Those who want to but don’t know how to plan for a retirement income should make a trip to the Central Provident Fund Board first because doing so can save them from buying unsuitable private products that can end in losses.

On average, a few hundred people will end up filing claims against financial institutions annually after they buy risky investments that cause them to lose their savings.

What’s worrying is that many of them are retirees and unsophisticated customers who are misled into buying more expensive and less profitable insurance plans, when they can gain more with CPF LIFE, the Singapore Government-backed lifelong annuity plan that is much cheaper and yet pays substantially more.

For instance, a retiree recently paid over $600,000 and borrowed $1.4 million to buy insurance products worth over $2 million but ended up with big losses because the investment could not cover the loan interest, let alone pay for his retirement.

As a comparison, those who hit 55 in 2026 can top up to the Enhanced Retirement Sum (ERS) of $440,800 for CPF LIFE, which will pay about $3,400 for life from 65. 

Those who do so can receive $408,000 by age 75, $816,000 by age 85 and over $1 million if they are blessed with longevity genes and live beyond 90. There are no hidden costs or risks for the payout because it is guaranteed by the Government.

Here are three things you should know before you sign up for any investment plans.

Many people end up buying unsuitable private products because they are misinformed by naysayers who cast aspersions on CPF LIFE by claiming that it serves to only “lock up” your money.

The reality is all annuity products need a minimum holding period for them to generate profits so you can receive more than your initial sum.

Those reaching 55 in 2026 are told upfront that if they put up the ERS for CPF LIFE, they will get up to $3,400 monthly in 10 years’ time. Going by this schedule, they will get back their initial capital soon after 75, and thereafter every monthly payout is the profit for their investment.

As a comparison, the product the retiree bought bound him for life because the loan will be paid only when he dies. He chose to terminate the plan earlier, but doing so before the stipulated holding period resulted in him being slapped with high penalties.

His payouts were not guaranteed and, as it turned out, he ended paying interest costs instead of receiving any payment.

Don’t be enticed by sales pitches that promise huge payments because these claims mean nothing unless the numbers are clearly reflected in the documents that you sign.

Vendors may pass out brochures that contain the numbers, but these documents carry no weight unless such numbers are guaranteed in the main agreement.

As you are investing for your retirement, you owe it to yourself to make sure the payment terms are clear and there is a signed schedule you can use to hold the vendor to it.

If the vendor cannot even give you such an assurance in writing, it is a sign that you should just walk away from the deal.

The worst thing that can happen is to discover that your investment fails to deliver in your old age, as it would then be a huge burden to seek recourse.

Imagine being sold a $200,000 financial plan that pays you $600 every month until the end of life.

At first glance, this may sound like a good deal, but a simple calculation will reveal that if you just keep the same amount in your own bank account and spend $600 from it every month, it will take you almost 28 years to finish spending your money.

You can also make your savings last longer if you keep the bulk of it in fixed deposits, even as you spend a small portion every month.

So doing simple maths before you sign any deal will provide a good insight into whether it still pays to invest in the deal if it takes too long to just recoup your capital.

If the product’s returns are too complicated for you to even calculate, it is also a sign for you to walk away because it may be a risky product that is unsuitable for you.

So if you are looking for a risk-free retirement plan, choose only those that come with a transparent and guaranteed payout schedule, like CPF LIFE, which you can check easily with your calculator.