Can I retire with just Fixed Deposits or Treasury Bills in Singapore?

By Racheal Chin

As a Singaporean looking toward retirement, the temptation of Fixed Deposits (FD) and Treasury Bills (T-bills) is understandable. Both instruments are safe, low-risk, and backed by regulated financial institutions and the government. But the real question is, are they enough to retire on?

UNDERSTANDING FIXED DEPOSITS AND TREASURY BILLS

Fixed Deposits are time-based savings accounts that offer attractive guaranteed interest over a fixed term, as short as 6 months to 12 months, interest rates ranging from 2.15%p.a. to 2.45%p.a. (capped at $19,999) depending on the tenure term and amount (as of June 2025).

Treasury Bills are short-term debt securities issued by the Singapore Government, typically with 6-month or 1-year durations. They are considered almost risk-free and yield between 2.05%p.a. and 2.99%p.a. (as of June 2025).

Both instruments are short-term, hence when they mature, you may not be able to “reinvest” at the same or higher rates as they are primarily determined by global interest rate trends (especially U.S. Fed rates) and the Singapore Overnight Rate Average (SORA). You may also not get the full amount you apply for, there’s always a cap especially if demand is high.

THE APPEAL: STABILITY AND SECURITY

If you are approaching retirement age, these instruments may seem like an ideal choice as they do preserve capital, provide predictable interest income and are easily accessible and liquid. This makes them attractive for retirees who are extremely conservative and want peace of mind. However, there are limitations if solely depending on them.

Limitation 1: Inflation Risk

Singapore’s average inflation rate is around 3% annually. If your FD or T-bill yields at 2.5% and inflation is at 3%, your real return is barely catching up with inflation. Over 20 to 30 years of retirement, inflation can significantly erode the value of your money.

Limitation 2: Longevity Risk

Many Singaporeans underestimate how long they will live. With life expectancy reaching 84.5 years and rising, your retirement portfolio may need to last 25 years or more. While FDs and T-bills provide safety and guaranteed returns, they typically don’t keep up with rising inflation, meaning your money may grow in nominal terms but your purchasing power may still decline over time.

Limitation 3: Renewal risk

It refers to the uncertainty of being able to relocate your funds at the same or better interest rate once your existing FD or T-bill matures. It may be a source of predictable passive income, but due to interest rate fluctuations, you may renew at prevailing market rates after the existing placement matures. Even if the rates are high now, you are unable to lock in those rates for the long term. If you are solely relying on both instruments to maintain your living expenses, you would probably either have to decrease your expenses or dip into you savings, which eventually will deplete your nest egg.

Besides that, both FDs and T-bills don’t provide monthly payouts; FDs pay at maturity and T-bills pay upfront which may not suit retirees who need steady monthly cash flow for expenses.

A BETTER APPROACH: BLENDING SAFETY WITH GROWTH

Rather than relying solely on FDs and T-bills, consider a core-satellite strategy:

• Core (Safety):Use FDs, T-bills, and CPF LIFE for capital preservation and predictable income.
• Satellite (Growth):Allocate a portion to Annuities, Unit Trust and Investment Linked Policies (ILP) to beat inflation and potentially grow your capital.

This approach balances stability and growth, ensuring your retirement plan remains sustainable.

CONCLUSION: SAFE ISN’T ALWASY SUFFICIENT

While it is tempting to park all your retirement funds in fixed deposits or T-bills for peace of mind, the strategy may not be sufficient in the long run. They serve as a strong foundation for emergency funds or short-term needs, but relying solely on them is risky in a different way, the risk of running out of money or losing purchasing power.

If you’re unsure, speak with a licensed financial adviser representative to explore diversified retirement strategies tailored to your goals and risk tolerance. In retirement, the goal isn’t just to be safe, it’s to stay secure.

The article above should not be taken as financial advice. Investments and their corresponding products have risks. Please seek advice from a financial adviser representative before making any investment decisions. In the event that you choose not to seek advice from a financial adviser representative, you should consider whether the investment or product in question is suitable for you.

Racheal Chin

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