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Old 09-09-2019, 09:14 PM   #1
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For discussion - Will most singaporeans be able to achieve FRS?

Was wondering if majority of Singaporeans will be able to achieve FRS when they turn 55.

Example
Let's say a 30 year old is earning a salary of $3500 a month with $0 balances across all 3 of his CPF accounts.
In 20 years time his balances will be as follows:
OA: 209033
SA: 183540
MA: 57200

This calculation is based on a flat salary of $3500 over 20 years excluding bonuses and pay increments. What more, he still has another 5 years of compounding interest to reach 55.

Based on this, will it be safe to say that majority of singaporeans (those who work consistently) will be able to meet the min sum? Why then do we always read about complains of seniors unable to withdraw their savings because they can't hit minimum sum? I have yet to read a story of anyone who says that CPF is good and he is now a rich man due to the govt's forced savings. Lol. Anyone has any stories or opinions to share/discuss?
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Old 09-09-2019, 09:15 PM   #2
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Bro where you going to stay
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Old 09-09-2019, 09:41 PM   #3
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Was wondering if majority of Singaporeans will be able to achieve FRS when they turn 55....
A slight majority of today's Singaporeans, yes, probably. Older cohorts are different. For perspective, the $3,500/month figure you picked is a little below the 2018 median of $3,792. (Note: The Ministry of Manpower reports median wages inclusive of the employer's CPF contribution. Take that MOM reported figure and divide by 1.17 if you want the more common wage figure that most employees talk about.)

Based on this, will it be safe to say that majority of singaporeans (those who work consistently) will be able to meet the min sum?
I think you mean the Full Retirement Sum.

Today's Singaporeans, probably. However, there are significant numbers of stay-at-home parents, self-employed individuals, and disabled adults. These individuals often end up with low or zero CPF balances (except for MediSave for self-employed individuals, which is compulsory).

I have yet to read a story of anyone who says that CPF is good and he is now a rich man due to the govt's forced savings.
Actually, there are such stories. Look for stories about Loo Cheng Chuan, for example.
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Old 09-09-2019, 09:49 PM   #4
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There is such a man. Ak71, his CPF is loaded. I followed his suggestion to top up cpf Special account via cash and also tRF from OA, after a few years of doing so I managed to hit FRS at age 39.

Without topping up and TRF from OA, it is still possible but maybe not easy for low income earners.
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Old 09-09-2019, 11:09 PM   #5
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love reading these real life stories. but by the time we reach 65, worried 1M may not mean much
Actually, there are such stories. Look for stories about Loo Cheng Chuan, for example.
he also very successful investor himself. wish i have read it earlier
There is such a man. Ak71, his CPF is loaded. I followed his suggestion to top up cpf Special account via cash and also tRF from OA, after a few years of doing so I managed to hit FRS at age 39.

Without topping up and TRF from OA, it is still possible but maybe not easy for low income earners.
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Old 09-09-2019, 11:31 PM   #6
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Was wondering if majority of Singaporeans will be able to achieve FRS when they turn 55.

Example
Let's say a 30 year old is earning a salary of $3500 a month with $0 balances across all 3 of his CPF accounts.
In 20 years time his balances will be as follows:
OA: 209033
SA: 183540
MA: 57200

This calculation is based on a flat salary of $3500 over 20 years excluding bonuses and pay increments. What more, he still has another 5 years of compounding interest to reach 55.

Based on this, will it be safe to say that majority of singaporeans (those who work consistently) will be able to meet the min sum?
Now FRS is 176,000. 20 years later, SA would be $317,000 if annual increment is 3%, to meet prevailing FRS.
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Old 09-09-2019, 11:35 PM   #7
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Was wondering if majority of Singaporeans will be able to achieve FRS when they turn 55.

Example
I have yet to read a story of anyone who says that CPF is good and he is now a rich man due to the govt's forced savings. Lol. Anyone has any stories or opinions to share/discuss?
Have you not read or heard one MP who said he always happy and laughing whenever he receives his CPF statement.

https://www.youtube.com/watch?v=kxOgjmcGJ6g

He receives his CPF statement every month compare to lesser mortals?

