Is CPF Life Sufficient for Your Parents’ Retirement?

Singaporeans are plagued by a multitude of worries in today’s rapidly changing financial landscape, from the ever-increasing cost of living to the need to secure a sustainable retirement plan. While we navigate these challenges, Singapore itself continues to undergo a significant demographic transformation.

Today, the median age of Singaporeans has surged to 42.8 years, an alarming shift given it stood at 38.7 years less than a decade ago in 2015. This has thrust many of us into the ‘Sandwich Generation’, wedged between the financial demands of caring for ageing parents, and supporting our own growing children.

The Singaporean government introduced CPF Lifelong Income for the Elderly (CPF LIFE) as a lifeline for our ageing population. CPF LIFE promises a reliable stream of monthly payouts that last as long as one lives, making it a cornerstone of retirement planning. But as we contemplate the future, we must ask ourselves: Is CPF LIFE robust enough to serve as the sole foundation for a secure and comfortable retirement?

Read more: Sandwich Generation: How To Stop It From Happening to Your Kids 

Preparing for your parents’ retirement

Before we cast the spotlight on CPF LIFE’s sufficiency, it is imperative to delve into the intricacies of our parents’ envisioned lifestyles. Beyond the basics like healthcare and daily expenses, we often miss out on other desires and needs such as their travel plans, hobbies and housing costs.

It is imperative to carve out time to engage in dialogue to discuss how these expenses are distributed within your family, whether your parents can manage the brunt of retirement on their own, as well as your role in their retirement years.

A breakdown of costs per month for two elderly parents living in an HDB flat could look something like this:
Expense CategoryBreakdownEstimated Cost Per Month
Healthcare and medical expenses
Insurance coverageS$300
Medical expenses (e.g.: routine check-ups, medicine, etc.)S$300
Daily Expenses
1. Monthly concession pass for Senior Citizens
2. Occasional cab rides
Household billsS$400
Town Council FeesTown council feesS$100
Leisure ActivitiesTravel to regional countries (Divided by 12 months)S$200
Total Estimated Monthly ExpensesS$2,300

Consider this table as a lens through which you look at the potential monthly expenses your parents might have within a month. However, we must also acknowledge that there are other costs that might be omitted from this table, particularly that of housing. This could come in different forms, such as if your parents have outstanding mortgage loans, rental costs or monthly maintenance fees related to their property.

It’s also important to remember that expenses will ultimately be shaped according to an individual and their desired lifestyles. Take for example the cost of travelling in this table. While we predict the cost of travelling to neighbouring ASEAN countries at a reasonable S$2,400, if your parents harbour dreams of exploring destinations further away or which cost more, that will also need to be accounted for accordingly. Naturally, this beckons us to the next step: assessing whether their retirement savings are enough.

Read more: How to Help Your Parents Prepare for Retirement

Is their nest egg ready for retirement?

To assess the adequacy of your parents’ retirement savings, you need to consider their retirement plan and the payouts from CPF LIFE.

CPF LIFE stands as a beacon of financial security, providing a person with monthly payouts for as long as they live. These payments can be initiated at any point between the ages of 65 and 70. Depending on their plan and retirement savings, the amount will differ. A snapshot of these payouts can be seen in the table here:
Desired Monthly Payout from 65CPF LIFE Premium at 65Savings You Need at 60Savings You Need at 55
S$960 -S $1,030S$184,400S$147,500S$120,000
S$1,510 – S$1,620S$298,800S$241,600S$198,800
S$2,210 – S$2,370S$443,100S$360,200S$298,200

Source: CPF Board

CPF LIFE offers three distinct plans: Escalating, Standard and Basic. In the Escalating Plan, individuals receive payouts with a 2% increase each year. In contrast, the Standard Plan offers a fixed cadence of payouts while the Basic Plan has a gradual descent in payouts when savings dip below $60,000.

Of these three. the only plan that accounts for inflation is the Escalating Plan. This is significant as inflation can have a big impact on your parents’ (and your own) expenses.

