I'm 38 now. My goal is to have more retirement saving upon reaching age 55 after setting aside FRS. I was wondering which option is better CPF strategy for years down the road by further top up cash into CPF as I'm reaching FRS in SA.
OK, so that's simple: highest yield is what you're looking for. Your SA is still below the FRS, so that's the best available option for your next dollars since they'll earn 4% interest and then boost your future lifetime retirement income. Today (April 29) is a good day to add dollars to your SA via PayNow QR since dollars credited within April will start earning interest from May 1.
Refund OA aim to reduce the accrued interest where the compound interest is getting scary. I'm not sure if can ignore this after I meet FRS, or just do VC better.
After your SA reaches the FRS, and before age 55, the next best choice from a yield point of view is a MediSave top up each January when the Basic Healthcare Sum (BHS) is raised. MediSave Account dollars also earn 4% interest. MA top ups must fit within both the CPF Annual Limit and the BHS, and they are eligible for tax relief in the full amount.
The next best option after that is your Option #2: an "all three account" Voluntary Contribution. That sort of contribution must fit within the CPF Annual Limit ($37,740), and as Maple96 explained it's eligible for tax relief if you're self-employed. Since some of these dollars flow into your SA, the interest rate earned ends up higher than 2.5%.
The least attractive choice in this menu from a yield point of view is repayment of dollars used for OA. OA earns 2.5%, a lower interest rate than all the choices described above. "Accrued interest" simply tracks the maximum amount that would be redeposited into your OA if/when you sell your home from your home's sales proceeds. It's nothing to worry about: the money still comes back to you, in your own OA. And if your home's sales proceeds aren't enough to repay OA plus accrued interest then you're not required to make up the "gap." Keep it simple, though, because it is: these dollars earn 2.5%. That's a lower interest rate than all of the other options described above, so if it's higher yield you want (and that's what you've explained), this'd be your last CPF choice.
....A slight "footnote" here. If you want to deposit more than the "few K" you describe, then there's a slightly better option potentially available. Let's suppose there's $8K remaining below the Full Retirement Sum and you'd like to deposit $10K total, today. Here's what you could do:
(a) Transfer $8K from your OA to your SA;
(b) Make an "all three" Voluntary Contribution of $10K using PayNow QR.
I think this works a little better all around. OA to SA transfers start earning 4% SA interest backdated to the first day of the month when you make the transfer, so in this case from April 1 (instead of May 1) if you make the transfer today. Transfers also give you a little more flexibility at age 55+ in terms of withdrawal choices. Which probably won't matter at all, but it doesn't hurt.
The only "catch" is that you need more room below the CPF Annual Limit to pull this off, because your "all three" VC must fit within the CPF Annual Limit. If you don't have that much room then you can do something like (example) $3K straight into SA, $5K transferred from OA to SA, and $7K as an "all three" VC.
