.
Plans can go awry, so don’t forget to maintain your emergency fund to cover unexpected costs. This could be anywhere from three to six months of essential living expenses, though you may wish to adjust this based on your personal risk appetite.
2. Grow your retirement budget
Maximising CPF contributions for greater payouts
On top of employer contributions, you can make voluntary contributions to your Ordinary Account (OA), Special Account (SA), and Medisave, which offer attractive interest rates and tax benefits.
Making additional cash top-ups to your accounts allows you to grow your retirement savings, while benefiting from tax reliefs. Check out the CPF board’s handy guide on the Basic Retirement Sum, Full Retirement Sum, and Enhanced Retirement Sum to gauge how much to save for your desired monthly payout.
On that note, you may wish to delay your CPF withdrawals if it’s still feasible. This allows you to maximise your monthly payouts once you fully retire.
Longer term housing and lifestyle changes
Treating yourself to the occasional luxuries feels rewarding, but it’s worth considering the idea of adopting a more frugal lifestyle that is sustainable in the longer term. You can also consider downsizing your home – a smaller, more affordable home can free up equity for retirement expenses.
Alternatively, you can do as others have done, and start renting out your unoccupied rooms or properties for passive income. While the rental market is currently showing signs of cooling, having an additional stream of income to grow your nest egg with is always helpful. You can adjust rents as and when market conditions are ripe.
3. Plan for your healthcare and caregiving needs
As we age, our immune systems get weaker. It’s imperative to start treating healthcare planning seriously to better budget for your nest egg.
Take stock of your current health situation
Attend regular medical check-ups to identify and address any potential health issues early. By nipping the issue in the bud, you could potentially avoid more medical costs in the future.
Evaluate your healthcare insurance coverage
Medisave and Medishield Life go a long way in covering expenses, but understanding their limitations can help you plug the gaps. For instance, overseas medical treatment and private nursing charges are not insured by Medishield Life.
Consider purchasing long-term care insurance
This insurance will help to provide financial support for potential assisted living or nursing care expenses in your later years. Currently, Singaporeans born after 1980 are automatically covered by CareShield Life when they turn 30. Some private insurers even offer approved supplementary plans to enhance CareShield coverage.
4. Estate planning
While you might still be young, it’s never too early for estate planning. This involves determining how you’d like your finances and assets distributed when you pass on, which is even more crucial as DINKs do not have any children to will their assets to. Here are some tools you can tap on to take ownership of your estate planning:
Making your CPF nomination
You can nominate up to 15 loved ones to receive your CPF savings in cash upon your passing.
Drafting a will
A will is a legally binding document that ensures your assets are distributed according to your wishes. In its absence, the state will distribute your assets in accordance with the Intestate Succession Act, and the allocation may not be what you actually want.
Setting up a Lasting Power of Attorney (LPA)
This allows you to appoint a trusted individual to make financial and healthcare decisions on your behalf, in the event that you lose mental capacity due to any mental or physical illness.
5. Continuous learning and skill building
Invest in personal development and skill-building activities to remain employable in the long term, if you’re still looking to work ad-hoc or part-time in retirement.
In the short term, upskilling can help with mid-career switches or job hunting in a tough economy. Singaporeans and PRs can also make use of SkillsFuture credits to explore the wide variety of affordable online courses. Alternatively, Massive Open Online Courses (MOOCs) are free for all on platforms like Coursera, with a small top-up for a completion certificate.
6. Stay informed
Even after you’ve made your plans, it’s important to stay updated on government policies, tax regulations, and investment opportunities. Read the news regularly for latest updates on the global economic outlook and any other information that might affect your plans.
Seek advice from trusted financial advisors who specialise in retirement planning to help you with your goals. This allows you to stay nimble in reviewing your retirement plans to account for changes in policies, ensuring you stay on track to meet your goals..
Retirement planning is a vital step for all of us to secure our financial future. By following a comprehensive retirement plan, DINKs can look forward to a comfortable and fulfilling retirement. The key is open and honest communication about your needs and desires as you embark on this journey as a couple. All the best in building your nest egg!