Last edited by henrylbh; 09-09-2019 at 11:43 PM..
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Old 10-09-2019, 07:21 AM   #8
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Now FRS is 176,000. 20 years later, SA would be $317,000 if annual increment is 3%, to meet prevailing FRS.
Right, but it’s at least fairly likely the BRS/FRS/ERS increases won’t be as much as 3% per year for 20+ years (the government has explained they’re only in “catch up mode” right now), wages are subject to inflation and career progression effects, and most people work longer than 20 years. Also, this forecast assumes zero bonuses (evidently not even a “13th month”), zero cash top ups for tax relief, zero government top ups, zero extra employer contributions to MediSave, and zero OA to SA transfers for higher interest.
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Old 10-09-2019, 07:33 AM   #9
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Yup, its a little sick to be honest to know that future generations are gonna have to meet ever increasing FRS. I wonder when will this ever stop. Cannot be it keeps increasing till a million dollars right (though we wont be affected coz we would mostly be six feet under).

Now FRS is 176,000. 20 years later, SA would be $317,000 if annual increment is 3%, to meet prevailing FRS.
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Old 10-09-2019, 07:34 AM   #10
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Was wondering if majority of Singaporeans will be able to achieve FRS when they turn 55.

Example
Let's say a 30 year old is earning a salary of $3500 a month with $0 balances across all 3 of his CPF accounts.
In 20 years time his balances will be as follows:
OA: 209033
SA: 183540
MA: 57200

This calculation is based on a flat salary of $3500 over 20 years excluding bonuses and pay increments. What more, he still has another 5 years of compounding interest to reach 55.

Based on this, will it be safe to say that majority of singaporeans (those who work consistently) will be able to meet the min sum? Why then do we always read about complains of seniors unable to withdraw their savings because they can't hit minimum sum? I have yet to read a story of anyone who says that CPF is good and he is now a rich man due to the govt's forced savings. Lol. Anyone has any stories or opinions to share/discuss?
It's simple, because you forgot to take into account housing.

A lot of young people like to overspend on housing, buying a much more expensive house than they can afford to.

But then again, housing is still the killer, In your above example if the person buys a 4-room flat at 400k, and shares co-pay 200k with his other half, his OA would be wiped.

Also, there are quite a % of people whose salary never gets pass $3000 throughout their lives.
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Old 10-09-2019, 07:37 AM   #11
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U are correct. Thats why i did a comparison with the figure of $3500. So for those who are worried they cant reach FRS, all they need to do is play around with their bonuses and the figure of 1.17 to see if they ever hit 3500 monthly in whatever combinations they can think of.

Right, but it’s at least fairly likely the BRS/FRS/ERS increases won’t be as much as 3% per year for 20+ years (the government has explained they’re only in “catch up mode” right now), wages are subject to inflation and career progression effects, and most people work longer than 20 years. Also, this forecast assumes zero bonuses (evidently not even a “13th month”), zero cash top ups for tax relief, zero government top ups, zero extra employer contributions to MediSave, and zero OA to SA transfers for higher interest.
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Old 10-09-2019, 07:39 AM   #12
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Actually i purposely left housing out because i wanted it to be a "fair" comparison. Like u mentioned, ppl tend to buy bigger and more expensive houses. But u are right, perhaps i should have included housing in my calculations. 😢

It's simple, because you forgot to take into account housing.

A lot of young people like to overspend on housing, buying a much more expensive house than they can afford to.

But then again, housing is still the killer, In your above example if the person buys a 4-room flat at 400k, and shares co-pay 200k with his other half, his OA would be wiped.

Also, there are quite a % of people whose salary never gets pass $3000 throughout their lives.
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Old 10-09-2019, 08:48 AM   #13
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Can be done. Low OA due to servicing house

Last edited by undiscern; 10-09-2019 at 08:51 AM..
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Old 10-09-2019, 09:14 AM   #14
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Now FRS is 176,000. 20 years later, SA would be $317,000 if annual increment is 3%, to meet prevailing FRS.
Salary will increase too.
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Old 10-09-2019, 09:30 AM   #15
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Frankly, it's quite easy to hit FRS.
I wish the SA ceiling is much higher.

Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.
Albert Einstein
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