CPF Account Value Thread 2024

[tyongchi]

The big decision for Jan 2025 is whether to top up to 4 x ERS in Jan 2025 or stay at 3 x ERS and try to beat 4% from the $108,500K (amount to top up to 4 x ERS).

For my scenario:
Monthly payout assumming 2.5% interest on $108,500
Annual 4 x ERS payout at 70 years = $50,040
Annual 3 x ERS payout at 70 years = $38,760 + $11,280 from annual drawdown of $108,500
After 14 years at 84 years old, the monthly payout will reduce to $38,760 for 3 x ERS
Bequest comparison in case one is interested:
Bequest in favour of 4 x ERS for the first 8 years and $0 after 13 years
Bequest in favour of 3 x ERS after 8 years and $0 after 14 years

I'm steering towards 3 x ERS for the following reasons:
Allow flexibilty on amount we want to wtihdraw during the 14 years. That is, I can withdraw less if my other investments are giving good returns.
At 84 years old if I've not kicked the bucket yet, I think I can probably make do with a lower monthly payout

 

[gold_eagle36]

The big decision for Jan 2025 is whether to top up to 4 x ERS in Jan 2025 or stay at 3 x ERS and try to beat 4% from the $108,500K (amount to top up to 4 x ERS).

For my scenario:
Monthly payout assumming 2.5% interest on $108,500
Annual 4 x ERS payout at 70 years = $50,040
Annual 3 x ERS payout at 70 years = $38,760 + $11,280 from annual drawdown of $108,500
After 14 years at 84 years old, the monthly payout will reduce to $38,760 for 3 x ERS
Bequest comparison in case one is interested:
Bequest in favour of 4 x ERS for the first 8 years and $0 after 13 years
Bequest in favour of 3 x ERS after 8 years and $0 after 14 years

I'm steering towards 3 x ERS for the following reasons:
Allow flexibilty on amount we want to wtihdraw during the 14 years. That is, I can withdraw less if my other investments are giving good returns.
At 84 years old if I've not kicked the bucket yet, I think I can probably make do with a lower monthly payout

U say try to beat 4% with 108k. But yet u assume 2.5% interest only.

If not investing just 4x BRS ers. No need think so much.

Cpf life is for longevity coverage. So it really make sense to consider above 85 situations.

And dun need to bother with bequests as it's just the balance left in RA after payout at 0% interest

 

[dork32]

The big decision for Jan 2025 is whether to top up to 4 x ERS in Jan 2025 or stay at 3 x ERS and try to beat 4% from the $108,500K (amount to top up to 4 x ERS).

For my scenario:
Monthly payout assumming 2.5% interest on $108,500
Annual 4 x ERS payout at 70 years = $50,040
Annual 3 x ERS payout at 70 years = $38,760 + $11,280 from annual drawdown of $108,500
After 14 years at 84 years old, the monthly payout will reduce to $38,760 for 3 x ERS
Bequest comparison in case one is interested:
Bequest in favour of 4 x ERS for the first 8 years and $0 after 13 years
Bequest in favour of 3 x ERS after 8 years and $0 after 14 years

I'm steering towards 3 x ERS for the following reasons:
Allow flexibilty on amount we want to wtihdraw during the 14 years. That is, I can withdraw less if my other investments are giving good returns.
At 84 years old if I've not kicked the bucket yet, I think I can probably make do with a lower monthly payout

your scenario very cheem and calculation is wrong
if you have 108500 and you draw 11280 per year, and the interest is 2.5%, you money is gone is 11 years and a bit. dont how you get 14 years. i get it through =NPER(2.5%,-11280,108500,0)

dont understand what is
Bequest in favour of 4 x ERS for the first 8 years and $0 after 13 years
Bequest in favour of 3 x ERS after 8 years and $0 after 14 years

Also there is no such thing at 3x ers or 4x ers. There is only one ers which is 3x brs and 4x brs when it is jan next year

 

[tyongchi]

your scenario very cheem and calculation is wrong
if you have 108500 and you draw 11280 per year, and the interest is 2.5%, you money is gone is 11 years and a bit. dont how you get 14 years. i get it through =NPER(2.5%,-11280,108500,0)

dont understand what is
Bequest in favour of 4 x ERS for the first 8 years and $0 after 13 years
Bequest in favour of 3 x ERS after 8 years and $0 after 14 years

Also there is no such thing at 3x ers or 4x ers. There is only one ers which is 3x brs and 4x brs when it is jan next year

oh, my mistake. I meant 3x brs and 4x brs.
For the $108,500 now, it will grow to $145,920 in 11 years time (equivalent to 70 years old). Then start to draw down at 70 years old onwrads.

 

[JuniorLion]

For myself, if all else remains the same, I would go with 3xERS. The main premise is that I know how to invest, am disciplined, and stretch my dollar to get better returns.

