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Old 06-09-2019, 12:06 PM   #5
lifeafter41
Master Member
 
Join Date: Oct 2016
Posts: 4,360
And how would you do that? Via repayment of OA dollars used for housing?


Well, if you could do that, here's the comparison:

(a) OA is paying 2.5% interest. From age 55 you can withdraw those OA dollars on demand, although you must first withdraw any remaining 4% interest earning dollars from your Special Account in order to start withdrawing OA dollars. (There are some possible, only partially effective SA "shielding" techniques for such withdrawals.) OA dollars can be invested via the CPF Investment Scheme-OA if you wish.

(b) RA is paying 4% interest, much more than 2.5%. From age 55 until CPF LIFE payout start, which can be as late as age 70, you have the option to withdraw some number of dollars from your Retirement Account. (Exactly how many dollars primarily depends on whether you make a property pledge.) All remaining dollars then go into CPF LIFE, with your choice of three payout plans. You can start payouts as early as age 65, as late as age 70, or anytime in between. The more dollars (and accrued 4% interest, plus bonus interest) in your Retirement Account, the bigger your monthly payouts for life (and the bigger the residual to your CPF nominees if you should die at any age when there's still a residual for your payout plan).

I don't see any way that option (a) would ever make financial sense, at least not before age 65, under reasonable (and even quite unreasonable) assumptions. If you need to withdraw up to the Basic Retirement Sum from your Retirement Account, you're free to do that at any time before CPF LIFE payouts start, which can be as late as age 70. And that's assuming you haven't made any Retirement Sum Topping Up (RSTU) Scheme top ups, but that's the same assumption if you're able to withdraw up to $90,500 at age 55.

What are you thinking? Why would ever do that -- what goal(s) are you trying to achieve?
More towards minimizing the payment into CPF Life.

Ie 181k*0.2 is 36.2k
90.5k*0.2 is 18.1k

Assuming Basic plan.
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