In response to concerns over the cost of living, Deputy Prime Minister Lawrence Wong unveiled significant measures during his Budget 2024 address last February 16, 2024, aimed at providing increased financial support to Singaporeans. Here’s a comprehensive timeline outlining the various cash payouts and assistance schemes slated for implementation:
Enhanced by an additional S$1.9 billion, the Assurance Package offers:
– S$600 in CDC vouchers distributed in June and January 2025 to all Singaporean households.
– Cost-of-living “special payment” ranging between S$200 and S$400 for eligible adult Singaporeans.
– Additional U-Save benefits totaling up to S$950 for eligible HDB households.
– An extra half-month of S&CC rebate in January 2025, totaling up to four months’ rebate for eligible HDB households.
#2: LIFESG CREDITS FOR NSMEN
All NSmen, past and present, will receive S$200 digital credits redeemable via the LifeSG mobile app. Distributed in November, these credits are valid for one year.
#3: MEDISAVE BONUS
In December 2024, adult Singaporeans aged 21 to 50 will receive a one-time MediSave bonus ranging from S$100 to S$300, based on various criteria, including age and property ownership.
#4: SINGAPORE WORKFORCE DEVELOPMENT
The introduction of the SkillsFuture Level-Up program for mid-career workers will include a top-up of SkillsFuture Credit by S$4,000 for Singaporeans aged 40 and above, starting in May. Moreover, there will be a monthly training allowance for those aged 40 and above enrolling in selected full-time courses, capped at S$3,000 per month.
#5: TAX RELIEF
The income threshold for dependant-related tax reliefs will double from S$4,000 to S$8,000 for the year of assessment 2025, benefiting more taxpayers.
#6: TAX REBATE
A 50% personal income tax rebate, capped at S$200, will be applicable for the year of assessment 2024, primarily benefiting middle-income workers.
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These initiatives underscore the government’s efforts to alleviate financial burdens and support the well-being of Singaporeans amidst economic challenges.
Singapore’s public and private hospitals offer some of the world’s most exceptional healthcare services. The only drawback is the rising healthcare costs of about 8-9% each year. Other countries are embracing this upward trend due to the global inflation.
The question now is: “How will you save for future healthcare costs?”
CREATE A SEPARATE SAVINGS ACCOUNT
If you have a trusted financial advisor in your network, discuss about the feasibility of opening a separate savings account for your healthcare costs. You may choose to categorize this under your emergency fund for fuss-free budgeting. Otherwise, you will have to adjust your budget to accomplish this.
EVALUATE YOUR OPTIONS
Whether we are purchasing a plane ticket or a small furniture, we are constantly on the hunt for the good deals. However, we can easily spend thousands of dollars on medical costs without comparing the hospital prices. Avoid sinking in a pile of debt by not jumping into the first offer.
For instance, you have a substantial amount of time to evaluate your options for an elective surgery. Maximize your time by shopping around.
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PREVENTION IS BETTER THAN CURE
A surefire way to manage overwhelming healthcare expenses is to prevent them from happening. Your road to wellness starts today! Make healthier choices by eliminating your unhealthy vices including your indulgence on junk food. Afterwards, commit to eating a balanced diet and to cultivating an active lifestyle.
COMPARE THE INSURANCE POLICIES
Get the best health insurance that your money can afford! Frame your current situation and compare the insurance coverages that will suit your medical needs. For instance, some insurance policies cover long-term care. This only make sense if you plan to retain the policy throughout your retirement years.
Perform a quick cost-benefit analysis by check it out Singapore’s first health insurance comparison website: gobear.com.sg. It provides basic information such as the premium amount per month as well as the maximum payout per year.
FAMILIARIZE YOURSELF ABOUT MEDISHIELD LIFE
Central Provident Fund administers a health insurance plan called MediShield Life. It aids in paying out huge hospital bills and certain outpatient treatments such as dialysis and chemotherapy. MediShield Life’s coverage is ideally for Class B2/C wards at public hospitals.
You may choose to stay in a Class A ward or a private hospital, but the payout will only make up a small proportion of your bill. You will have to fork out cash or pay from your Medisave.
No one is entirely certain about what the future holds. Preparing now can help you manage the financial pain of later years!
Many Singaporeans look to their CPF to provide for retirement. As the General Election draws close however, some critics have panned the retirement scheme, saying it no longer suffices. Have a look at some of the realities of the CPF, and decide for yourself:
What is the CPF?
The Central Provident Fund (CPF) is a mandatory savings scheme for Singaporeans. This fund is used to provide for a range of crucial financial needs, such as healthcare, retirement, and home ownership.
Your CPF is automatically deducted from your wages, and your employer is also required to pay a portion into your CPF. Compulsory CPF contributions are as follows:
Age
Your contribution
Your employer’s contribution
Up to 50 years old
20% of monthly income
17% of monthly income
From 51 to 55 years old
19% of monthly income
16% of monthly income
From 56 to 60 years old
13% of monthly income
12% of monthly income
From 61 to 65 years old
7.5% of monthly income
8.5% of monthly income
Above 65
5% of monthly income
7.5% of monthly income
Your CPF is divided into an Ordinary Account (OA), a Special Account (SA), and your Medisave account. The interest rates for these accounts (as of 2015) are:
OA – 3.5% per annum
SA – 5% per annum
Medisave – 5% per annum
You do have the option to invest your CPF money in other schemes, based on an approved list. However, the returns are not guaranteed, and the government will not replace any losses you incur. You can see further details on allowable investments here.
Once you reach the age of 55, you will be able to withdraw all the money except for a required Minimum Sum. The Minimum Sum is placed in a Retirement Account (RA). From the age of 65, savings in your RA are disbursed to you in monthly payouts, which should ideally last till you are 90.
