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MCKawe 31-07-2018 09:25 AM

Quote:

Originally Posted by BBCWatcher (Post 115758880)
OA to SA transfers are only allowed before your 55th birthday, and only up to the Full Retirement Sum.

Oh...that is sad.

Quote:

Originally Posted by BBCWatcher (Post 115758880)
beyond age 55, CPF turns into a weird “piggy bank” because you can make voluntary “all three” top-ups and then have fully government guaranteed funds earning a high rate of interest (>2.5% blended rate) that are available for withdrawal any time you wish. The “CPF 55+ Piggy Bank” works best if you’ve hit the Basic Healthcare Sum and keep your Medisave Account pegged there.

Interesting. With the PayNow method of withdrawal, this seems like a way better place to park cash than banks.

Before 55, any top-ups RSTU or VC to the SA will have a limit of the FRS right? After 55, this limit disappears and it's just based on the allocation based on age?

MCKawe 31-07-2018 09:26 AM

Quote:

Originally Posted by BBCWatcher (Post 115758237)
Please note that OA shields, whether t-bills or unit trusts, incur fees because they go through the mandatory CPF Investment Account. UOB offers the lowest cost CPF Investment Account right now. You can do that now, well ahead of the time you need to raise the shield.

The fees are only for CPFIS-OA right? Are there any fees for CPFIS-SA? Don't seem to find any anywhere.

Defying_Gravity 01-08-2018 10:34 AM

Hi BBCW and the experts here,

My mom is 59 this year with the following balances in her CPF account:

OA: 8200
SA: 300
MA: 22500
RA: 930

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?

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. So far, to date, all her investments and stock picks are losing money. I wanted to convince her to liquidate her holdings.

Looking forward to all your views. Thanks in advance!

Maeda_Toshiie 01-08-2018 12:06 PM

Quote:

Originally Posted by Defying_Gravity (Post 115777278)
Hi BBCW and the experts here,

My mom is 59 this year with the following balances in her CPF account:

OA: 8200
SA: 300
MA: 22500
RA: 930

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?

She need the basic Medishield. You get an ISP only if you insist on private patient status. If she doesn't an ISP, she need to be willing to accept B2 and below wards, with no choice of doctors.

Quote:

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. So far, to date, all her investments and stock picks are losing money. I wanted to convince her to liquidate her holdings.

Looking forward to all your views. Thanks in advance!
What investments are those?

Maeda_Toshiie 01-08-2018 12:08 PM

https://www.businesstimes.com.sg/sta...rowth-startups

Quote:

CROWDFUNDING platform FundedHere has launched FundedX, a private stock exchange in Singapore to facilitate the trading of shares of high-growth startups and privately held companies in South-east Asia.

AnTiLooP 01-08-2018 01:09 PM

BBCWatcher wrote:
beyond age 55, CPF turns into a weird “piggy bank” because you can make voluntary “all three” top-ups and then have fully government guaranteed funds earning a high rate of interest (>2.5% blended rate) that are available for withdrawal any time you wish. The “CPF 55+ Piggy Bank” works best if you’ve hit the Basic Healthcare Sum and keep your Medisave Account pegged there.


BBCW: can you expand a little more on this? I assume this special piggy bank works on the assumption that the RA account is already created and that you have residual funds left in OA and SA?

on the point re: withdrawals, is there a ceiling/milestone to meet or is it a case of "as long as one has his RA created, that he/she can withdraw monies at anytime from OA/SA". ?

if not, are you simply saying that we can leverage those 2 accounts to simply pump monies in to get interest? in which case those funds deposited + accrued interest can be withdrawn anytime?

thanks.

MCKawe 01-08-2018 01:13 PM

Quote:

Originally Posted by Maeda_Toshiie (Post 115778913)

You can buy on that through CPFIS? :O

Recommend she either hold, pray, stop buying and hope for a nice selling point(if even possible) or liquidate immediately.

