Retirement is a big topic in life. Retire cheap is a popular topic these days.
The banks have been printing money for years. Until one day we all face runaway inflation. We complain that everything becomes so expensive. It is particularly hard for those who have retired. They must find ways to cut costs. As expected, reasons from people who want to retire cheap are often “Singapore too expensive” or “not enough savings”.
Not enough money for retirement
According to the OCBC 2023 annual Financial Wellness Index, as many as 79 percent Singaporeans either do not have a retirement plan or are not on track with their retirement plans.
Respondents in their 20s said they plan to start planning for their retirement at 42. Those in their 50s said they intend to start at age 60. No wonder our government pushed back Singapore’s retirement age to 64 from July 2026 and to 65 by 2030. Above all, re-employment age was raised to 69 in 2026 and 70 in 2030.
“I am also a big supporter of retirement planning. Financial advisors may tell you to start doing so in your 40s. But I believe in planning for your retirement as early as possible, preferably the first day you go out to work … Always begin with the end in mind. Visualize what and when you want to achieve in your job. Treat every assignment as the last one you will be handling.”
– “Learning from the Chief Investment Officer”, PropertySoul.com
In fact, those who fear not having enough money for retirement are the poor, or those who believe that they are poor.
For people who have money, they work hard and find ways to build wealth all their life. When they reach the age to slow down, they don’t have to retire cheap. On the contrary, it’s time they rewarded themselves and enjoyed life in their golden years.
After all, cheap implies despicable, inferior and of lower quality. It’s sad to think about retire cheap after toiling day and night our whole life.
How much retirement fund is enough?
How much money is enough for retirement? The answer depends on individuals’ lifestyles and expectations. The article “Determine your retirement needs” in the Money Sense government website can give some hints.
The income replacement ratio method assumes that most retirees only need two-thirds of their last annual income to live comfortably. The average life expectancy of Singaporeans is 83 and 88 for men and women respectively. Use that number to minus your desired retirement age times 75 percent of your last annual income. That is the amount of total retirement income needed.
However, if you are a high-income earner making over $300,000 a year. And like me you retire early in your 40s. As a woman, do you need to save $10 million for retirement?
Fortunately, the article also mentions the adjusted expense method. Use your estimated total expenses per month after retirement times 12 months times your years in retirement. If you plan to live a simple retirement life or to retire cheap, the total retirement income needed is much more achievable.
Singapore’s CPF is one of the best pension schemes in the world. Expenses in your retirement life can be supplemented with CPF payout, MediShield and positive return from different investments.
However, this is provided that you don’t overspend your money, overcommit in properties, or being cheated by scammers or acquaintances before and after your retirement.
To retire cheap in Johor Bahru
If your retirement fund cannot last long in Singapore, what about retiring in neighboring Johor Bahru? Will that give you bigger bang for the bucks?
I stay in the northwest of Singapore. During non-peak hours, traveling by Causeway Bus to City Square in Johor Bahru is almost the same time as traveling by public transport to City Square Mall in Singapore.
I notice that many retirees and elderly like to go shopping, dining and killing time in Johor Bahru. They buy back food, groceries, and in particular, medicine for their chronic disease. These people are not poor. Things are cheaper across the border. But they are not free.
The young also like to go for entertainment, beauty services and café hopping with their friends. Weekends usually see more families going for vacation and shopping.
It is not just the lower prices. The service is better too. The front-line staff are younger, more polite and more patient. In Singapore, usually I am the one saying “thank you”, “excuse me” and “sorry” to the service staff. On the contrary, their counterparts in JB make me feel I am a customer.
If we can pay less for better quality of life in JB, should we retire there?
Very often, this question comes from the man in the street. None of my rich friends think about how to retire cheap in Malaysia. They did mention Australia, Canada or Europe though. They all understand that shopping and vacation is one thing. But living there is a totally different story.
Coping with traffic jams at the causeway
Ahead of the Easter public holiday, Immigrations & Checkpoints Authority said a record number of 510,000 travelers crossed the Woodlands and Tuas Checkpoints on a single day on Thursday (March 28). It is shocking to see 10 percent of Singapore’s population traveled to Malaysia over the long weekend.
Ironically, just three days ago on Monday, the authority warned us about heavy traffic expected at the Woodlands and Tuas checkpoints from March 28 to April 14. This is because of Good Friday holiday, Hari Raya Puasa and Qing Ming festival.
