DBS launches tool in mobile app to help those below 55 years old plan for retirement
SINGAPORE – Like many countries, Singapore has an ageing population, with many people concerned about having enough retirement savings.
Financial advisers recommend an early start to retirement planning to take advantage of the longer runway for savings to grow over time.
Many people will typically start retirement planning with their Central Provident Fund (CPF) savings.
From Monday, to encourage those aged below 55 to plan for retirement early, DBS Bank has incorporated a new feature – “Your CPF” – in its digibank app to give users a clearer picture of their CPF savings.
Ms Lorna Tan, head of financial planning literacy at DBS, said the new tool will enable CPF members to benchmark their retirement savings against the projected CPF retirement sums for their age cohort.
This will allow them to take steps to close the gaps in their retirement savings, she added.
For instance, a 29-year-old individual who earns about $6,000 every month has $75,000 in his CPF balances – $45,000 in his Ordinary Account and $15,000 each in his Special and MediSave accounts.
From inputs based on his personal circumstances, which include withdrawing his savings from the Ordinary Account to buy a Housing Board flat, the “Your CPF” tool projects that at age 55, he will have $100,000 in his CPF balances – short of his cohort’s basic retirement sum of about $114,100.
The tool then recommends him to top up his Special Account by $58 every month so that he can reach his basic retirement sum by the time he is 55.
Being able to track the progress towards the required CPF retirement sums has taken on greater importance as people are living longer after they retire.
Department of Statistics data shows that total life expectancy at 65 years old rose to 21.2 years in 2021, up from 20 years in 2011. This means a 65-year-old with this life expectancy can expect to live for another 21.2 years.
As people live longer, they may worry about not having enough savings to last through their golden years. Inflation is exacerbating the problem by eroding the value of money and raising the cost of living.
Besides CPF, many people have other assets and liabilities, as well as insurance policies. Assets may include investments and property, while liabilities may include home and car loans, and credit card debt.
The “Your CPF” tool recognises this, said Ms Evy Wee, DBS’ head of financial planning and personal investing.
“We are hoping to harness everything else, the banking data, SGFinDex, your insurance and complement what CPF has, to show whether you are on track,” she said.
SGFinDex, which is short for Singapore Financial Data Exchange, allows any individual to retrieve his personal financial information using his Singpass.
Each individual can then consolidate his financial information from the seven participating banks (DBS, OCBC, UOB, Citi, Standard Chartered, HSBC and Maybank); insurance policy details from insurers; and investment information from the Central Depository; and his home loan from HDB and his CPF balances to get a holistic view of his financial situation.
An individual who realises he is not on track to meet his retirement goals may decide on “the choices and trade-offs he can make ”, Ms Wee said.
He could get a smaller home instead of the bigger unit he was eyeing, or give up his car and cut down on fancy meals and other expenses.
He could also look at ways to boost his income by picking up new skills or investing some of his money while being aware of the risks involved in investing.
Individuals who are on track could consider whether they want to grow their retirement savings further or deploy their savings to build a legacy for their children, Ms Wee said.
“Everyone is different. That is why our tool is designed to be personalised,” she added.
Ms Wee gave another example of how “Your CPF” can work seamlessly with other data aggregated via SGFinDex on the DBS digibank NAV Planner platform.
If something happens to an individual and he cannot work for some time, will his insurance cover him during this period? Does he have other assets to fall back on if he has to stop working? Should he then get more insurance protection?
The tool helps address these questions so the individual will not get a nasty surprise when an unfortunate situation happens, she said.
Ms Wee added “Your CPF” and the NAV Planner are available to non-DBS/POSB customers as well.
“DBS/POSB customers can log into their digibank apps to access them, whereas new-to-bank customers can sign up for a digibank account with MyInfo, which is linked to their Singpass accounts,” she added.
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