HWZ Forums

Login Register FAQ Mark Forums Read

FRS or BRS with property pledge at age 55.

Reply
 
LinkBack Thread Tools
Old 06-09-2019, 11:05 AM   #1
Master Member
 
Join Date: Oct 2016
Posts: 4,324
FRS or BRS with property pledge at age 55.

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?
lifeafter41 is offline   Reply With Quote
Old 06-09-2019, 11:24 AM   #2
Supremacy Member
 
Join Date: Jun 2010
Posts: 9,511
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?
BBCWatcher is offline   Reply With Quote
Old 06-09-2019, 11:29 AM   #3
Arch-Supremacy Member
 
Join Date: Mar 2004
Posts: 12,456
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 .
henrylbh is offline   Reply With Quote
Old 06-09-2019, 11:55 AM   #4
Master Member
 
Join Date: Oct 2016
Posts: 4,324
Firstly, you can't put all back in OA only and there is annual limit to put back.

I will leave it till .
Plan is to put in back in via OA housing payback.
lifeafter41 is offline   Reply With Quote
Old 06-09-2019, 12:06 PM   #5
Master Member
 
Join Date: Oct 2016
Posts: 4,324
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.
lifeafter41 is offline   Reply With Quote
Old 06-09-2019, 12:16 PM   #6
Arch-Supremacy Member
 
Join Date: Mar 2004
Posts: 12,456
Plan is to put in back in via OA housing payback.
Take out from 4% account and put into 2.5% account?
henrylbh is offline   Reply With Quote
Old 06-09-2019, 01:40 PM   #7
Master Member
 
Join Date: Oct 2016
Posts: 4,324
Take out from 4% account and put into 2.5% account?
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.
lifeafter41 is offline   Reply With Quote
Old 06-09-2019, 02:00 PM   #8
Supremacy Member
 
Join Date: Jun 2010
Posts: 9,511
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 by BBCWatcher; 06-09-2019 at 02:06 PM..
BBCWatcher is offline   Reply With Quote
Old 06-09-2019, 03:10 PM   #9
Moderator
 
tangent314's Avatar
 
Join Date: Jul 2002
Posts: 4,350
Sounds like cutting off the nose to spite the face
tangent314 is offline   Reply With Quote
Old 06-09-2019, 03:41 PM   #10
Master Member
 
Join Date: Oct 2016
Posts: 4,324
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.
lifeafter41 is offline   Reply With Quote
Old 06-09-2019, 03:56 PM   #11
Moderator
 
tangent314's Avatar
 
Join Date: Jul 2002
Posts: 4,350
Took a quick look at the latest life tables. Probability of dying between 65 and 78 is about 20.8%
tangent314 is offline   Reply With Quote
Old 06-09-2019, 04:16 PM   #12
Senior Member
 
Join Date: Apr 2017
Posts: 1,317
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!

Last edited by maple96; 06-09-2019 at 04:19 PM..
maple96 is offline   Reply With Quote
Old 06-09-2019, 04:33 PM   #13
Moderator
 
tangent314's Avatar
 
Join Date: Jul 2002
Posts: 4,350
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.
tangent314 is offline   Reply With Quote
Old 06-09-2019, 04:41 PM   #14
Senior Member
 
Join Date: Apr 2017
Posts: 1,317
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!
maple96 is offline   Reply With Quote
Old 06-09-2019, 04:55 PM   #15
Senior Member
 
Join Date: Dec 2018
Posts: 2,078
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!
Merg91 is offline   Reply With Quote
Reply
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 Terms of Service for more information.


Thread Tools

Posting Rules

Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are On