With CPF LIFE, her earliest payout is at 65. However with just 930 in her RA, I don't think she is getting a lot per month. Unless this amount is after transfer to the Lifelong Income Fund.

She needs enough money to sustain her next 6 years before being able to receive payouts. Thus, do not cash all 20k into RA unless she can sustain on your contributions to her.

She can do a VC to her OA, SA and MA. However, since her MA has not reached the Basic Healthcare Sum, her allocation is skewed towards MA(which she cannot withdraw at all). This scenario isn't the best but I would choose this option. Earning 2.5-4% interest is better than keeping in the bank. Do note that she needs to at least hold atleast 3 months of spending in cash(Emergency Fund) and subscribe to the PayNow(for same day withdrawals from CPF) in case there is a need for cash.

MCKawe 01-08-2018 01:18 PM

Quote:

Originally Posted by AnTiLooP (Post 115779873)
BBCWatcher wrote:
beyond age 55, CPF turns into a weird “piggy bank” because you can make voluntary “all three” top-ups and then have fully government guaranteed funds earning a high rate of interest (>2.5% blended rate) that are available for withdrawal any time you wish. The “CPF 55+ Piggy Bank” works best if you’ve hit the Basic Healthcare Sum and keep your Medisave Account pegged there.


BBCW: can you expand a little more on this? I assume this special piggy bank works on the assumption that the RA account is already created and that you have residual funds left in OA and SA?

on the point re: withdrawals, is there a ceiling/milestone to meet or is it a case of "as long as one has his RA created, that he/she can withdraw monies at anytime from OA/SA". ?

if not, are you simply saying that we can leverage those 2 accounts to simply pump monies in to get interest? in which case those funds deposited + accrued interest can be withdrawn anytime?

thanks.

It works if:

1) The RA is created with the FRS inside(or BRS with property pledge).

2) The MA reached the Basic Healthcare Sum(For maximum withdrawal amount - MA allocation will be deposited in the SA)

To withdraw, you need option 1 to happen and hold true.

@BBCW
Do advise whether the following is possible to gain overall interest closer to 4%.

With MA hitting BHS, to withdraw all sum in OA and dump back into CPF via VC. Rinse and repeat until satisfactory.

AnTiLooP 01-08-2018 01:23 PM

Quote:

Originally Posted by MCKawe (Post 115780000)
It works if:

1) The RA is created with the FRS inside(or BRS with property pledge).

2) The MA reached the Basic Healthcare Sum(For maximum withdrawal amount - MA allocation will be deposited in the SA)

To withdraw, you need option 1 to happen.

so basically,let's assume those pre-reqs are in place....

1. I have FRS/ERS/BRS in RA
2. @55, whatever is left in SA / OA... I can draw down via anytime... just like an ATM.

I ask as i've been deliberating on what I should do when i Hit 55 - this is alike 15 years away for me. I have no housing loans or other life liabilities (all done), have 139K in SA and 54500 in MA at the time of this writing. based on simple math, I should hit FRS in a year's time thereabouts. that gives me another decade or more to work the amount higher....

likely be able to leverage the special piggy bank.

question - at 55, do we have a say on how much to move into RA assuming we have to meet the FRS/BRS or will the govie just consolidate everything in both accounts to form the RA? latter of which, it is precisely this place where we need to perform SA shielding ?

MCKawe 01-08-2018 01:24 PM

Quote:

Originally Posted by AnTiLooP (Post 115780082)
so basically,let's assume those pre-reqs are in place....

1. I have FRS/ERS/BRS in RA
2. whatever is left in SA / OA... I can draw down via anytime... just like an ATM.

?

Yes. However time taken to draw down varies on options used - PayNow, GIRO etc...

BBCWatcher 01-08-2018 01:29 PM

Quote:

Originally Posted by MCKawe (Post 115759356)
Before 55, any top-ups RSTU or VC to the SA will have a limit of the FRS right?