Locking into 4xERS will reduce flexibility.

BUT if you lack discipline, perhaps 4xERS is better.

 

[highsulphur]

For myself, if all else remains the same, I would go with 3xERS. The main premise is that I know how to invest, am disciplined, and stretch my dollar to get better returns.

Locking into 4xERS will reduce flexibility.

BUT if you lack discipline, perhaps 4xERS is better.

You mean brs

 

[maumu]

sorry for interrupting... why need to rush to top up to ERS ah? is it to earn the guaranteed 4%?

*also, is this applicable to those below 55? or only for those who're 55 onwards? for those below 55, nothing changes, correct?

 

[rizhal]

sorry for interrupting... why need to rush to top up to ERS ah? is it to earn the guaranteed 4%?

*also, is this applicable to those below 55? or only for those who're 55 onwards? for those below 55, nothing changes, correct?

For people above 55, there is no SA starting today, so it is a decision point to top up RA to ERS to earn 4% interest or not.

For those under 55, you still have SA, talking about ERS is invalid.

 

[BBCWatcher]

For myself, if all else remains the same, I would go with 3xERS. The main premise is that I know how to invest, am disciplined, and stretch my dollar to get better returns.
Locking into 4xERS will reduce flexibility.
BUT if you lack discipline, perhaps 4xERS is better.

Of course you meant 3xBRS/4xBRS.

....No, I disagree. There are really only about 3 relevant questions that help you make this particular decision:

1. Do I have special insight into my longevity such that I know, with high probability, that I'm going to die within roughly the 10 year period from circa 72 to 82 (assuming I started CPF LIFE payouts at age 70, which I should if possible)? If I do have that special, unusual insight then adding funds to my CPF Retirement Account probably makes less sense than otherwise.

2. Will I spend at least as much as the (higher) CPF LIFE benefit in retirement to support my desired lifestyle? (N.B. Use the CPF LIFE Escalating Plan payout figure for purposes of answering this question since that's the one most closely aligned to real, inflation-adjusted spending. Whether or not you end up choosing the Escalating Plan -- although that's often a great choice.) If no, that the (higher) CPF LIFE income will be "too much retirement income," then you probably shouldn't add funds to your CPF Retirement Account. (This is rare, I think. CPF LIFE income levels aren't exactly lavish. Is anyone supporting champagne and caviar lifestyles solely on CPF LIFE income? Although you can/should take other reliable life annuity income into account in considering this question.)

3. Will I maintain sufficient liquidity after adding funds to my CPF Retirement Account, inclusive of any preexisting liquidity I have from CPF savings (including via a property pledge/charge)? If no, then you might not want to add funds to a CPF Retirement Account.

Conventional investment returns don't matter for this particular decision. There's no realistic way conventionally, with an appropriate safe withdrawal rate (SWR), you could support the lifestyle that (additional) CPF LIFE income would support, input dollar for input dollar. Pooling longevity risk is a powerful thing, provided these 3 threshold questions are cleared.

 

[BBCWatcher]

Just to follow up, there are some possible "edge cases" that could trigger additional questions. For example, if you think there's a decent chance, or better, that you'll acquire another citizenship and thus stop being a Singaporean citizen, then adding funds to your CPF Retirement Account turns into a somewhat different proposition. Mostly unfortunately the CPF Board now kicks you completely out in such circumstances, albeit with accrued interest or the residual value of your CPF LIFE annuity if payouts have started. I can also imagine asset protection-related questions that might suggest violating Question 3. If someone is going to seize your conventional assets (which would also cause liquidity problems) then maybe Question 3 is inoperative, and you still go ahead and deposit more funds into your CPF Retirement Account (and into other CPF accounts for that matter).

 

[hwmook]

sorry for interrupting... why need to rush to top up to ERS ah? is it to earn the guaranteed 4%?

*also, is this applicable to those below 55? or only for those who're 55 onwards? for those below 55, nothing changes, correct?

For those above 55, SA account closing down so need to decide whether to take the money and put in to RA to earn interest. Below 55 no need to worry.

 

[JuniorLion]

Of course you meant 3xBRS/4xBRS.

....No, I disagree. There are really only about 3 relevant questions that help you make this particular decision:

1. Do I have special insight into my longevity such that I know, with high probability, that I'm going to die within roughly the 10 year period from circa 72 to 82 (assuming I started CPF LIFE payouts at age 70, which I should if possible)? If I do have that special, unusual insight then adding funds to my CPF Retirement Account probably makes less sense than otherwise.

