When we think of when to retire, we don’t give much thought to it.
We usually use a “default” age as a fallback.
Well, the statutory retirement age in Singapore is going to change.
What is it changing to? And how is it going to affect us?
Let’s find out now.
There’s a Difference Between Retirement Age and Re-employment Age
Most Singaporeans know the concept of a retirement age, but not a re-employment age.
There’s a clear distinction and reasons behind having said numbers in black and white.
According to the Retirement & Re-employment Act, your employer can’t fire you (for age-related reasons) if you’re below the minimum statutory retirement age and if you satisfy certain requirements.
And even if you’ve hit the minimum retirement age, your employer must continue to provide continuous work up to the re-employment age, if you’re eligible.
However, if your employer isn’t able to re-employ you, there are 2 options:
- Transfer the obligation to another employer (with your agreement)
- Provide you a one-time Employment Assistance Payment (last resort)
What Are the Current Retirement Ages?
Now that we’ve gotten the definitions out of the way, here are the current and future retirement ages.
Retirement Age:
Currently, it’s at 62 years old. This figure will change in 2022 to 63 years old. And by 2030, it will be 65 years old.
Re-employment Age:
Currently, it’s at 67 years old. It will change in 2022 to 68 years old. And by 2030, it will be 70 years old.
How Are These Changes Going to Impact Us?
It’s always good to know what are the latest retirement ages, but understanding how these changes affect us is even better.
Here are 2 main impacts:
1) Provides Protection
As you get older, your productivity may be lowered as compared to one who’s of a younger age.
And this could cause discrimination to older employees in the workplace.
Having an official retirement age ensures that these older workers aren’t dismissed because of their age, and gives them the flexibility to remain in the workforce if they need more financial help.
This is especially critical if the older employee doesn’t have enough funds to retire.
Adding to this, an increasing life expectancy (currently, females are at 85.7 years; males are at 81.4 years) will mean that we’re living longer, and thus need to accumulate even more because of this “extension” of life. The raise in retirement ages will allow us to be employed to earn more if we need it.
For the fortunate few who have an abundance of funds to retire, the raising of retirement age will still help as they can continue to work as a way of passing time.
2) Changes to Your Retirement Planning
Your CPF Accounts – Ordinary Account and Special Account – could amount to a chunk and are meant to provide retirement income when the time comes.
That’s why they’re a core component to any proper retirement plan. And any changes to its withdrawal will affect your retirement planning.
Fortunately, even with the changes in retirement age, PM Lee Hsien Loong has reassured that the CPF withdrawal age and its current policies will not change. Note: there will still be changes to the CPF contribution rates.
Having said that, other government schemes may be impacted.
For example, the Supplementary Retirement Scheme (SRS).
As the name suggests, SRS is supposed to supplement your retirement income, and at the same time, provide tax relief benefits.
Because the SRS withdrawal age follows the statutory retirement age, it will change in the future.
But if you make your first contribution before the changes come into effect (i.e now), you can still begin your first penalty-free withdrawal at 62 years old.
Pro tip: You can open an SRS account and contribute just $1 to “lock in” this withdrawal age.
What’s Next?
While it’s good to know the statutory retirement age in Singapore, know that you have full control over when you want to retire.
When do you want to enjoy the fruits of your labour? That’s entirely up to you to decide.
Although planning for your retirement can consist of many moving parts, the end goal is to achieve a certain amount of wealth before a certain age.
If you’ve done a consolidation of your current assets and liabilities, a shortfall is likely to appear.
To make up for it, there are various investment options to make better use of your money, depending on your risk appetite.
Retirement planning is usually neglected until it’s too late.
Taking the first step (even if it’s a small one) will go a long way.
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