CPF Accounts Value thread

[lifeafter41]

Care to share why? Thinking if i should opt for FRS and let the surplus amount remained in the SA and OA accounts so that interest can still be accumulated and I can withdraw anytime when there is a need. If I opt for ERS, the funds will be locked in. Believe that the goal post will be shifted when it comes to my turn

The other option would be to opt for FRS initially them top up every year towards ERS.

There is 10 years in between for one to top up to ERS.
While the interest might be lesser though, instead of leaving a lump sum for ERS at age 55.

 

[SKenny]

Care to share why? Thinking if i should opt for FRS and let the surplus amount remained in the SA and OA accounts so that interest can still be accumulated and I can withdraw anytime when there is a need. If I opt for ERS, the funds will be locked in. Believe that the goal post will be shifted when it comes to my turn

There is no need to top up your RA to ERS using your SA. You can use cash too.

If you have a concern about the shifting goalposts, then you may want to remain at FRS. Personally, I have no such concern and I am happy to top up my RA to ERS.

 

[Nofear40]

The other option would be to opt for FRS initially them top up every year towards ERS.

There is 10 years in between for one to top up to ERS.
While the interest might be lesser though, instead of leaving a lump sum for ERS at age 55.

When must you decide on ERS?

 

[SKenny]

When must you decide on ERS?

Anytime between 55 and 65.

BTW, you are allowed to top up to the prevailing ERS of the day and not the ERS when you turned 55. The top up limit also excludes any interest earned in RA.

 

[cal3135]

Getting interesting, presume ur SA reached ERS 2018 on 55yo

1)u opt for ERS, from 65yo, u receive $1960/mth

2)u opt for FRS, from 65yo; u receive $1350/mth + at least $131k** in SA where u may withdraw anytime

**bal 88k(264-176) compound int4% for 10years =131k

Given a choice I may opt for (2)

The other option would be to opt for FRS initially them top up every year towards ERS.

There is 10 years in between for one to top up to ERS.
While the interest might be lesser though, instead of leaving a lump sum for ERS at age 55.

Posted with xsmax HardwareZone Forums app

 

[SKenny]

Getting interesting, presume ur SA reached ERS 2018 on 55yo

1)u opt for ERS, from 65yo, u receive $1960/mth

2)u opt for FRS, from 65yo; u receive $1350/mth + at least $131k** in SA where u may withdraw anytime

**bal 88k(264-176) compound int4% for 10years =131k

Given a choice I may opt for (2)��

Posted with xsmax HardwareZone Forums app

The top up of RA from FRS to ERS need NOT come from your SA even if you have money in your SA. You can use cash to top up, assuming that you have surplus cash.

In another words, your surplus cash has the opportunity to earned 4% interest in RA. The flip side is that it gets locked up until 65 when it is paid out as part of your CPFLife.

 

[Nofear40]

Anytime between 55 and 65.

BTW, you are allowed to top up to the prevailing ERS of the day and not the ERS when you turned 55. The top up limit also excludes any interest earned in RA.

Which is higher right ?
Then does it mean that the payout will be higher ?

 

[Nofear40]

The top up of RA from FRS to ERS need NOT come from your SA even if you have money in your SA. You can use cash to top up, assuming that you have surplus cash.

In another words, your surplus cash has the opportunity to earned 4% interest in RA. The flip side is that it gets locked up until 65 when it is paid out as part of your CPFLife.

Hmmm.. sounds like retirement insurance...

 

[SKenny]

Which is higher right ?
Then does it mean that the payout will be higher ?

Yes to both questions.

 

[SKenny]

Hmmm.. sounds like retirement insurance...

CPFLife is an annuity. It should sounds like that.

 

[tangent314]

Yes, at the moment the SMRA interest rates are higher than the rate of the ERS increasing, so if you top up your RA to ERS immediately at age 55, your RA will end up being higher than the prevailing ERS when you reach 65/70. Which allows you to get a higher monthly payout than if you leave your RA at FRS and top up to ERS only just before reaching 65/70

 

[SBC]

Can sense the amount of beh an ness from this thread.

This speak of myself too.
This Sunday Times is show casing the amount of money for education.

Good for those that are around age 60.

 

[lifeafter41]

Wife is still working. HDB is fully paid. Required for decoupled HDB.
But she may stop working any time soon.

One question though, how did you managed to convince the waifu to “decoupled”?

 

[BBCWatcher]

When must you decide on ERS?

Anytime between 55 and 65.

Actually there’s no age limit to this decision (as long as you’re alive), but, as Tangent314 has explained, you miss out on some of the attractive 4% interest if you don’t top up within the month of your 55th birthday.

 

[hwmook]

One question though, how did you managed to convince the waifu to “decoupled”?

Why the wife need to be convinced? A fully paid HDB, all under her own name.

 

[Calthron]

Let say I top up to ERS at 55 in my RA. It will continue to earn interest. Then, at 65, can I switch to FRS, and take out the balance ERS - FRS?

Anytime between 55 and 65.

BTW, you are allowed to top up to the prevailing ERS of the day and not the ERS when you turned 55. The top up limit also excludes any interest earned in RA.

 

[Nofear40]

Actually there’s no age limit to this decision (as long as you’re alive), but, as Tangent314 has explained, you miss out on some of the attractive 4% interest if you don’t top up within the month of your 55th birthday.

If I TOP up gradually using cash, will this be entitled to tax relief up to 7k?

 

[dork32]

Again I don't disagree. Provided there is a safe arbitrage opportunity.

Not everyone can (or would) put all their loan into their OA. For those who placed their loan into their OA, some may have part of their OA suck into their RA when they turn 55. Others may choose to invest. Investments can make you more money, or it may not. Some may choose to spend their loan away (I have seen many people in this category)

Whatever the case may be, as long as you can afford the higher cost should the interest shoot up, then it is OK to take the longer loan. Otherwise it is a risk you should avoid in your retirement years, especially in a rising interest rate environment.

i totally agree with bbc this time round, although i do not like his reference to americans.

oa is a safe option for many singaporeans ( i am not tokking abt americans).

this is because most singaporeans would have used their oa if they were to buy a property.

take sbc. he has taken out 290k from his oa. this means that he can return 290k back to the oa anytime. he can choose to return 700 every month. it will take him a long time to reach 290k.

take me for instance. my monthly contribution to oa is 1700 and my installment is 2.5k for 20 years. i will use 1700 oa and 800 cash everymonth to service my loan. or
i can switch to a 30 year loan at 1800 a month. i use 1000 oa and 800 cash to service the loan. in this way my oa will increase by 700 a month.

i also mentioned many times. when the interest rates shoots, i have many 700s + its interest that i have accumulated over the months to pay down the loan when the lockin and fixed period ends.
and if i do this, you will realize that my outstanding loan would be less than if i had chosen the 20 year loan and was paying 2.5k a month.

 

[dork32]

I think SKenny advice is also sound and prudent.
Its not straight mathematics.
Many a time the human emotional factor is at play.

it is normal feelings that taking a loan is bad because you are buying beyond your means.
it is normal feelings that you should clear up your loans as quickly as possible and be debt free.
that was how i felt last time.

sometimes normal feelings just dont make sense mathematically.

 

[dork32]

One question though, how did you managed to convince the waifu to “decoupled”?

i decoupled with my wife and mom on my condo.
i bought a hdb using my mom's name.
my wife is homeless. she also agreed.

we take ourselves as one unit. as long as there is benefit to this unit, we will do it.