Talking Point >>> Is your CPF enough for retirement?

[Enye]

On 1/9/2024 at 8:16 PM, TangoCharlie said:

Here is what I did to shield SA and clean out OA. All steps were done online. 

1. Shield SA. 10 days before birthday, bought Nikko short term fund. Do note that past top ups cannot be invested.

2. Withdraw OA cash. Using Paynow is instant. Max 200k daily. Default level was much lower and took a day for the revised limit to take effect. 

>My CPF/ retirement/ withdraw for immediate retirement needs

 

3*. Unshield SA. Sell Nikko.

4#. Withdraw CPFIS investments. Means closing CPFIS account and affect both investments using CPF OA and SA. Agent bank (in my case DBS) requires a physical form (CPF S15 form) to be completed. For OA investments, Agent bank upon receipt of the completed form will then  liaise with CDP and UT distributor to effect the transfer/conversion. CPF board handles SA investments similarly. 

>My CPF/ investments/ account details/ withdraw investments

 

5. Withdraw discounted SingTel shares. CDP effected it in 4 working days. 

>My CPF/ investments/discounted SingTel shares/ withdraw your shares

 

*I did it after step 4 which was a mistake! The Nikko fund (For SA shielding) was converted to cash holdings (in 3 working days). I caught it early and CPF board reinstated it as SA investments after I appealed (in 2 working days). Heng ah. 

 

#The first physical form was lost in mail mysteriously. After I feedback to CPF, finally received the second one 3 weeks after I submitted my online request. I was told the form is available at the agent bank branches. So pop by the bank if you have a timeline to meet. 

 

Now that I have sent in the S15 form, the conversion of investments to cash holdings should occur soon. 

 

Overall very satisfied with my interactions with CPF.

 

ps. I made a phone appointment for a retirement planning service instead of visiting a CPF branch before turning 55. Useful to guide me through the steps.

thanks for sharing the process boss...

step 2 withdrawal of OA is the remaining after transfer to RA?

 

[TangoCharlie]

On 1/10/2024 at 9:59 AM, Enye said:

thanks for sharing the process boss...

step 2 withdrawal of OA is the remaining after transfer to RA?

 

Yup.  Tiagong strikes midnight, RA will be created and monies will be transferred there. 

When I woke up on my birthday, money in RA already. 

[Drive]

On 1/9/2024 at 8:16 PM, TangoCharlie said:

Here is what I did to shield SA and clean out OA. All steps were done online. 

1. Shield SA. 10 days before birthday, bought Nikko short term fund. Do note that past top ups cannot be invested.

2. Withdraw OA cash. Using Paynow is instant. Max 200k daily. Default level was much lower and took a day for the revised limit to take effect. 

>My CPF/ retirement/ withdraw for immediate retirement needs

 

3*. Unshield SA. Sell Nikko.

4#. Withdraw CPFIS investments. Means closing CPFIS account and affect both investments using CPF OA and SA. Agent bank (in my case DBS) requires a physical form (CPF S15 form) to be completed. For OA investments, Agent bank upon receipt of the completed form will then  liaise with CDP and UT distributor to effect the transfer/conversion. CPF board handles SA investments similarly. 

>My CPF/ investments/ account details/ withdraw investments

 

5. Withdraw discounted SingTel shares. CDP effected it in 4 working days. 

>My CPF/ investments/discounted SingTel shares/ withdraw your shares

 

*I did it after step 4 which was a mistake! The Nikko fund (For SA shielding) was converted to cash holdings (in 3 working days). I caught it early and CPF board reinstated it as SA investments after I appealed (in 2 working days). Heng ah. 

 

#The first physical form was lost in mail mysteriously. After I feedback to CPF, finally received the second one 3 weeks after I submitted my online request. I was told the form is available at the agent bank branches. So pop by the bank if you have a timeline to meet. 

 

Now that I have sent in the S15 form, the conversion of investments to cash holdings should occur soon. 

 

Overall very satisfied with my interactions with CPF.

 

ps. I made a phone appointment for a retirement planning service instead of visiting a CPF branch before turning 55. Useful to guide me through the steps.

Thanks much for sharing.

Can I clarify:

a) Step 2 onwards is after age 55 birthday?

b) What is the purpose for step 4 & 5?

[Drive]

On 1/10/2024 at 8:05 AM, RadX said:

ya but with rates at 3.74, quite ok la

Most impportantly, the SA shd be protected for that 4% interest

means you use T bills to shield SA? How's the process like? Need to go to bank physically? 

Also, how long before you bough the Tbills before you 55 birthday?
 

Thanks for sharing

[RadX]

Got 2, 6 month or 12 month.

 

^ month rates higher.  Yiu lose a bit, but I have hedged with OA, and avg of 3.88%, so short term no have the 4%

 

@TangoCharlie anything to add on?

[Ct3833]

On 1/10/2024 at 7:55 AM, RadX said:

Shielding done

 

rooster!