Unfortunately, some read the news as a hint or reminder to go Malaysia the coming holiday. Imagine the terrible jams at the customs, the causeway, the highways, major roads and large shopping malls there.
Still want to retire cheap in JB? How can one manage to leave home, go shopping or visit friends and relatives in Singapore during long weekends and festive seasons?
In January, our Prime Minister visited Johor for the JB-Singapore special economic zone signing ceremony. The JB-Singapore RTS link is said to be 65 percent complete and targeted to commence service by December 2026.
Our media immediately grabbed the opportunity to publish headlines like “Singaporeans snap up residential units near RTS station in Johor Bahru”. No doubt this is a good advertorial to help developers clear their ample stock of unsold units in JB projects.
I visited Singapore and Malaysia the first time in 1994. The tour guide told us that the two governments were building a “link” to solve the congestion problem at the causeway. Traffic would run smoothly the next time we visited Johor Bahru from Singapore.
That was 30 years ago!
RTS link has nothing to do with JB properties
By the way, RTS link is for those who are not driving. If crossing the border is so efficient, Singaporeans can opt for a shopping day trip in JB without buying or renting a place there. If the problem lies in clearing the customs at the Malaysia side, this is not under our control anyway.
On the other hand, when RTS Link is in service, Malaysians from JB working in Singapore don’t have to pay high rent in Singapore anymore. Both HDB and private rentals will be affected. If Singapore rents and prices go south and become affordable, few will choose to retire cheap in JB.
And what about the lessons from early birds who bought JB homes at the peak of the property market back in 2013? Malaysian ringgit exchange rate has dropped from 2.5 to 3.5 since then, not to mention the drastic decline in value of JB homes. (Read my earlier post “What happened to buyers who overpaid at new launch?”.)
Lesson learned: Rent there first before buying in a foreign country to find out what is really happening.
Besides, affordability and value-for-money are two different things. You may be paying more for the same thing in Singapore. But for a meal, a service or a home, you are paying more for quality, regulations, safety and peace of mind. Make sure it is an apple-to-apple comparison.
“We often hear people complaining about high living expenses in Singapore. But the statement is unfounded unless we look at the full picture. Are higher living expenses justified based on the country’s higher standard of living, infrastructure development, law and order, employment and business opportunities?”
Lower standard of living but things are not cheaper
There is an article in mustsharenews.com titled “Malaysian says cost of living in Singapore is lower if income-to-spending ratio is considered”.
After living in Singapore for a decade, the Malaysian lady realized that the cost of living in Malaysia is actually higher. For example, a branded bag may be a little bit cheaper in Malaysia. But working in Malaysia would have to earn three times as much as in Singapore to be able to afford the same bag.
Her conclusion is: “Though individual items seem cheaper in Malaysia due to the exchange rate, the income-to-spending ratio in Singapore is more sustainable.”
Besides, the reason why Singaporeans can save more is partly the result of our taxation system. In Asia, Singapore and Hong Kong charge the lowest income taxes. We earn more, but we pay less.
Above all, Singapore’s monetary tightening policy helps to maintain a strong dollar. This in turn keeps prices of imported goods in check. As a result, for the same imported brand, Singaporeans may find it affordable while our counterparts in Southeast Asia may think otherwise.
A Hong Kong lady on early retirement in Bangkok has the same experience. Her skincare and cosmetic brands and products are either not available or far more expensive in Bangkok. Furthermore, food and accommodation are not as cheap as what she thought unless she does everything like a local.
To retire cheap in another country, are you able to change your lifetime habits and adapt to the lifestyle of a local? If you can’t, you are a foreigner. And everything you are paying for will inevitably cost more.
Privileges and benefits we enjoy as Singaporeans
Many are not aware of the fact that Singaporeans can actually save a lot of money staying in their country.
As citizens, we enjoy all the subsidies throughout our life – baby bonus, school fees, vaccinations, public housing, healthcare, entrance fees, top-ups, cash payouts, Skillsfuture, etc. Who are asked to pay higher prices for everything with zero subsidies? The foreigners.
Likewise, once you decide to retire cheap in another country, you are considered a foreigner. And you pay the “original price” for everything.
Are you familiar with all the benefits for Merdeka Generation and Pioneer Generation in Singapore? Do you know all the public transport, supermarket, restaurant and entertainment discounts after you reach 65? What are you missing out if you retire cheap in another country?
