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How to turn your HDB into your Retirement Plan

Singapore Property Agent | Andik Imran | Real Estate Dad

Retirement – most of us know about it and know that we have to plan for it, yet many of us do not.

We all have a vision of how we want our retirement to look like – be it travelling around the world, living comfortably in a fully paid house or even just having the luxury to do the things we enjoy.

But our vision can only come to life with a plan. Aside from the CPF payouts by the government, some of us may also prefer to invest in a solid portfolio of stocks or implement a financial plan to grow our financial assets. Yet, we often overlook one of the most important assets: our flat.

For those living in HDB flats, understanding the various ways of unlocking the value of your flat allows you to select the best option for a comfortable retirement. Read on to find out.

1. Sell your remaining HDB lease

Under HDB’s Lease Buyback Scheme (LBS), homeowners aged 65 and above will have the option of selling the tail-end of their flat’s lease to HDB and receive an LBS bonus up to $30,000 for a 3-room or smaller flat, $15,000 for a 4-room flat, or $7,500 for a 5-room flat. The scheme allows you to retain up to 35 years of lease, as long as you retain enough lease that can last all homeowners till the age of 95.

So how does the LBS work? Part of the net sale proceeds will be used to top up your CPF Retirement Account (RA). Your full RA savings will then be used to buy a CPF life plan, an annuity scheme that provides you with a lifelong monthly payout.

There are specific requirements, however. If you’re the sole owner of the flat, you’re required to use the proceeds to top up your RA according to the current age-adjusted Full Retirement Sum (FRS). For households with multiple owners, each owner will have to use their share of the proceeds to top up their RA according to the current age-adjusted Basic Retirement Sum (BRS).

To qualify for the LBS, the following conditions are to be met:

  • All owners must have reached the eligibility age of 65 or older
  • At least one owner must be a Singapore Citizen
  • Gross monthly household income of $14,000 or less
  • No concurrent ownership of second property
  • All owners have been living in the flat for at least 5 years
  • Have at least 20 years of lease to sell to HDB

2. Right-size to a smaller apartment

The Silver Housing Bonus (SHB) is an alternative for seniors who prefer to right-size to a smaller flat that requires less maintenance.

Homeowners selling their current home with Annual Value not exceeding $13,000 and are purchasing a 3-room or smaller flat can receive up to $30,000 cash bonus. To be eligible, you’ll need to top up $60,000 from your net sale proceeds into your CPF RA. If the top-up amount is less than that, a prorated cash bonus will be issued based on a 1:2 ratio. This means you will receive $1 in cash bonus for every $2 top-up made to your CPF RA.

In order to be eligible for the SHB, there are a few criteria to fulfil:

  • At least one owner is a Singapore Citizen aged 55 or above
  • Gross monthly household income is within $14,000
  • No concurrent ownership of second property
  • Right-sizing to a 3-room or smaller flat from a bigger flat, or private property with annual value not exceeding $13,000

Additionally, if you’re right-sizing to a resale flat to live near your children, you can also qualify for the Proximity Housing Grant of up to $20,000.

3. Rent out your flat or spare rooms

Have extra space to spare? Consider renting out your property or bedrooms for some passive income. According to the latest statistics, a 4-room flat can bring in an estimated $1,750 to $2,600 monthly – depending on the estate and flat type. Renting is a great way to utilise unused space while providing an affordable home for someone who’s in need of a place to stay. Win-win!

Before listing your unit for rent, make sure that you’re able to fulfil the minimum occupation period of 5 years (and yes, you need to be a Singapore Citizen). If you’re renting out your spare bedrooms in a 3-room or bigger flat, prior approval from HDB is required before the new tenants may move in.

It’s important to ask yourself these questions when planning for your retirement:

  1. How much do you need to retire?
  2. Where are you NOW?

Also, it will be worthwhile to take a step further to ask yourself:

  1. What property do you want to own at your retirement age?
  2. What is the Property Quality you want to own when you retire: Is it $500K or $5M?

If you answered $5M, then NOW is the time to consider asset progression.

Don’t simply retire from something, HAVE something to retire to.

Andik Imran

Engage a professional Singapore real estate agent

ANDIK IMRAN | BSc Business
CEA Reg No: R061801F

9450 8732
PropNex Realty Pte Ltd

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