 

considering the options to leave OA cash there ir continue w the TBill ladder

 

On 1/10/2024 at 8:01 AM, TangoCharlie said:

Just that you lose at least 1 month interest every time you buy T bill. That's why I  withdrew all out. 

The diff between keeping money in OA to buy T bills vs  withdrawing from  OA as cash to  buy T bills is that,  when one day the T bills and  FD drops below OA interst rate, one can still keep the money in OA to earn the OA interst, this has happned for years in the past, so it may/will happen again. The decision will be whether one is prepared to lose that 1 month back and forth by buying T bills through OA, or want to draw out all and risking not knowing where to park the extra cash when interest rate drops. One can only plonk so much into stock market, not risking  all your blood and sweat money.

Edited January 10 by Ct3833

[Mkl22]

On 1/10/2024 at 7:55 AM, RadX said:

Shielding done

 

rooster!

 

considering the options to leave OA cash there ir continue w the TBill ladder

I might shield OA as well. Especially if going forward the interest rates will drop below 2%, then can top up RA with cash and then return OA once T bills mature. Anyway can anytime take out from OA. 
might as well squeeze some interest back from Ah Gong. 😂

I’m not convinced of ERS. Even FRS I’m so so. Might do a BRS and leave the rest for the money in OA. 
 

have not yet done the math of FRS using OA or leaving the money in OA via shielding and use cash to top up to BRS. 

Edited January 10 by Mkl22

[Ct3833]

On 1/10/2024 at 10:45 AM, Mkl22 said:

I might shield OA as well. Especially if going forward the interest rates will drop below 2%, then can top up RA with cash and then return OA once T bills mature. Anyway can anytime take out from OA. 
might as well squeeze some interest back from Ah Gong. 😂

I’m not convinced of ERS. Even FRS I’m so so. Might do a BRS and leave the rest for the money in OA. 
 

have not yet done the math of FRS using OA or leaving the money in OA via shielding and use cash to top up to BRS. 

Seperate  the RA top up and OA consideration. Not everyone beleievs in RA, it is subjective.  But if  you believe in RA, then top up your RA with cash, keep the OA. That is my thoughts and what i did to max out RA to ERS for myself and my wife using cash . 

Edited January 10 by Ct3833

[RadX]

On 1/10/2024 at 10:58 AM, Ct3833 said:

Seperate  the RA top up and OA consideration. If you believe in RA, then top up your RA with cash, keep the OA. That is my thoughts and what i did to max out RA to ERS for myself and my wife using cash . 

agree..that is the most ROI one can gather

[Mkl22]

On 1/10/2024 at 10:58 AM, Ct3833 said:

Seperate  the RA top up and OA consideration. Not everyone beleievs in RA, it is subjective.  But if  you believe in RA, then top up your RA with cash, keep the OA. That is my thoughts and what i did to max out RA to ERS for myself and my wife using cash . 

If one is still working after 55, then topping up RA slowly also give tax rebates. But I know the slower top up affects the total monthly payout in the end but not sure the maths on it. Maybe you save more tax than the additional you get via payout. 

[TangoCharlie]

On 1/10/2024 at 10:24 AM, Drive said:

Thanks much for sharing.

Can I clarify:

a) Step 2 onwards is after age 55 birthday?

b) What is the purpose for step 4 & 5?

a. Yes

b. Because withdrawal after 55 will take from SA first. And I believe there a good chance to beat the OA rate. 5. Itchy backside since it's in SA. No need to do 

On 1/10/2024 at 10:28 AM, RadX said:

Got 2, 6 month or 12 month.

 

^ month rates higher.  Yiu lose a bit, but I have hedged with OA, and avg of 3.88%, so short term no have the 4%

 

@TangoCharlie anything to add on?

Can consider shielding with funds eligible under CPF SA. I sold my Nikko short term fund with 0.6% gain over a month. Of course you may end up losing as well. 

On 1/10/2024 at 10:45 AM, Ct3833 said:

 

The diff between keeping money in OA to buy T bills vs  withdrawing from  OA as cash to  buy T bills is that,  when one day the T bills and  FD drops below OA interst rate, one can still keep the money in OA to earn the OA interst, this has happned for years in the past, so it may/will happen again. The decision will be whether one is prepared to lose that 1 month back and forth by buying T bills through OA, or want to draw out all and risking not knowing where to park the extra cash when interest rate drops. One can only plonk so much into stock market, not risking  all your blood and sweat money.

Conclusion is I have a much more modest cash savings than many here. Hahaha.

I am planning to max RA to ERS also in due course. Earlier if I cannot beat OA rate. Let's see.

I would encourage all to go for the highest CPF life if you can afford it. If suay suay unable to benefit from it, think as giving back to society. 

Edited January 10 by TangoCharlie

[Mkl22]

a different school of thought based on some basic calculations. I'm not a finance guy so might not be right. 😁

but i just put it up here for discussion. some of the info is obtained from hardwarezone forums.

