Why most Singaporeans will be able to Financially Retire

Why most Singaporeans will be able to financially retire

Being a Singaporean, I feel extremely privileged as we have one of the best financial systems and services to grow our wealth. The average mean and median net worth per Singaporean adult is S$449,543 and S$117,068, respectively. There are 269,925 millionaires in Singapore, of which 60 have more than half US$1 billion. FYI, Singapore’s total population is 5.82million. That means that 4.64% of the population in Singapore are millionaires! In this blog, I will explain why I believe most Singaporeans who learned to invest properly will be able to retire early.

What makes Singapore’s financial system so great

Singapore is the third wealthiest country in the world, and it is one of the most expensive places to live in. It is mostly concerned with commerce and government-funded businesses. Its extensive access to regional and global markets strengthens its position as the linking hub that connects Asia to the rest of the world and the rest of the world to Asia. Singapore provides unprecedented connectivity for passengers and commodities, and it is an especially efficient site for accessing Asian markets.

Singapore has well-established financial markets, and the main financial services businesses include banking (particularly investment banking, wealth management, and treasury activities), insurance, and capital market (securities, futures, and derivatives) services. As a Singaporean, I just thought to myself how crazy it is that with the right strategy in investing. Every Singaporean can be a millionaire by investing in stocks and real estate.

The government incentivizes saving for retirement

Back in 1955, the government introduced CPF (Central Provident Fund) as a means of helping workers save for retirement by contributing part of their monthly income. The CPF can be used in a variety of ways. From investing in real estate, purchasing unit trust for stocks, and paying for healthcare. If the person does not wish to invest with the CPF, that’s alright. The government provides an annual interest of 2.5% (Ordinary account) and 4% (Special and Medical account). Singaporeans over the age of 55 have the option of withdrawing monthly income from their CPF.

Apart from CPF, the government also introduced SRS (Supplementary Retirement Scheme) to encourage individuals to save for their retirement by offering tax incentives. The SRS can be used to invest in the stock market through services like EndowUs, StashAway, and Syfe. Click on the Referral link down below to sign up!

Owning a Real Estate Advantage

In Singapore’s Business Times, 90% of Singaporean investment asset comes from real estate. The government offers a lower tax rate on purchasing a property. It even incentives its own citizen to stay in government houses. The government has subsidies of up to $80,000. In 2020, 81% of Singaporeans are staying in HDB (Housing Development Board). The average cost of a government BTO (Build-to-order) for a 2 bedder is $169,000, 3 bedder is $267,500 and 4 bedder is $398,500. These may seem a lot to pay for a house. However, Singaporeans can choose to pay cash for only 5% while 10% comes from CPF as a downpayment. Subsequently, they have a choice to pay between cash or CPF. Most people would take CPF as the most obvious choice. At the end of 5 years, all houses would be able to sell with large paper gains.

If you would like to know more about real estate investing to grow wealth. Click on the link here to find out more.

Higher than Average Income

The global average income is $1,600. The US average income is $3,600. While Singapore’s average income is $4,680. One of the greatest perks of working in Singapore is the high competitiveness for salary as there are always an abundant amount of job openings in Singapore. In June 2021, there were 163 job vacancies for every 100 unemployed people. For the first time since March 2019, the ratio of job openings to unemployed people has risen beyond one. Thus, the country is always on a hiring spree for oversea talents.

Low Tax

Singapore is known as one of the best tax haven cities in the world for both companies and its citizen. The highest taxable income is 22% while the highest company tax is 17%. Singaporeans with an average salary of $4,680 per month ($56,160 per year) must pay $3,350 in taxes. Which can be readily deposited into the SRS account, up to a maximum contribution of $15,300. In essence, Singaporeans with a median income do not have to pay any taxes. Investing in SRS to build their money for retirement.


It’s all about retiring early

Depending on how much you need to retire, retiring early can be as quick as 10 to 20 years. It’s crazy to me how some Singaporean are not investing their money into the SRS account. A $3,000 yearly amount invested into the SRS (assuming money is invested inEndowUS S&P500 index fund) would give $47,000 (10 years)/ $172,000 (20 years)/ $493,000 (30 years).

The same can be applied to CPF of a monthly deposit of $1,731.60 (based on Singapore’s average income and CPF based on 20% ownself 17% company). Assuming the money only grows by 2.5%. The amount would be $232,797 (10 years), $530,797 (20 years) and $912,263 (30 years) respectively.

Depending on your knowledge of financial wealth, any Singaporean will be able to retire early with the right strategy. To learn more about financial wealth, follow Us to learn more. Or you can read more topics on Money talk or Investment 101.

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