After CPF Life, any remaining amount you need can come from supplemental retirement income streams. For investment properties and rental income, you may not have to worry about drawdown as they are typically recurring. However, how much rental income you receive may fluctuate depending on economic conditions.
You can also rely on retirement plans providing regular payouts to supplement CPF LIFE. Such plans typically allow you greater flexibility in staying invested even during your drawdown phase, as well as starting your drawdown from an earlier age.
With AIA Platinum Retirement Elite, you can choose to start your desired monthly retirement income from age 50 to 75, as well as combat inflation with a choice to increase yearly payouts between 0% and 5%.
AIA Platinum Retirement Elite allows you to invest cash or Supplementary Retirement Scheme (SRS) funds in three portfolios depending you’re your risk appetite, managed by leading global asset managers BlackRock, Wellington Management and Baillie Gifford, that have close to US$9 trillion in combined assets under management.
If you wish to drawdown from a personal investment portfolio of stocks and bonds, you can use a common rule of thumb that advocates you to withdraw about 4% of the portfolio amount each year.
At the same time, you do not need to liquidate your entire investment portfolio once you retire either. As you may enjoy a relatively long retirement, with those aged 65 today expected to live another 21 years, part of your retirement funds can still be ploughed in lower-risk investments to continue growing.
While planning your drawdown, ensure you also keep your emergency savings fund as well as build another pot of cash buffer to cushion against sequence risk – the risk of a market crash just when you are about to start withdrawing from your investments. Instead of liquidating your investments when prices are heavily depressed, you can tap into this cash buffer first.