Since the 1980s, some retirees from Hong Kong relocated to Shenzhen because of lower standard of living there. They thought their small amount of pension could last longer with cheaper rent and food in Shenzhen. However, they enjoyed zero welfare because foreigners have no household registration (户口). Then the Chinese yen appreciated. So did living expenses. Gradually, they used up all their savings. When they were really old, healthcare became a big concern.
At the end, they had no choice but move back to Hong Kong for better healthcare services. Above all, they could enjoy senior citizen welfare in their hometown, including elderly living allowance (HK$4,195 or S$723 per month), old age allowance (HK$1,620 or S$279 per month) and subsidized public transport (HK$2 or S$0.34 per trip).
It is sad but true: If you have money, you can go anywhere for your retirement. If you don’t have money, you will be poor wherever you go. To play safe, stay where you are.
Happy retirement life is more than money
It is unwise to retire cheap or move to a place just because things look cheaper. To make a country a great place to live, there must be other factors such as new industries, business and employment opportunities, cultural or recreational attractions, good infrastructure, safety and community.
Studies find that the happiest elderly are not the ones who have a lot of money, nor the ones with no money. They are those who have just enough money they need. These elderly can afford to buy what they like to eat and afford to go where they want to go. They have spare cash, good health and great companionship.
The reason why the Hong Kong old folks moved back from Shenzhen is not only about money. The elderly need companionship too. When they grow old, daily life becomes dry and repetitive. They don’t want to deal with loneliness and deteriorating physical and mental health in a foreign country.
When you reach 75 or 85, won’t you want to spend more time with your loved ones, old friends, NS mates, or primary, secondary, JC and university school friends who are still around?
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I now work 3 months sg, then rest 3 months th. My th monthly expenditure is sgd800 with 1 car and 2 bikes. I bought my own apartment in th at 50k. I’m 49.
I’m aware of other Singaporeans, older than me, who are living in th also. No we are not living in bkk.
I’m Chinese and can blend in here by skin colour. Of course I speak a little thai.
Since I went for business trips in Bangkok two decades ago, I have often been mistaken as a Thai. If I walk into a local eatery and don’t speak, no one will suspect that I am not Thai. When the kids are older, I will spend more time in Thailand.
I admired what Terry said. I am also 49 (okay, 48 by mth). But I am not able to do it, at least not now. Same as Vina, I have frequent business trips to BKK even till today. It is attractive in many ways, I reckon I can just visit like few months each time instead of staying there permanently, There are many retirement villages in TH catering to foreigners but its also hard to really move around, basically you just stay in the retirement village. Brands in BKK are not really found just 1hr outside BKK, the locals live differently, shop differently, one has to adapt. I have many colleagues or ex-colleagues there as well to reach out to if necessary though its better to keep the relationship light. Besides, I have elderly parents to care for in Singapore. My mum rely on me for companionship and medical appointments as well. I have a HDB and a condo both fully paid up and like Loo, JB is a better option though Vina is right too. SG might still be the best option. As a Singaporean, we can live in AU for 3 months too. Its a matter of money, yes if you have, you can live anywhere. The idea is right, I would really rather rent first and that starts with Singapore, explore different units, setup and areas first. Though, many I know would rather continue to work, it gives them purpose in life and work kills time, provided one doesn’t hate their job. Certainly, I don’t. Its just that I don’t have that many days of leave and I would plan it very carefully to go for all the holidays I can go, utilizing all my leave, every public holiday is a day leave saved and holiday stretched. I still SG is the place to live in but, its no harm to try living in some other place, but don’t buy. Even Australia currency has dwindled over the last few years and the regulations e.g cannot sell to locals? even though people may claimed properties’ prices have risen as well, we don’t really know the P&L until we count every $ and cts in.
I agree with you Alex. After my younger child goes university, I also plan to spend a few weeks or one to two months in countries I love, and to spend more time with family and friends overseas. Life is short. The second half of my life I want to be in places I want to be instead of focusing on making more money.
I decided early on in life that retiring cheap is not me. I know I want to eat well, explore new places/ experiences (slow travel) and besides spending time in Singapore, I also want to live somewhere with 4 seasons. So…make life decisions before money decisions.
Agree with you. Good financial management enables us to retire comfortably.