Personal Finance
$1.5m in CPF savings by doing nothing henceforth.
By A Singaporean Stockmarket Investor (ASSI)  •  February 3, 2019
Reader says... "I know you think of CPF as bonds in your portfolio and you want to grow it to reduce portfolio risk and volatility but what if you are unable to do it one day?  "Do you have back up plan?" AK says... "Although I feel that I should be able to continue to do Voluntary Contributions to my CPF account yearly to reach the Annual Contribution Limit, there could be a year or two or a few when I might not be able to do so. "After all, we cannot know what might happen in future and there could be times when my passive income takes a hit or when my expenses spike for whatever reason. "It is a situation that I would have to accept but it is not a situation that I would need a back up plan for. "I will blog about this and you can...
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By A Singaporean Stockmarket Investor (ASSI)
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One response to “$1.5m in CPF savings by doing nothing henceforth.”

  1. Fred says:

    Hi AK

    I have been reading your blogs for some years now. I pick up many tips from you. Thank you and Congrats to your fat CPF.

    I’m 64 and retired since 60. I will defer my CPF payout to 70..and get defaulted. My CPF RA is now at ERS level. Recently, I played with the CPF RSS calculator on my estimated payouts for 65 to 70. I was shocked to see the numbers on payout being substantially reduced. On the front page table of CPF website, when one has ERS at 55, the payout at 65 will be $1800-2000. This time my numbers is reduced to $1350! I tried to understand what causes the change. Playing with the calculator on RSS, I realise that CPF is estimating the payouts by prolonging the payout period. I believe the answer was based on current lifespan of Sporeans at age 80/85 based on IMF statistic. This means the payout period is 20 years for whatever the RA. Some kiasu ppl in CPF Board decides it should not be so.
    and decide to prolong the period So my estimate from the calculator which I input my RA as ERS, and
    Payout to be at 65, show $1350 for 32 years! This mean my lifespan as 97 years old ( 65+32). When I input into the calculator for payout at 66, the lifespan reduces. It continues when I input at 70, my expected lifespan drop to 92? Absurd! Payout period of 20 years and 32 years will reduce the payout sum tremousdously.

    Recently thru my chat group, someone (65) who had RA of $157k, will get only $570 monthly. Some six months ago, a CPF officer told him it is about $1200 per month. At $157k, close to FRS with payout of $1300-1400pm, to be reduced to $570 pm! Even the fine prints in CPF website said the final figures will be slight and gradual, but this is BIG and Shocking. When queried, CPF staff told him it is policy matter. It is also stated that one has the right to opt for RSS or CPF Life scheme.

    Even if I opt to defer my payout to 70, I will still elect RSS instead of CPF Life. I know I don’t have a long lifespan as seem from my descendants. I prefer my money remain with CPF RA to earn max interest instead of taking out a lump sum to join CPF Life. Once this sum joins the Life Scheme, it gets no interest but of course you are guaranteed payouts for life( I have shown you, its a much lower sum now). With RSS, my money remains in CPF and generating 4% interest annually.

    Sorry, AK I can only reach you thru here not at your site.

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