{"id":80821,"date":"2024-12-05T17:32:26","date_gmt":"2024-12-05T09:32:26","guid":{"rendered":"https:\/\/www.99.co\/singapore\/insider\/?p=80821"},"modified":"2024-12-05T18:24:48","modified_gmt":"2024-12-05T10:24:48","slug":"a-retirement-plan-through-real-estate","status":"publish","type":"post","link":"https:\/\/www.99.co\/singapore\/insider\/a-retirement-plan-through-real-estate\/","title":{"rendered":"A retirement plan through real estate"},"content":{"rendered":"
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This article was contributed by Paul Tan<\/b><\/p>\r\n

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\u201cWhat\u2019s your retirement plan?\u201d It\u2019s a question that becomes increasingly relevant as you get older. While contributing to your <\/span>Central Provident Fund (CPF)<\/span><\/a> through <\/span>both your personal and employer contributions<\/span><\/a> is a solid approach \u2013 especially given its attractive dividends \u2013 another compelling option is investing in real estate. This doesn\u2019t mean diving into a large portfolio of properties. Instead, it can start as simply as making a smart choice with your very first home and the others that follow suit.\u00a0<\/span><\/p>\r\n

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Determine how much you spend monthly<\/b><\/h3>\r\n
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Saving money concept Man hand putting Row and coin Write Finance Saving money concept Man hand putting Row and coin Write Finance<\/figcaption><\/figure>\r\n

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Planning your retirement starts with understanding your future financial needs. Start by estimating your monthly expenses. For many Singaporeans, this figure is approximately S$4,000. If you\u2019re planning to retire at 65 and have a life expectancy of 85, you\u2019ll need about S$960,000 per person over 20 years \u2013 or S$1.92 million for a couple.<\/span><\/p>\r\n

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This amount typically covers only basic living expenses, excluding luxuries like multiple vacations each year. When asked whether they can save this amount through monthly income alone, many find it unlikely. That\u2019s where property investments can help bridge the gap.<\/span><\/p>\r\n

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Look into your retirement goals<\/b><\/h3>\r\n

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Before diving into the property market, it\u2019s essential to think about what you want to achieve in retirement. Are you aiming for a comfortable nest egg, financial stability, or a steady passive income? Having a clear vision will help you make smarter real estate decisions that align with your future needs.<\/span><\/p>\r\n

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Your first step should be evaluating whether your current property supports your retirement plan. For instance, if you\u2019re living in a large home with high maintenance costs, it might be worth considering a smaller, more manageable property. On the other hand, upgrading to a property with higher appreciation potential could help you grow your wealth over time.\u00a0<\/span><\/p>\r\n

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Evaluate your current housing options<\/b><\/h3>\r\n

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For HDB owners, the potential for property appreciation can vary greatly. For instance, a brand-new executive apartment purchased in 2003 for S$355,000 might have appreciated to around S$785,000 by 2024. If you were 40 years old when you bought it, you\u2019d be 65 now. Selling it to downsize to a smaller 3-room flat (priced at around S$500,000 in a non-prime area) would leave you with limited funds for retirement, unless you\u2019ve saved significantly over the years.<\/span><\/p>\r\n

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This highlights why some homeowners explore upgrading to private property earlier in life to maximise their net worth and retirement savings.<\/span><\/p>\r\n

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Consider upgrading to private condominiums or landed units<\/b><\/h3>\r\n

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If you\u2019re in a position to afford it, buying a condominium can be a game-changer for your retirement plan. For example, a 3-bedroom condo in<\/span> Marine Parade<\/span><\/a>\u2019s <\/span>Cote d\u2019Azur<\/span><\/a> cost S$911,000 in 2002. Today, that same unit could fetch approximately S$2.72 million.\u00a0By selling this property at retirement age, you could purchase a resale HDB for about S$500,000 and still have over S$1.3 million in cash \u2013 providing a significant financial cushion.<\/span><\/p>\r\n

Check your affordability with<\/i><\/b>\u00a099.co\u2019s affordability calculator!\u00a0<\/i><\/b><\/a><\/strong><\/p>\r\n

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Similarly, <\/span>landed properties<\/span><\/a> have demonstrated even more substantial appreciation. A house on <\/span>Lilac Drive<\/span><\/a> sold for S$1.08 million in 2009, while similar-sized properties in the same area now sell for between S$3.9 million and S$5.1 million.<\/span><\/p>\r\n

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Investing in larger-ticket items when you\u2019re younger not only leverages your earning potential but also helps you build wealth over time, creating a sustainable retirement plan in Singapore.<\/span><\/p>\r\n

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But what makes a good investment?<\/b><\/h3>\r\n

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When investing in private condos, choosing the right property can significantly impact your financial returns. The potential for value appreciation is one of the most critical factors. Properties that steadily increase in value over time serve as a powerful tool for building wealth, helping you secure a robust retirement plan. Beyond that, strategic location plays a pivotal role. Condos situated <\/span>near MRT stations<\/span><\/a>, upcoming infrastructure projects, or future commercial hubs tend to appreciate more quickly due to heightened demand and accessibility.<\/span><\/p>\r\n

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Emerging districts are also worth considering for their growth potential. Areas like <\/span>One-North<\/span><\/a> and <\/span>Jurong Lake District<\/span><\/a>, which are earmarked for development, often see substantial increases in property value as they evolve into vibrant commercial and residential zones.\u00a0<\/span><\/p>\r\n

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Additionally, condos with unique selling points, such as rare layouts, unobstructed views, or proximity to major business districts, tend to hold their value better. They stand out in the market, attracting more buyers and renters, which makes them excellent long-term investments.<\/span><\/p>\r\n