Growing up, money was not just a topic of discussion in our household; it was a constant presence that influenced everything we did. I lived with my parents and my grandmother, who, due to old age and health issues, required assistance. This prompted my dad to hire a helper to care for her. As the sole breadwinner, he carried the heavy responsibility of providing for our family, which added tremendous stress to our household.
I could see the toll that financial instability took on my parents. I vividly remember how their faces would tense up during late-night conversations about bills, and how they would anxiously monitor the calendar as they counted the days until the next pay cheque.
Witnessing my parents’ struggle left a lasting mark on me. I promised myself that when I grew up, I would manage my finances differently. I wanted to escape the worry and anxiety that surrounded money in our home. I wanted to find my financial calm. However, I was hit with the harsh reality that life isn’t always straightforward. I stepped into the workforce carrying the weight of my university student debt. With interest accumulating at the start, I felt overwhelmed by worries about how I would ever pay it off. It made me wonder, where do I even begin when everything feels urgent?
Starting Small, But Starting Early
I decided to focus on the basics first. Creating a budget became my top priority—not just to tackle my loans but also to cater towards savings and insurance. In those initial stages, it was tough; it felt like every dollar I earned was already allocated to something. Yet, having a structured plan in place gradually helped me regain control over my finances.
As I began to educate myself more, I dove into understanding the Central Provident Fund (CPF) system, which I initially viewed simply as a deduction from my pay cheque. I soon realised it is a powerful financial tool. For employees, contributions are automatically divided into three accounts, serving different purposes: housing, retirement, and healthcare. As someone who is self-employed, although my contributions aren’t automatic, it’s mandatory for me to contribute to my MediSave Account (MA), which is crucial for my healthcare coverage.
At first, I contributed only the bare minimum, feeling hesitant to allocate more money than necessary. However, as I educated myself further, I discovered the benefits of voluntarily topping up my other CPF accounts. They help grow my savings and provide tax relief—a win-win situation.
This newfound insight sparked motivation within me: the earlier I start contributing and maximising my CPF savings, the more time they have, to earn compound interest for higher retirement payouts. It was a turning point as I began to see the value of saving early and strategically.
Thinking Ahead to Milestones
Looking ahead, as I approach my 30s, I know that significant life changes are just around the corner—buying a home, starting a family, and caring for my ageing parents. Being an only child amplifies these responsibilities, and I often feel the weight of them pressing down on me. Knowing my parents depend on me for financial support adds extra pressure, especially when I consider the potential costs of medical expenses if either of them falls ill.
To help ease some of this burden, I’ve taken proactive steps to ensure they have essential insurance coverage. I can’t stress enough how important it is to plan for your parents’ medical coverage — it’s one of the best pieces of advice I can share. Having a safety net really alleviates some of my worries and ensures my family is taken care of should unforeseen circumstances arise.
In addition to supporting my parents, I recognise that buying a home and starting a family will require substantial savings too. Friends in their 30s and 40s have generously shared their experiences and insights on managing these financial demands. Many of them emphasise the importance of setting non-negotiable savings goals and leveraging on a combination of CPF and cash for mortgage payments, or using CPF for mortgage payments if cash is not enough. Their advice reassures me that the planning I’m diligently doing today will pay off when these significant milestones arrive.
Retirement: Planning for the Long Game
While thinking about longer term financial goals, I’ve found myself recently mulling over what I want in retirement, which, I’ll admit, feels surreal in my 20s. However, the more I learn about CPF LIFE, the clearer it becomes how much my choices today will shape my future. One valuable tool I’ve discovered is the Retirement Payout Planner. It allows me to assess my financial situation by projecting my retirement payouts and savings based on my current contributions. This helps to paint a clearer picture of how far I am from my retirement payout goals. Also, by simulating different scenarios, I can see how my saving habits now will impact me in retirement.
Using the planner, I started by estimating that I’d need about $3,000 a month to support the retirement lifestyle I envision—one where I can travel occasionally, enjoy hobbies, and still set aside some funds for contingencies. It felt daunting at first, but breaking it down into today’s dollars made the goal feel more achievable.
But here’s where reality hits: when inflation is factored in at 2% per year, that $3,000 grows to around $6,250 a month by the time I turn 65. Seeing this figure was a wake-up call—it’s easy to underestimate how much we’ll need in the future.
The planner then asked me to think about how I might adjust my lifestyle to accommodate these rising costs. Would I aim for the same standard of living, or would I consider scaling back in certain areas? This step helped me understand the importance of choosing the right CPF LIFE Plan to match my future needs. After exploring the options, I realised that a plan like the Escalating Plan—which starts smaller but increases payouts yearly—might help me better manage inflation’s impact over the long term.
The planner prompted me to input details like my current salary, bonuses, and projected annual increments. This gave me a personalised projection of whether my income and CPF contributions would grow enough to meet my retirement needs.
Seeing the numbers laid out was an eye-opener—it highlighted the gap between where I am now and where I need to be.
The planner also provided simulations to explore how positive actions such as voluntary top-ups or making a CPF transfer from my Ordinary Account (OA) to Special Account (SA) could bring me closer to my goal.
While no real transactions are made during this step, it’s a powerful tool for visualising the long-term impact of proactive planning. For instance, I’ve realised that by starting now, even small regular top-ups to my SA can grow significantly over time, thanks to compound interest. The projections may appear larger than today’s numbers, but that’s because they anticipate future needs more than 30 years later when I reach retirement age. The reassuring part is that starting early, even with modest contributions, can build a solid foundation over time—giving you confidence that you’re on track for your desired retirement.
The planner also made me think about how I’d adapt my retirement lifestyle to rising prices. Would I aim to maintain my current standard of living or adjust in certain areas? Exploring options like the CPF LIFE Escalating Plan, which increases payouts yearly to offset inflation, helped me see how my choices today could secure a more comfortable future.
Breaking my goals into actionable steps using the planner gave me clarity and confidence in my savings strategy. By addressing these decisions early, I’m not just preparing for retirement—I’m ensuring that I can enjoy the lifestyle I envision without the stress of playing catch-up later.
Why It’s Worth Starting Early
If there’s one thing I’ve learnt, it’s that financial security doesn’t happen overnight—it’s built one step at a time. By taking small but consistent steps, like topping up accounts or setting aside savings, I’m giving myself options and peace of mind.
CPF isn’t just about retirement; it’s about having a financial partner through every stage of life. From navigating my 20s with student debt to preparing for future responsibilities, it’s been a cornerstone of my journey.
If you’re just starting your financial journey, here’s my advice: don’t wait for the “right time.” Start small, start now, and trust that every effort you make today will bring you closer to a secure future. Take the first step today! Visit cpf.gov.sg/BeReady to explore tools like the Retirement Payout Planner and learn how to start building a secure financial future. Every action counts, and with CPF by your side, you’ll be on your way to achieving your financial calm.
This article is sponsored by CPF. All views expressed belong to the author.