Before your 55th birthday, you can top up your Special Account up to the Full Retirement Sum.

On or after your 55th birthday, you can top up your Retirement Account up to the Enhanced Retirement Sum.

At any age, you can top up all three of your CPF accounts using CPF Form VC/1 or its online equivalent. This top up must fit within the CPF Annual Limit ($37,740). Funds will be allocated across the three accounts according to the standard allocation rules for your age bracket. OA and SA will always receive some portion. MA will not if it has reached the Basic Healthcare Sum. The portion for MA will first spill over into SA, but if that's at the FRS, it will be spill over again into the OA.

Quote:

The fees are only for CPFIS-OA right? Are there any fees for CPFIS-SA?
The CPF Investment Scheme (OA) requires a CPF Investment Account, available from any of the "big three" local banks. UOB currently offers the lowest cost CPF Investment Account.

The CPF Investment Scheme (SA) does not require a CPF Investment Account.

For either scheme, you may need a CDP account depending on what you're buying.

BBCWatcher 01-08-2018 02:00 PM

Quote:

Originally Posted by Defying_Gravity (Post 115777278)
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.

Quote:

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.

Quote:

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).

Quote:

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.

BBCWatcher 01-08-2018 02:14 PM

Quote:

Originally Posted by BBCWatcher (Post 115780800)
5. You should deposit that $500/month straight into her Retirement Account. You may qualify for tax relief.

There's another "trick" available here. If you qualify for tax relief, try to increase that $500/month ($6,000/year) to $7,000/year, to maximize the tax relief. However, if you cannot afford the extra $1,000, then ask her to give you the $1,000 from her (limited) savings, and then you take that $1,000 and top up her Retirement Account. IRAS is fine with that arrangement.

maple96 01-08-2018 02:22 PM

Quote:

Originally Posted by Defying_Gravity (Post 115777278)
Hi BBCW and the experts here,

My mom is 59 this year with the following balances in her CPF account:

OA: 8200
SA: 300
MA: 22500
RA: 930

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?

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. So far, to date, all her investments and stock picks are losing money. I wanted to convince her to liquidate her holdings.

Looking forward to all your views. Thanks in advance!

Before u follow any suggestions here, pls get a copy of her CPF statement or check it out online.

She is likely to be under the old CPF Life scheme (before changes were introduced in 2015/16), where at 55 her RA get transferred to the CPF life pool under the standard plan. CPF statement will show how much now sitting in CPF Life Pool. Under that old scheme, check when her payout will start, is it same as 65 and how much is her likely mthly payout. If it does not meet FRS, u need to rethink and find out from CPF what will happen

If payout starts 65, and u start topping up RA now, she cannot touch the monies until 65.

EagleToThesSky 01-08-2018 02:44 PM

Just to confirm, the cash top-up to SA/RA does not count towards the Annual CPF contribution cap of 37740SGD for tax relief purpose?

So if that is the case, lets say I draw a monthly salary of 7000 with no bunos. then the max amount I can top-up my MA and enjoy tax relief is

37740 - 37%*6000*12 = 11100 SGD, even if I have cash top-up of 7000 to my SA. Assuming I will not reach the BHS after the top-up.

Is my understanding right?


Quote:

Originally Posted by BBCWatcher (Post 115608059)
Your math looks exactly correct to me. What you can do, for example, is to top up Medisave immediately after there’s a withdrawal, such as a withdrawal for your 2018 base Integrated Shield premium payment. That additional Medisave top up will also be eligible for tax relief.

Well played.

To simplify matters for you and for anyone else who earns $6,000 or more per month from employment in Singapore, just remember that you won’t have any room below the CPF Annual Limit unless your bonus income from employment totals less than $30K. Since your expected bonus income totals $14K, you have room below the Annual Limit. And that room is 37% of $16,000, which is $5,920. You’ve already consumed $2,500 of that, so you get to that same $3,420 figure remaining. Just another way to get to that number, if you like.



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