2. Will I spend at least as much as the (higher) CPF LIFE benefit in retirement to support my desired lifestyle? (N.B. Use the CPF LIFE Escalating Plan payout figure for purposes of answering this question since that's the one most closely aligned to real, inflation-adjusted spending. Whether or not you end up choosing the Escalating Plan -- although that's often a great choice.) If no, that the (higher) CPF LIFE income will be "too much retirement income," then you probably shouldn't add funds to your CPF Retirement Account. (This is rare, I think. CPF LIFE income levels aren't exactly lavish. Is anyone supporting champagne and caviar lifestyles solely on CPF LIFE income? Although you can/should take other reliable life annuity income into account in considering this question.)

3. Will I maintain sufficient liquidity after adding funds to my CPF Retirement Account, inclusive of any preexisting liquidity I have from CPF savings (including via a property pledge/charge)? If no, then you might not want to add funds to a CPF Retirement Account.

Conventional investment returns don't matter for this particular decision. There's no realistic way conventionally, with an appropriate safe withdrawal rate (SWR), you could support the lifestyle that (additional) CPF LIFE income would support, input dollar for input dollar. Pooling longevity risk is a powerful thing, provided these 3 threshold questions are cleared.

Not sure if you are aware.

You can (1) do cardiovascular exercise, (2) strength training, (3) yearly health checkups, (4) eat healthy.

Doesn't eliminate death, but research has shown that it reasonably increases lifespan.

 

[BBCWatcher]

You can (1) do cardiovascular exercise, (2) strength training, (3) yearly health checkups, (4) eat healthy.
Doesn't eliminate death, but research has shown that it reasonably increases lifespan.

Good ideas no matter what your CPF Retirement Account is holding.

 

[dork32]

Not sure if you are aware.

You can (1) do cardiovascular exercise, (2) strength training, (3) yearly health checkups, (4) eat healthy.

Doesn't eliminate death, but research has shown that it reasonably increases lifespan.

if you can increase life span, then all the more you should go for 4xbrs.

 

[laokorkor]

Short life span should be ok, since you've bequest from CPF LIFE - you won't lose much.

 

[JuniorLion]

Of course you meant 3xBRS/4xBRS.

....No, I disagree. There are really only about 3 relevant questions that help you make this particular decision:

1. Do I have special insight into my longevity such that I know, with high probability, that I'm going to die within roughly the 10 year period from circa 72 to 82 (assuming I started CPF LIFE payouts at age 70, which I should if possible)? If I do have that special, unusual insight then adding funds to my CPF Retirement Account probably makes less sense than otherwise.

2. Will I spend at least as much as the (higher) CPF LIFE benefit in retirement to support my desired lifestyle? (N.B. Use the CPF LIFE Escalating Plan payout figure for purposes of answering this question since that's the one most closely aligned to real, inflation-adjusted spending. Whether or not you end up choosing the Escalating Plan -- although that's often a great choice.) If no, that the (higher) CPF LIFE income will be "too much retirement income," then you probably shouldn't add funds to your CPF Retirement Account. (This is rare, I think. CPF LIFE income levels aren't exactly lavish. Is anyone supporting champagne and caviar lifestyles solely on CPF LIFE income? Although you can/should take other reliable life annuity income into account in considering this question.)

3. Will I maintain sufficient liquidity after adding funds to my CPF Retirement Account, inclusive of any preexisting liquidity I have from CPF savings (including via a property pledge/charge)? If no, then you might not want to add funds to a CPF Retirement Account.

Conventional investment returns don't matter for this particular decision. There's no realistic way conventionally, with an appropriate safe withdrawal rate (SWR), you could support the lifestyle that (additional) CPF LIFE income would support, input dollar for input dollar. Pooling longevity risk is a powerful thing, provided these 3 threshold questions are cleared.

Escalating payout is the worst of all the options.

 

[laokorkor]

Escalating payout is the worst of all the options.

I understand that some of the calculation shows escalating payout to be the worst. I'm not going to dispute that.

However, with that said, I'm going to pick escalating payout cos it's the most financially conservative thing to do. You don't want to struggle with cost-of-living when you've dementia. To each of his own. LOL!

 

[BBCWatcher]

Escalating payout is the worst of all the options.

"Worst" how? It's the only CPF LIFE payout plan that even attempts to preserve real purchasing power, so clearly it's best doing that. The other two payout plans "feature" progressively declining real income (and corresponding real standards of living) in the face of inflation.

 

[BBCWatcher]

Short life span should be ok, since you've bequest from CPF LIFE - you won't lose much.

Actually, dying before or right around age 70 is "terrific" for your CPF nominees, assuming you don't start CPF LIFE payouts any earlier than required. They'd collect the full balance of your CPF Retirement Account including accrued interest to that point, or close to it.

 

[highsulphur]

"Worst" how? It's the only CPF LIFE payout plan that even attempts to preserve real purchasing power, so clearly it's best doing that. The other two payout plans "feature" progressively declining real income (and corresponding real standards of living) in the face of inflation.

You can always take the excess of normal over escalating in the first few years and invest yourself to hedge against inflation for the subsequent years