What once seemed ample at S$2,000 a month might gradually evolve into $3,000 to sustain their chosen lifestyle. As you grapple with the realisation that your parents’ savings might be on a precarious precipice, you might begin to wonder what steps to take next.

Read more: Can You Retire on CPF LIFE Payouts Alone?

Bridging the financial gap

Given the rate of rising cost of living, it is entirely possible that even day-to-day expenses might outpace CPF LIFE pay-outs. It becomes essential, therefore, to explore practical solutions to bridge this gap.

Financial support from family

Many households in Singapore choose to provide financial assistance to their ageing parents as a means to demonstrate respect towards their parents. Here are some approaches to consider:

  1. Monthly allowances: Several families opt for monthly allowances for their elderly parents to help with covering their expenses. This method is a structured and consistent way to ensure their wellbeing.
  2. Bills payment: Your parents might be reluctant to accept monetary support. In this instance, offer to cover specific costs such as groceries or household bills. Why not make it an engaging family affair by dedicating a day on the weekends for grocery shopping together? It’s an opportunity to bond while ensuring their essential needs are met.
  3. Shared experiences: Alternatively, contribute by sharing experiences with your parents, such as occasionally travelling together. By going on trips together, you can take care of their travel expenses and create lasting memories.

Managing their expenses

However, if you find yourself shouldering the entire financial burden of your parents’ retirement to maintain their lifestyle, it could mean an unsustainable burden for you. Not only could this cause possible strife within the family, it can also jeopardise your own retirement planning. Rather than assuming full responsibility for your parents’ retirement, encourage them to assess their spending habits and consider adjusting where necessary.

  1. Reducing expenses: If you notice that your parents tend to overspend on hobbies or leisure activities, you could discuss the need for moderation. For example, if frequent travel is putting a dent in their wallet, you could help them plan vacations to more affordable destinations.
  2. Explore budget-friendly activities: Cutting back on certain expenses doesn’t mean sacrificing enjoyment. Singapore offers a wide range of budget-friendly activities, including public facilities and parks. A walk along the Marina Barrage Loop, for instance, is both completely free of charge and a good way to stay healthy.

Read more: 7 Common Oversights When Doing Retirement Planning With Your Parents

Navigating Government Schemes

Yet another avenue to explore is the array of government schemes designed to help individuals who need a boost in their retirement funds. Here’s a non-exhaustive compilation of some schemes:

  1. Silver Support Scheme: This scheme is targeted at those who had lower incomes while working, and consequently, now have lower retirement savings. A quarterly cash supplement will be provided to eligible seniors. This amount would depend on the household monthly income per person, and the type of HDB flat they live in.
  2. Matched Retirement Savings Scheme: This scheme also aims to help senior citizens with lower retirement savings. The government will match every dollar of cash top-ups made to an eligible senior’s CPF Retirement Account, up to S$600 a year for five years. The beauty of this scheme is that anyone (including you) can make this top-up.
  3. Majulah Package: Fresh off the press and introduced during the National Day Rally 2023, this package aims to provide much-needed support to those born in 1973 or earlier with modest incomes and wealth. It includes a bonus of up to S$1,000 credited to the CPF accounts of lower to middle-income workers, as well as an amount of up to S$1,500 for Singaporeans who have not yet reached the Basic Retirement Sum. The package even extends its reach to homemakers and those not in the workforce, ensuring everyone is financially protected.

Read more: Subsidies and Schemes for Seniors and Caregivers 


As Singapore grapples with the complex issues its ageing population presents, many have opted to trust CPF LIFE to tide them over in their silver years. But while CPF LIFE serves as an integral part of Singapore’s retirement landscape, it may not fully meet your parents’ retirement needs. A combination of family support, prudent cost-cutting approaches, and government schemes can help ensure that your parents enjoy a comfortable and financially secure retirement.

Retirement planning is constantly evolving, and it’s essential to adapt strategies to cater to the unique needs of our elderly, providing them with the quality of life they deserve in what should be a worry-free and enjoyable chapter of their lives.

Read more: How To Complement Your CPF Life With an Annuity Plan

Leave a Reply

Your email address will not be published. Required fields are marked *