Automatic vs Manual Transmission: Turbo-boosting your pension

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When it comes to planning for our retirement, we have two broad choices – do it ourselves or trust someone else to. It’s a lot like driving a car - you can pick a manual transmission or an automatic one.

Brandan Chen

Financial Planner

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Automatic is the easy option, letting the car change gears for you while you just control the speed. When it comes to planning your retirement, automatic might mean handing over a portion of your salary each month to the CPF and hoping it pays out enough when you retire.

Manual on the other hand, puts you in more control. When you change gears yourself you are more in control of the car and your savings. You choose where your money goes, and when you want to reach your destination. Yes, manual takes a bit more effort than an automatic, but ultimately it puts you are in the driving seat.

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Choosing the right car

The CPF is a good starting point. You could say it was a nice family sedan. It’s familiar, easy to drive and the main mode of transport for retirement for many Singaporeans. But what guarantee do you have that it will be an enjoyable and comfortable ride in retirement? While payouts vary according to how much you contribute, you can expect to receive income ranging from $700 to $2,000 a month. That may not be enough to lead the sort of lifestyle you want in your golden years, cruising down the highway of life.

Fuel in the tank

So how much do you need? A general rule of thumb is to aim for 60%-70% of your current income. So if you are currently earning $8,000 a month, then you should target an income of about $5,000 a month to live on once retired. Of course, this is just a ballpark figure but it gives you something to work towards. You could look at it another way – work out your currently monthly outgoings and predict what these will be in retirement. Include utility/phone bills, food expenses, transport and entertainment as your basics. It’s very hard to predict what medical costs you may have which is why medical expenses insurance makes sense. Plus, you may want to do some travelling which is also hard to budget for in advance.


Basically, the more money we put in now, the more luxurious the ride in retirement. In some cases, taking out a separate retirement plan will provide very handy income to supplement your CPF Life income – call it turbo-charging the sedan. If you start your retirement savings plan early, that gives you a much bigger budget to upgrade to a new car and travel in style. For example, at age 40, you saved $2,066 a month for 20 years into Manulife Retire Ready. That would give you a guaranteed monthly income of $3,000 for 25 years (from age 65-90). On top of that, there is an additional monthly income and a non-guaranteed cash bonus, which could further boost your income.

Road map

Retirement carries a certain amount of uncertainty. The amount you think you need could easily change. In fact, most of us underestimate how much income we do need once we stop working, which creates a savings gap that is hard to make up. According to a survey by the Singapore Management University’s Centre for Research on the Economics of Ageing, one in five females sees herself in a full-time role past age 70 and respondents were more likely to report that they expected to work past age 65 if they were male, low-educated, low-wealth, single, or healthy. The smartest option then is start saving for retirement as soon as possible. The average Singaporean only starts their retirement savings at 38 years of age, but the road of retirement is getting longer, as we live longer, so you need even more petrol in the tank.


This advertisement has not been reviewed by the Monetary Authority of Singapore. The information in this article does not necessarily reflect the views of Manulife (Singapore) Pte. Ltd. All stated information, including external links, are general information and does not constitute or form any recommendation of insurance plan. Certain information in this article may be taken from external sources, which we consider reliable. We do not represent that this information is accurate or complete and should not be relied upon as such.

This article is for your information only and does not consider your specific investment objectives, financial situation or needs. We recommend that you seek advice from a Manulife Financial Consultant before making a commitment to purchase a policy.