Skip to main content

How to create regular income for yourself in retirement?

24 June 2022

Most of us dream about receiving a regular and consistent stream of income during our retirement years. But how achievable is this goal? The truth is, even if you do not enjoy the benefits of a well-funded employer pension scheme, such as those offered by the civil service, you can still enjoy an income with a prudent investment plan.


There are various types of payout strategies after retirement. Before selecting the investment vehicle that suits you best, consider the following factors:

  1. Individual risk tolerance
  2. Frequency of income
  3. Dividend/return rate (ratio of income to invested amount) and actual income received
  4. Liquidity of assets.

Stay invested and avoid idling assets

Let’s talk about the MPF first, which people do not immediately associate with regular income payments. Under normal circumstances, employees must wait until they reach 65 before withdrawing their mandatory and tax-deductible voluntary MPF contributions. While there is a legal age limit before you can withdraw from the MPF, it is not compulsory for those who have reached 65 to empty their MPF accounts.

In other words, the operation of MPF accounts is not directly related to the age of employees. If there are no special funding needs after retirement, employees can choose to keep the account and postpone withdrawal beyond age 65. This allows the funds in the account to remain invested and take advantage of potential capital appreciation and/or income opportunities.

Retirees with no employment income may be better suited to investments that generate monthly income (cashflow).  Some MPF trustees and fund companies currently offer income funds with a monthly dividend distribution feature. The share class of some retail funds withdraw from the principal to make monthly distributions and enhance the overall dividend rate.

Single stocks or bonds: tend not to pay monthly dividends and expose investors to concentration risk

If you belong to the fortunate group of landlords who do not have to deal with rogue tenants, then you will receive regular rental payments. As such, buying a property and leasing it to a tenant can indeed yield monthly payouts. Of course, before entering into any investment, you are encouraged to do your homework, as taxes relating to rental income may significantly undermine the actual payment. Furthermore, real estate as an asset is relatively less liquid, implying that you may not be able to quickly generate cash for a rainy day.

Two other popular payout tools include equities (such as the high-dividend stocks with robust businesses) and bonds (such as government bonds or inflation-linked bonds). However, both are more liquid, with dividends usually paid quarterly or semi-annually. Therefore it might not suit those retirees looking for monthly funds.

In addition, retirees have to bear higher concentration risk when investing in a single stock or bond, as issuers may be unable to deliver payouts due to different factors, such as financial conditions or regulatory authorities’ requests. Comparatively speaking, a fund contains a basket of holdings, offering better risk diversification while enjoying liquidity benefits similar to equities.

It should be noted that investment vehicles offering payouts do not only appeal to retirees, they are also suitable for those investors waiting for the right opportunity to realise specific financial goals and can utilise idle cash through active, flexible asset allocation for some income.


  • How to boost your income with these options

    With rising inflation, earning cash deposit rates may not be enough. We look for sources of income. Discover options to boost your income before it's too late!

    Read more
  • Dollar cost averaging: An easier way to navigate volatile markets

    If investors wish to reduce volatility and benefit from long-term growth when the markets move up and down, the passive strategy of dollar cost averaging may be a feasible choice.

    Read more
  • Cash is king?

    Amid volatile market conditions and higher interest rates, seeking security by burying your savings in a deposit account is tempting. As the saying goes, “cash is king”. Or is it?

    Read more
See all
  • 3 FAQs amid volatile market (MPF members version)

    2022 was an exceptionally volatile year for financial markets. With equities and bonds falling in tandem, shrinking retirement portfolios could trigger plenty of questions from employees. Let’s debunk some common investment myths and discuss ways to navigate market volatility.

    Read more
  • How to create regular income for yourself in retirement?

    To create a regular and consistent stream of income during our retirement years, you need a prudent investment plan. Check out the various types of payout strategies.

    Read more
  • Plan for retirement with inflation in mind

    To live comfortably in sliver age, your goal should not be merely to accumulate assets worth a nominal value. Inflation should also be considered to ensure an investment appreciates over the years, so its real purchasing power can satisfy your retirement needs.

    Read more
See all