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Guides / Budgeting and planning

How to build a retirement budget around CPF LIFE

Updated 1 October 2026

A working-life budget is about not overspending this month. A retirement budget has a different job. It has to tell you which costs are covered for life, which ones your savings are paying for, and how long those savings will hold up.

The simplest way we know to do that is to sort every cost into three buckets and match each bucket to a source of money.

Bucket 1: costs you can't skip

These are the bills that arrive whether or not markets are up. Food and groceries, utilities and service and conservancy charges, phone and internet, transport, your share of medical bills, and insurance premiums you pay in cash.

Keep insurance in this bucket, because you can't easily stop paying it at 72 without losing cover you may need. Health premiums are tied to your age. CPF Board's 2026 guide says private hospital rider premiums can climb from about $3,000 to about $9,000 a year between 50 and 70, so use the premium you expect to pay in your 70s when you fill this in.

Bucket 2: costs that come once or twice a year

Travel, Chinese New Year and other festive spending, birthday and wedding gifts, a new fridge, aircon servicing, a renovation every decade or so. These are easy to forget in a monthly budget and are often what pushes people to dip into savings in a panic.

Add up what you spent on these last year, divide by 12, and treat the result as a monthly cost. Some people move that amount into a separate account each month so the money is there when the airfare or the ang bao season arrives.

Bucket 3: costs you could cut if you had to

Eating out, hobbies and classes go here, along with money you give to children or grandchildren. They're a big part of what makes retirement enjoyable, and they're also the first things you'd trim in a bad year.

Match each bucket to a source

Once the three buckets are filled in, give each one a source of money to pay for it.

The ideal is for bucket 1 to be covered by income that lasts as long as you do. In Singapore that's mainly CPF LIFE, plus any pension or annuity you already hold. CPF LIFE pays every month for as long as you live, so if your must-pay costs fit inside your payouts, a market fall doesn't reach the money paying for your basics.

Buckets 2 and 3 can then come from savings, investments, part-time work or rental income. These can go up and down, and that's fine for spending you can delay or cut.

A worked example

Here's an illustration for a married couple in their early 60s. Every figure is invented to show the method, not to suggest what you should spend.

ItemMonthly
Food and groceries$900
Utilities, conservancy, phone and internet$300
Transport$200
Medical bills paid in cash$150
Insurance premiums paid in cash ($4,800 a year)$400
Household and other essentials$250
Bucket 1 total$2,200
Travel ($6,000 a year)$500
Festive spending and gifts ($2,400 a year)$200
Repairs and appliances ($1,200 a year)$100
Bucket 2 total$800
Dining out and hobbies$400
Helping family$200
Bucket 3 total$600
All spending$3,600

On the income side, suppose the husband's CPF LIFE estimate is about $1,780 a month from 65 and the wife's is about $1,200, which comes to $2,980 a month for the two of them.

Their must-pay costs of $2,200 sit comfortably inside lifelong income. The remaining $620 a month, for the yearly and flexible spending, has to come from savings. Over 20 years that's $148,800 before inflation, which gives them a concrete savings target for the flexible part of their life rather than a vague worry.

If CPF LIFE had come in below $2,200, the conversation would be different. They might look at deferring payouts, topping up a Retirement Account, or trimming a premium before they ever touch bucket 3.

Keep it current

Redo the numbers once a year, ideally when your CPF annual statement arrives. Check three things:

  1. Did any must-pay cost jump? Insurance renewals are the usual suspect.
  2. Did you spend more or less than planned on the yearly items?
  3. Is your savings balance on track for the gap you planned?

If your actual spending in the first year of retirement is very different from the plan, believe the actual spending and adjust.

CPF Board's Retirement Payout Planner lets you set a monthly payout goal and see how far your current savings get you. It's a useful second check on your own figures.

If you'd like help sorting your own costs into these buckets and lining them up against your CPF LIFE estimate, book a free retirement review. Couples are welcome to come together.

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