FRS or BRS with property pledge at age 55.

lifeafter41

Arch-Supremacy Member
Joined
Oct 29, 2016
Messages
24,666
Reaction score
8,767
Will it make sense to take out the 90.5k (BRS with property pledge) and recycle it back to OA or leave it under FRS assuming 55 next year?
 

BBCWatcher

Arch-Supremacy Member
Joined
Jun 15, 2010
Messages
20,119
Reaction score
3,014
Will it make sense to take out the 90.5k (BRS with property pledge) and recycle it back to OA....
And how would you do that? Via repayment of OA dollars used for housing?

....or leave it under FRS assuming 55 next year?
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?
 

henrylbh

Arch-Supremacy Member
Joined
Mar 9, 2004
Messages
15,777
Reaction score
702
Will it make sense to take out the 90.5k (BRS with property pledge) and recycle it back to OA or leave it under FRS assuming 55 next year?

Firstly, you can't put all back in OA only and there is annual limit to put back.

I will leave it till ……….
 

lifeafter41

Arch-Supremacy Member
Joined
Oct 29, 2016
Messages
24,666
Reaction score
8,767
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.
 

BBCWatcher

Arch-Supremacy Member
Joined
Jun 15, 2010
Messages
20,119
Reaction score
3,014
More towards avoiding this.....
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.
If you can withdraw $90,500 from your newly formed Retirement Account on your 55th birthday, you can also withdraw $90,500 from your Retirement Account just before you start CPF LIFE payouts, which can be as late as (just before) your 70th birthday. All you need is a property pledge either way, when (not before) you want to withdraw. There's also an up to 20% withdrawal option, inclusive of the optional $5,000 withdrawal amount.

Second, the 20% earmarked for the CPF Lifelong Income Fund is the maximum, but it's not fixed. If you'd like to reduce that percentage then one way is simply to wait until age 70 to start CPF LIFE payouts. Another way is not to get (or to get) gender reassignment surgery, depending on your current gender. (The percentage is likely to be higher for women. For men it's unlikely to be 20%.) To my knowledge CPF hasn't published the current, precise details on how that percentage is calculated, but those seem like reasonable guesses.

So why do you want to give up 1.5 percentage points of lovely interest for at least 10 years, compounded annually, in order to slightly reduce the portion of your Retirement Account allocated to the CPF Lifelong Income Fund that you and/or your nominees will always get back at least without interest (as principal), and possibly more than that? That's a terrible trade financially.

Here's a better question: why wouldn't you double down on collecting even more of that juicy, lovely 4% interest -- topping up your Retirement Account above the Full Retirement Sum (as high as the Enhanced Retirement Sum) on your 55th birthday, if you can afford it? So what if a maximum of 20% of your Retirement Account is earmarked for the CPF Lifelong Income Fund just before you start CPF LIFE payouts (Basic Plan), an amount that will always come back to you and/or your CPF nominees at least as principal? Assume the worst case if you like ("lost," principal return only), and it's still a heck of a great deal from age 55 onward. Have you noticed what fixed deposit interest rates are? Singapore Savings Bond rates?

Do you still need some help calculating this, or do you get the point now? What you're proposing is a dreadful idea financially.

Where did you get this idea?
 
Last edited:

lifeafter41

Arch-Supremacy Member
Joined
Oct 29, 2016
Messages
24,666
Reaction score
8,767
If you can withdraw $90,500 from your newly formed Retirement Account on your 55th birthday, you can also withdraw $90,500 from your Retirement Account just before you start CPF LIFE payouts, which can be as late as (just before) your 70th birthday. All you need is a property pledge either way, when (not before) you want to withdraw. There's also an up to 20% withdrawal option, inclusive of the optional $5,000 withdrawal amount.

Second, the 20% earmarked for the CPF Lifelong Income Fund is the maximum, but it's not fixed. If you'd like to reduce that percentage then one way is simply to wait until age 70 to start CPF LIFE payouts. Another way is not to get (or to get) gender reassignment surgery, depending on your current gender. (The percentage is likely to be higher for women. For men it's unlikely to be 20%.) To my knowledge CPF hasn't published the current, precise details on how that percentage is calculated, but those seem like reasonable guesses.

So why do you want to give up 1.5 percentage points of lovely interest for at least 10 years, compounded annually, in order to slightly reduce the portion of your Retirement Account allocated to the CPF Lifelong Income Fund that you and/or your nominees will always get back at least without interest (as principal), and possibly more than that? That's a terrible trade financially.

Here's a better question: why wouldn't you double down on collecting even more of that juicy, lovely 4% interest -- topping up your Retirement Account above the Full Retirement Sum (as high as the Enhanced Retirement Sum) on your 55th birthday, if you can afford it? So what if a maximum of 20% of your Retirement Account is earmarked for the CPF Lifelong Income Fund just before you start CPF LIFE payouts (Basic Plan), an amount that will always come back to you and/or your CPF nominees at least as principal? Assume the worst case if you like ("lost," principal return only), and it's still a heck of a great deal from age 55 onward. Have you noticed what fixed deposit interest rates are? Singapore Savings Bond rates?

Do you still need some help calculating this, or do you get the point now? What you're proposing is a dreadful idea financially.

Where did you get this idea?

Thanks bbc for the clarification.
Perhaps was confuse by this below.......

