Singapore’s elderly will soon benefit from a government-led initiative to help them make better use of their money in their golden years by moving to smaller homes.
Called the Silver Housing Bonus, S$20,000 will be given to older Singaporeans who wish to sell their homes and shift to 3-room or smaller HDB flats.
"Many of our senior citizens are in fact keen to do so – the great popularity of our Studio Apartments speaks for itself. It is not just a desire to unlock their savings, but their apartments are practically designed for them," said Finance Minister Tharman Shanmugaratnam, in his Budget 2012 announcement.
The Silver Housing Bonus will see the government providing S$15,000 in cash and $5,000 to the CPF accounts of the elderly. To benefit from the scheme, homeowners will use the proceeds from the sale of their previous homes to top their CPF savings up to the prevailing Minimum Sum. All amounts above the Minimum Sum can be withdrawn in cash, and the government expects many to be able to do so.
As an example, Mr Tharman said: "Suppose we have a retiree couple who each had S$10,000 set aside in their Retirement Accounts when they turned 55. They decide to move from a 3-room flat to a Studio Apartment. That gives them net proceeds of S$250,000. The proceeds will go into their CPF LIFE. But because they will now exceed the Minimum Sum, they take out S$8,000 in cash. Together with the S$15,000 cash from the Silver Housing Bonus, they get S$23,000 in total. Most important, they also get a much bigger income for life from CPF LIFE – an additional $1,200 per month."
Meanwhile, seniors who move from a 4- or 5-room flat to a Studio Apartment would benefit greatly, receiving more than five times as much upfront in cash.
To complement the Silver Housing Bonus, the government will also enhance the Lease Buyback Scheme. This is another way in which older Singaporeans can get money out of their homes – by selling part of their lease back to the government.
To make the Lease Buyback Scheme more attractive, it will also double the incentive from S$10,000 to S$20,000. Of this, S$15,000 will be paid in cash – a similar quantum to the Silver Housing Bonus.
"We will also help them keep some of their cash proceeds. Unlike the current scheme, where all proceeds must be used to purchase a CPF-LIFE plan, participants can now receive in cash the proceeds that are above the prevailing Minimum Sum," noted Mr Tharman.
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