My mom is 59 this year with the following balances in her CPF account:
OA: 8200
SA: 300
MA: 22500
RA: 930
If you could double check those balances, that'd be great. They look odd.
At age 55, by default, she claimed, she bought into the standard CPF life plan. To date, she has $10k in unit trust with UOB and about 10k in stocks purchased through CPFIS. She is holding about 20k in cash. I am giving her 500 a month. She does not have an integrates shield plan coz she thinks it's too expensive. What would you guys recommend she should do for retirement?
Wow. Assuming those numbers are accurate, she's in a tough spot.
OK, well, here's the basic formula:
1. Keep working and earning an income. If she's not working but able to work, then she should go back to work. She needs income, if at all possible, and she needs that income until at least age 65.
2. Unwind the unit trust and stock positions, and get those funds into her Retirement Account.
3. I would encourage her to transfer some or all of her OA and SA funds into her Retirement Account. As additional funds stream in from work, she should keep transferring them to her RA.
4. She should consider depositing at least $7,000 of her cash into her Retirement Account. (Notice a pattern?) Then another $8,000 in the Singapore Savings Bond as an emergency reserve, then the remaining $3,000 in day-to-day cash.
5. You should deposit that $500/month straight into her Retirement Account. You may qualify for tax relief.
....Get the Retirement Account up, as soon as reasonably possible, as high as reasonably possible -- "all hands on deck." CPF LIFE is going to be her sole source of income in retirement for the rest of her life, or at least darn near that, it would appear. That's the best available option. But it means she still has to "bridge" to age 65, at least, with income from work.
I was thinking of suggesting to her that she could either do a voluntarily top up into her all three accounts with the 20k or directly to her RA.
Straight into the RA, where they will earn 5% at present (since she still hasn't even maximized her bonus interest).
So far, to date, all her investments and stock picks are losing money. I wanted to convince her to liquidate her holdings.
Yes, that was a mistake I'm afraid. I agree. This isn't the time to fool around at age 59, so I'd exit those positions and get CPF LIFE nailed down as best as possible.
....If she's able to keep up this strategy and work until age 67, then start CPF LIFE payouts, that'd probably work out decently enough. The CPF LIFE payout plan decision is "interesting." There are going to be two basic choices in her situation, when the time comes:
(a) The Escalating Plan would be preferred, assuming she can live on the initial monthly amount. That'll take her through the rest of her life and combat inflation, so it should protect her real standard of living quite well.
(b) If she cannot live on the initial monthly amount in (a), then she'll have to take the Standard Plan. And then somebody (you presumably) will have to support her with progressively higher gifts as she ages, as inflation eats away the real value of her Standard Plan payouts.
If she owns her own home -- a HDB unit, notably -- then there are two more choices available:
1. She can (and should!) downsize if the unit she has now is bigger than she needs. Downsizing will liberate some capital -- some of which may be returned to her OA -- which can then be pumped into her Retirement Account for the lifetime retirement income she so badly needs right now.
2. She might also be able to tap into her home value via the HDB Lease Buyback Scheme.
As far as medical coverage, she's got MediShield Life, thank goodness. I don't think it's likely that she'll be able to afford anything more, and thus she should check herself into a public hospital C ward if she ever needs hospitalization. However, for the record, if her Retirement Account is growing nicely and quickly, she could consider getting NTUC Income's Enhanced Income Shield C plan, the only Integrated Shield plan in Singapore that's designed to cover public hospital B2+ ward and below. So that would cover her hospital stay at KK Hospital's B2+ ward, which is the most affordable air conditioned ward. I'm assuming that she doesn't have any pre-existing conditions that would exclude coverage. Her Medisave balance is decent -- the only slightly bright spot in this picture -- so she should be reasonably OK there. (And income from work will boost her MA some.) She should NOT get any riders for that C plan except the Assist Rider, maybe.