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What is the Silver Housing Bonus and is it Worth Considering?

As we all know, Singapore is facing an aging population. By 2035, it is estimated that around 32% of the population will be aged 65 and above. The median age is also expected to rise from 39.7 years old in 2015 to 53.4 years old in 2050. With more Singaporeans approaching their golden years, most would welcome some form of additional income for a meaningful retirement.

As most seniors would have grown-up children staying on their own, they can capitalize on their current property to supplement their retirement funds with the Silver Housing Bonus (SHB). Introduced by the HDB, the SHB allows seniors to right size their existing property by selling their current flat or private housing (annual value not exceeding $13,000) and buying a 3-room or smaller flat.

To qualify for SHB, each senior household is required to top-up $60,000 of their proceeds into their CPF Retirement Account (CPFRA) and join the CPF CPF Lifelong Income For The Elderly (CPF Life). The top-up amount required depends on the proceeds they receive and is capped at $60,000. Seniors will enjoy the maximum cash bonus of $30,000 if they top-up $60,000 into their CPFRA. If the top-up is less than $60,000, they will receive a pro-rated cash bonus based on a 1:2 ratio, i.e. $1 cash bonus for every $2 top-up made. CPF Life is a national longevity insurance annuity scheme that insures seniors against running out of their retirement savings, by providing them with a monthly payout no matter how long they live.

In order to be eligible for the SHB, at least one owner must be a Singapore citizen aged 55 or above, with a gross monthly income of not more than $14,000. The existing flat must meet the Minimum Occupation Period (MOP) or if it is a private property, the annual value must be $13,000 or less. They must also not own a second property.

For a clearer example, here are 2 scenarios of how seniors can enjoy the SHB.

Scenario 1:

Senior couple A are selling their 5-room flat in Yishun bought directly from HDB, and are right-sizing to a 2-room Flexi BTO flat in Sembawang. Based on their proceeds, they are required to top up $60,000 to their CPF RA. They will then be eligible to receive the maximum SHB of $30,000.

Source: HDB

Scenario 2:

Senior couple B are selling their 4-room resale flat in Choa Chu Kang and right-sizing to a 3-room resale flat in Bedok. Based on their proceeds, they are required to top up $35,000 to their CPF RA. They will then receive a pro-rated SHB of $17,500.

Source: HDB

So if you are a senior or planning ahead for your retirement and want to have a source of additional income during your retirement, the SHB is certainly worthwhile to consider. You right-size your property to suit your needs and requirements and enjoy a monthly payout for the rest of your living years.

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