BRS is the most worth it in the bequest, you lose out huge amount to bequest for ERS and FRS if you die between 65 to 78 iirc.

The correct way pointed out by one guy is to withdraw at BRS and take that monthly pay out.
Take the excess beyond BRS amount withdrawn out, top up to CPF for extra payout. This way the bequest lost is lesser, your payout is still good. You also enjoy the 4pct interest tru out.
 

tangent314

Moderator
Moderator
Joined
Jul 26, 2002
Messages
5,135
Reaction score
218
Took a quick look at the latest life tables. Probability of dying between 65 and 78 is about 20.8%
 

maple96

Senior Member
Joined
Apr 25, 2017
Messages
2,225
Reaction score
5
Took a quick look at the latest life tables. Probability of dying between 65 and 78 is about 20.8%

Provided u have a healthy lifestyle, your family history is long life, murphy's law dun catch u then u won the longetivity lottery! :s13:
 
Last edited:

tangent314

Moderator
Moderator
Joined
Jul 26, 2002
Messages
5,135
Reaction score
218
This is misleadingly incorrect. The life tables is averaged across all Singaporeans, so the figures are for an average Singaporean, not for a healthy Singaporean.
 

maple96

Senior Member
Joined
Apr 25, 2017
Messages
2,225
Reaction score
5
This is misleadingly incorrect. The life tables is averaged across all Singaporeans, so the figures are for an average Singaporean, not for a healthy Singaporean.

Precisely, u are gambling on your luck! If Murphy hit u, good luck!

What is the use of living a long life but unhealthy? What is the use of prolonging your life for just another 3 years (or a few weeks, mths, years) and still die, but spend a "fortune" leaving nothing much for your family or those who survive you? ie the recent case of a woman who spent more than 500k to treat her cancer hoping to life longer but still die after 3 years? What will happen to the husband and son who survive her having spent all there savings on her? That case was a failure of "experts" in counselling them to handle the situation.

Learn how to use all these statistics appropriately! Learn how to manage your life!
 

Merg91

Master Member
Joined
Dec 12, 2018
Messages
2,501
Reaction score
0
What is so difficult to have a healthy lifestyle?
Have regular health screening.
Make sure those chronic conditions are well controlled.
And we leave the last bit to God.

The chance of you belong to the 80% group would be even higher.

Provided u have a healthy lifestyle, your family history is long life, murphy's law dun catch u then u won the longetivity lottery! :s13:
 

maple96

Senior Member
Joined
Apr 25, 2017
Messages
2,225
Reaction score
5
What is so difficult to have a healthy lifestyle?
Have regular health screening.
Make sure those chronic conditions are well controlled.
And we leave the last bit to God.

The chance of you belong to the 80% group would be even higher.

I already said u have serious comprehension problem, cannot understand my message :s13:

Key is murphy's law, all others not important :s13:

I dun wish to debate with u further
 

Merg91

Master Member
Joined
Dec 12, 2018
Messages
2,501
Reaction score
0
This is real dumb.
Do you do that to your parents / your wife ?

Many gays must be the murphy's law believers like you. Multiple partners & unprotected.

Key is murphy's law, all others not important :s13:
 
Last edited:

BBCWatcher

Arch-Supremacy Member
Joined
Jun 15, 2010
Messages
20,119
Reaction score
3,014
Forget all that. Assume you're going to die on the "worst" possible day....

....Now tell me which other AAA-rated government is offering 3.X% net effective interest on globally asset protected Singapore dollars.

I'm sorry, but has anybody noticed what market interest rates are?!?! Here, let me help: On September 6, 2019, according to the Monetary Authority of Singapore's data, the 30 year Singapore government bond is yielding 2.05%. CPF Ordinary Account funds are yielding 2.5%. Or you can get 2.0% on a 24 month $50,001+ fixed deposit at Maybank, or maybe 2.38% on a 5 year endowment plan at Singlife (assuming you survive at least 5 years). The last two are SDIC protected up to $75,000, so they're comparable to that limit.

Or you (and/or your CPF nominees) can get >>3.0% interest from your CPF Retirement Account and CPF LIFE, and that's as low as it gets if you die on the worst possible day from an interest calculation point of view.

Your choice, but that's a heck of a good deal CPF is offering. Of course, if you need the cash at age 58.2 or whatever, you need the cash, but if you can afford to take that deal, all of it, you probably should.

To be clear, I don't think CPF should be your only savings vehicle, but it's damn fine as your savings foundation. Enjoy it, and make the most of it.

Merg91 said:
Many gays must be the murphy's law believers like you. Multiple partners & unprotected.
Not true, and not cool.
 
Last edited:

Merg91

Master Member
Joined
Dec 12, 2018
Messages
2,501
Reaction score
0
What's wrong to have a bigger bequest for my loved family if I uplorry earlier than 78 ?

I am also happy to collect ultrasafe 4-6% for my SA/ERS.

BRS is the most worth it in the bequest, you lose out huge amount to bequest for ERS and FRS if you die between 65 to 78 iirc.
 
Important Forum Advisory Note
This forum is moderated by volunteer moderators who will react only to members' feedback on posts. Moderators are not employees or representatives of HWZ. Forum members and moderators are responsible for their own posts.

Please refer to our Community Guidelines and Standards, Terms of Service and Member T&Cs for more information.
Top