1. based on mof annex BRS payout in 2022 is $850 and FRS is $1570. https://www.mof.gov.sg/docs/librariesprovider3/budget2022/download/pdf/annexe3.pdf

2. thus a diff of $720/mth.

3. if we leave the extra 96k needed to hit FRS from BRS in SA and let it accumulate interest at 4% from 55 to 65, we get approx $142k. given that BRS and FRS are also locked up from 55 to 65.

4. we then draw down $720 each month from SA. based on this website it says it can last for 26years. thus 91years old. https://www.360financialliteracy.org/Calculators/Savings-Distribution-Calculator

5. however if we look at CPF life, after 80years old or so, if you die, there is no money left. whereas in the above calculator at about the 15year mark, there is about $79k left to your family.https://dollarsandsense.sg/complete-guide-understanding-benefit-illustration-cpf-life-payouts/

6. the flip side is that if you live longer than 91, you get back more.

 

if you can manage with $260 less per month. the principal of $142k remain in SA. meaning you draw down $460 a month instead of $720.

 

disclaimer.... above might be wrong. feel free to correct.

Edited January 10 by Mkl22

[Ginyu]

On 1/9/2024 at 5:45 PM, Throttle2 said:

 

 

 

My properties have been fully paid since 2013.  Got no mortgage.  😂

You high flyer, saki, for low flyer still paying since 1993🤣

[Ginyu]

On 1/9/2024 at 5:45 PM, Throttle2 said:

 

 

 

My properties have been fully paid since 2013.  Got no mortgage.  😂

You high flyer, saki, for low flyer still paying since 1993. Like they say work till mati🤣

[Throttle2]

On 1/10/2024 at 4:10 PM, Ginyu said:

You high flyer, saki, for low flyer still paying since 1993. Like they say work till mati🤣

I frugal, save like mad so pay off earlier, take the burden away.  Even in 2019, i forked out another $1mil in cash to rebuild my house.  Didnt want to take any loans, so maintained my debt free status with no burden….

Simple life lah.

[Volvobrick]

On 1/10/2024 at 3:33 PM, Mkl22 said:

a different school of thought based on some basic calculations. I'm not a finance guy so might not be right. 😁

but i just put it up here for discussion. some of the info is obtained from hardwarezone forums.

1. based on mof annex BRS payout in 2022 is $850 and FRS is $1570. https://www.mof.gov.sg/docs/librariesprovider3/budget2022/download/pdf/annexe3.pdf

2. thus a diff of $720/mth.

3. if we leave the extra 96k needed to hit FRS from BRS in SA and let it accumulate interest at 4% from 55 to 65, we get approx $142k. given that BRS and FRS are also locked up from 55 to 65.

4. we then draw down $720 each month from SA. based on this website it says it can last for 26years. thus 91years old. https://www.360financialliteracy.org/Calculators/Savings-Distribution-Calculator

5. however if we look at CPF life, after 80years old or so, if you die, there is no money left. whereas in the above calculator at about the 15year mark, there is about $79k left to your family.https://dollarsandsense.sg/complete-guide-understanding-benefit-illustration-cpf-life-payouts/

6. the flip side is that if you live longer than 91, you get back more.

 

if you can manage with $260 less per month. the principal of $142k remain in SA. meaning you draw down $460 a month instead of $720.

 

disclaimer.... above might be wrong. feel free to correct.

Very hard to beat 91 de. That's way above average lifespan.

Unless one is really really bad and ill disciplined with money, leaving as much as possible in SA makes more sense. Risk free 4ish % and can take out like ATM. That's what I have done. SA > RA. 

Edited January 10 by Volvobrick

[Mkl22]

On 1/10/2024 at 4:17 PM, Volvobrick said:

Very hard to beat 91 de. That's way above average lifespan.

Unless one is really really bad and ill disciplined with money, leaving as much as possible in SA makes more sense. Risk free 4ish % and can take out like ATM. That's what I have done. SA > RA. 

the other negative about BRS is that you need to pledge property. unless you 100% sure you wouldn't sell, then not a problem.  cause if you sell you need to put back this 96k. not too sure how it screws with the final figures.

[Wt_know]

On 1/10/2024 at 4:32 PM, Mkl22 said:

the other negative about BRS is that you need to pledge property. unless you 100% sure you wouldn't sell, then not a problem.  cause if you sell you need to put back this 96k. not too sure how it screws with the final figures.

eitherway, the $96K is a must ... technically speaking, everyone is on FRS by default

the question is whether you want to commit upfront $96K in CPF RA

or ownself manage the $96K outside CPF with investment and whatsnot

dont forget, whatever you owe CPF, gotta pay back with accrued interests hor ...

same same no different except for those either cant meet FRS or got good use of $96K

 

Edited January 10 by Wt_know