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Here’s What Older Folks in Singapore Should Know About Their Homes as They Plan for Retirement

hdb plan for retirement silver housing bonus lease buyback scheme

Mark Cheng

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Retirement should not be something you think about only when you reach your golden years. Other than your CPF or cash savings or support from your children, your HDB flat can also be a helpful source of income if you plan properly.

Whether you are retired or thinking about retirement, it is useful to familiarise yourself with the various monetisation options available so that you can plan ahead.

In this article, we look at three ways that you can use your HDB flat to help you.

 

1. Right-sizing with the Silver Housing Bonus (SHB)

If you own a bigger flat and have no need for that much space in your retirement years, right-sizing is definitely a smart thing to do.

If you right-size to a 3-room or 2-room Flexi flat, you can apply for the Silver Housing Bonus (SHB) and receive up to a $20,000 cash bonus. You will have to use some of your net sale proceeds to top up your CPF Retirement Account (RA) and join CPF LIFE, but you will also receive additional monthly income for life. You can retain the balance net sale proceeds in cash.

Take for example Mr and Mrs Tan, who are staying in a 3-room flat in Bedok and would like to right-size to a 2-room Flexi flat. Here’s how they could benefit*:

Silver Housing Bonus (SHB)

*This example assumes that the couple has met all the eligibility conditions. Click here to find out more about the eligibility conditions.

Better yet, if you are buying a resale flat to live near your children (within 4km radius), you can enjoy an additional Proximity Housing Grant (PHG) of $20,000.

Buying a new 2-room Flexi flat from HDB is also a good choice as it is designed with seniors in mind, with senior-friendly fittings and a choice of lease length options to improve affordability. And your chances when you ballot for the flat is better if you are buying one near your current home or your married children, under the Senior Priority Scheme.

Click here for an estimate of how much you can get by right-sizing with the Silver Housing Bonus. 

 

2. Lease Buyback Scheme (LBS)

For those of you who prefer to stay in your current flat, and are living in a 4-room or smaller flat, you can also consider monetising your flat through the Lease Buyback Scheme.

Essentially, you sell the tail-end lease of your flat back to HDB and retain sufficient lease to cover the youngest owner till he/she is at least 95 years. If you stay in a 3-room or smaller flat, you can get a cash bonus of up to $20,000, and if you stay in a 4-room flat, you can get a cash bonus of up to $10,000. You will have to use some of your proceeds to top up your CPF Retirement Account (RA) and join CPF LIFE, but you will also receive more monthly income for life. You can retain the balance proceeds in cash.

If you stay in a 3-room or smaller flat, you can get a cash bonus of up to $20,000. If you stay in a 4-room flat, you can get a cash bonus of up to $10,000.

Take for example Mr and Mrs Tan, who is staying in a 4-room flat in Ang Mo Kio with a remaining lease of 65 years. By selling part of their lease back to HDB, they can get proceeds of $195,700, of which*:

Lease Buyback Scheme (LBS)

*This example assumes that the couple has met all the eligibility conditions. Click here to find out more about the eligibility conditions.

Many people are reluctant to sell their flats because they have a strong emotional attachment to their homes. With this scheme, you can continue staying in your flat whilst boosting your income stream in your retirement years!

Not sure how much you can get from LBS? You can get a simple estimate here.

 

3. Renting out bedrooms/whole flat

If you prefer to stay in your current flat and have spare bedroom(s), you can also consider renting them out.

Of course, you may also rent out your whole flat instead if you are moving in with your family to be closer to them.

Not sure how much rent your flat can fetch? Click here to find out the median rent of flats in your estate.

 

Conclusion 

Being savvy about using your house to bolster your retirement income is one way to improve the quality of your retirement life, allowing you to enjoy it with family and friends instead of worrying about money.

Visit https://www.mnd.gov.sg/yourhousingjourney/ to learn more about how you can monetise your home.

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Mark Cheng

I rant and rave a lot, but when I'm not busy doing that, I'm managing the content for MoneySmart. I love Singapore, but I also believe in helping it to improve bit by bit, and that's where MoneySmart comes in. Have some thoughts? Drop me an email at [email protected]