The Minimum Sum (as of 2015) is S$155,000. From the age of 65, this should provide monthly payouts of around S$1,200.
Is the CPF Alone Enough to Retire On?
The answer for most Singaporeans is “yes, but…” Here are some of the factors you need to consider:
Your CPF depletes very quickly when used to pay for your flat
The CPF rate barely keeps pace with inflation
A lot depends on how comfortable you want your retirement to be
1. Your CPF Depletes Very Quickly When Used to Pay for Your Home
Buying a home is one of the ways Singaporeans use their CPF. When you take out a HDB concessionary loan, the entirety of the down payment can come from your CPF*.
(*This does not apply to private bank loans, in which only 15% of the down payment can be made with CPF.)
CPF can also be used to pay for certain fees, such as the legal paperwork for the purchase. Mortgage repayments can be taken from your CPF rather than your bank account.
But this means that, if you use too much of your CPF money purchasing a house, there is a real possibility of it running out.
If you use HDB loans, the interest rate is 0.1% above the prevailing CPF rate (3.6% at present). If you use a private bank loan, the rate fluctuates according to an index, such as SIBOR or SOR. Both options can wipe out your CPF, and leave too little even for the Minimum Sum.
So if you want CPF to provide for your retirement, never overreach and buy a property beyond your means. If you buy the biggest house you can possibly qualify for, be aware that you could be forced to sell it to fund your retirement.
2. The CPF Barely Keeps Pace with Inflation
Singapore’s core inflation hovers at around 3%, which is on par with most developed countries. This means that the general cost of living goes up by 3% with each passing year, and your wealth is being depleted if it can’t grow as fast.
Given the CPF’s return of 3.5% and 5% (for OA and SA respectively), your real returns are only around 0.5% for OA and 2% for SA. This means that relying on CPF alone will provide for a very modest retirement.
Should you have plans after you stop working (e.g. travel the world, look after your grandchildren financially), it may not be a good idea to rely solely on CPF. You should speak to a financial advisor or a wealth manager about different investment products, which can complement your CPF.
3. A Lot Depends on How Comfortable You Want Your Retirement to Be
A pay out of S$1,200 a month is comfortable for some people, but painful for others. We are all used to different standards of living. If you enjoy a high income of S$15,000 a month, for example, switching to S$1,200 a month will be extremely painful.
As such, it is important to work out your desired Income Replacement Rate (IRR). This can be done with holistic financial planning, which also takes into account the amount you will need at retirement, and how long you have to get there (your investment horizon).
Do not believe any arbitrary “rules”, such as sayings that you must have a million dollars to retire in Singapore, or that S$500,000 is enough to quit your job. Such figures are not grounded in your specific needs. Speak to a qualified wealth manager or financial advisor to identify the sum you need.
A Note on Debt
Personal loans range from 6 – 8% per annum, and credit card loans reach around 24%. Your CPF interest rates (or the rates of even the most phenomenal financial products on the market) will never “outgrow” your debt. It is almost impossible.
If you want to retire well, you must pay down your debts early. Be an extreme miser with loans. Make comparisons every time you need money from the bank. You can find the best loans on SingSaver.com.sg.
In Summary:
The CPF is enough to provide the bare basics, when it comes to retirement. However, your retirement will not be lavish if you rely on CPF alone, especially if you are used to a more expensive lifestyle.
Once you have confirmed that you are pregnant, your mixed emotions will take a while to settle. Then, it is time to prepare for your much-awaited pregnancy. Before you deliver your child, it is vital to determine the costs related to your pregnancy here in Singapore.
PRE-NATAL
Expecting mothers need to visit the OB/GYNs or gynecologists regularly. As a result, you will have to pay about S$60-75 per visit. But to save more, you may take on the maternity package that costs about S$400 in the public hospitals. This already includes charges for consultation and needed supplements.
Routinely care for both your baby and you includes: monitoring blood pressure and weight gain, lab tests for blood and urine, and monitoring your baby’s position, heartbeat, and size. Additional tests include ultrasound and fetal health screening.
PRE-NATAL CLASSES
To prepare you physically and emotionally to giving birth in Singapore, you may join pre-natal classes that cost about S$150-250. These classes will impart knowledge on handling labor pain, post-natal exercises, and nursing for your newborn baby.
DELIVERY AND HOSPITALIZATION
Hospitalization for two days will cost you about S$3,000 in a private room at a private hospital. But, you can lower down the cost significantly by choosing a private room at a public hospital. Aside from the varied hospitalization fees, delivery fees vary depending on whether you have normal or C-section delivery. For normal deliveries, you can give birth with or without epidural. This costs about S$2,000-3,000 and the C-section only costs more.
POST-NATAL
Expect your bills to increase from the minute your give birth. You will have to pay not only for your gynecologist but also for the pediatrician of your baby. Also, you must get your newborn immunized against several diseases. All the compulsory immunizations are free but if you want to save more, then opt for the services by polyclinics.
CONCLUSION
Giving birth to a baby is a lovely experience. Couples may consider it as a miracle that they had dreamt of for long. But the reality is, getting pregnant in Singapore can bring hefty costs. Bills include pre-natal consultation, lab tests, fee for birth certification, baby immunization, baby clothing and accessories, and more. As a couple, you may prepare a minimum of S$10,000.
Fortunately, Permanent Residents and Singaporeans can deduct a percentage of the delivery costs through the Central Provident Fund (CPF) for their first four children. Furthermore, the Medisave Maternity Package allows you to use your Medisave savings to pay for the pregnancy and delivery expenses. Click here to know more.
