CPF after 55

[rrr2015]

I did not miss. The first part is the sequence. SA first then OA.

The second part is explaining why accrued interest is removed from withdrawal sequence. Not about sequence.

might be helpful to followup with CPF requesting link that points to these changes. i can't find any?

if changes were done from 9 jan 2022 onwards, surely it gets reported by media or bloggers?

 

[Okenba]

Does that mean me and my wife can cross-top up to each other's RA account using OA to circumvent this restriction. LOL!!!

Yes. But no tax relief as it is a CPF transfer. And you can't use it to withdraw, only to top-up RA up to ERS.

2.5% is not bad for a liquid deposit.

Its not really liquid. You can't withdraw it unless you want to withdraw the part earning 4%pa first...

 

[Andrew833]

I did not miss. The first part is the sequence. SA first then OA.

The second part is explaining why accrued interest is removed from withdrawal sequence. Not about sequence.

"So I interprete as must deplete SA bal first before can touch OA interest"
It's different from what you have said earlier.

"The second part is explaining why accrued interest is removed from withdrawal sequence. Not about sequence." Yes.

OA/SA interest nothing to do with "must deplete SA bal first".

 

[vsvs24]

might be helpful to followup with CPF requesting link that points to these changes. i can't find any?

if changes were done from 9 jan 2022 onwards, surely it gets reported by media or bloggers?

CPF so far do not publish details on withdrawal sequence other than to say SA first then OA. The earlier detailed withdrawal sequence involving accrued interest was shared by people based on an email reply from CPF.

I happen to be at CPF Board on 11 Jan 2022 and ask about withdrawal sequence and was told that changed in 2022. So I emailed to get confirmation in writing. Would be good if someone email them to get a second confirmation.

If it is really changed like they say, think no one would know until people withdraw. And that will not take place in Jan because no accrued interest yet. It will likely be visible in Feb.

 

[a4973]

I did test withdraw $10 to my paynow in 2020. On the transaction history, there were these entries. Under SA column INT +$10 then WDL -$10. So basically $10 from the pool of SA accrued interest was "credited" into SA then was withdrawn.
So this February I will test again. I guess it should just show under SA column WDL -$10 and the principal will reduce by $10.
Btw I don't have any work contributions.

 

[BBCWatcher]

Me too. I will make the choice that gives me most liquidity, not maximum gain. So that I can draw out when needed (will still spend carefully).

So will just go for FRS and not ERS.

Why not both?

And will start CPF life at 65, not 70. And standard plan even though people say basic plan more worth because standard plan has more going to the common pool.

Point is I want to spend on myself before I die. What's the use of getting more interest if I can't touch the money when I want to.

If you want to spend more on yourself before you die, aren't you better able to do that when your monthly income for life is more robust, not less?

Imagine for sake of argument that you're going to receive S$20,000 per month from the Government of Singapore starting at age 70 and increased 2%/year for the rest of your life. OK, great, now...what does that mean? Doesn't it mean that you are free to spend every penny of whatever savings you have on yourself, and to do it as early as age 70? Spend it all, or spend some and give all the rest away? Why yes, yes you are! You have a robust monthly income (S$240K per year in 2022 dollars in this example), so you can throw yourself a long party as long as you bridge to age 70.

Adjust the numbers of course, but that's what a life annuity from a highly reliable payer does (particularly an escalating one): it gives you full freedom to spend and/or give away ALL other dollars if the annuity is big enough to support the lifestyle you're accustomed to.

I think you've got this one a bit backwards in terms of how it actually works.

 

[vsvs24]

Why not both?

If you want to spend more on yourself before you die, aren't you better able to do that when your monthly income for life is more robust, not less?

Imagine for sake of argument that you're going to receive S$20,000 per month from the Government of Singapore starting at age 70 and increased 2%/year for the rest of your life. OK, great, now...what does that mean? Doesn't it mean that you are free to spend every penny of whatever savings you have on yourself, and to do it as early as age 70? Spend it all, or spend some and give all the rest away? Why yes, yes you are! You have a robust monthly income (S$240K per year in 2022 dollars in this example), so you can throw yourself a long party as long as you bridge to age 70.

Adjust the numbers of course, but that's what a life annuity from a highly reliable payer does (particularly an escalating one): it gives you full freedom to spend and/or give away ALL other dollars if the annuity is big enough to support the lifestyle you're accustomed to.

I think you've got this one a bit backwards in terms of how it actually works.

FRS instead of ERS so that I have more withdrawable SA and OA from age 55.

Likewise start CPF life at 65 so that I have spending money from age 65.

 

[BBCWatcher]

FRS instead of ERS so that I have more withdrawable SA and OA from age 55.
Likewise start CPF life at 65 so that I have spending money from age 65.

That's one way. The other way is to increase the CPF LIFE component so that you are free(r) to spend/give away everything else (or almost everything else).

If ~$1,100/month(*) (2032 dollars) is going to be enough on its own to support your complete age 65+ lifestyle, OK, fair enough I guess. But...really? This is Singapore isn't it?

(*) Standard Plan, but adjusted for some inflation defense -- which is required of course.

 

[jeffong]

Yes. But no tax relief as it is a CPF transfer. And you can't use it to withdraw, only to top-up RA up to ERS.

That's fine as the purpose is to build up the RA amount to increase CPF Life payout when both of us start the withdrawal at 65. To me, CPF Life payouts and Interest withdrawals from SA forms only the foundation and I'll still have other income streams (ie. SRS, Stocks, Private Annuity) to provide the buffer on top.

 

[XiaoFu99]

Wow! This thread super chim at times especially on the withdrawal. Go in easy, come out difficult! haha.

Anyway, just to check, today I have a fully paid HDB. However, the accrued interest is still running till today.

I'm wondering, when I'm at 54, if I were to use cash to settle the accrued interest, my queries:

1. The cash will landed back to OA?

2. Assuming I attained FRS (using only SA) for RA @ 55, means I can withdraw out whatever balance from OA (assuming my SA=0 after formation of RA) including those accrued interest that I repaid using cash?

Thanks

 

[polyglob]

Anyway, just to check, today I have a fully paid HDB. However, the accrued interest is still running till today.

I'm wondering, when I'm at 54, if I were to use cash to settle the accrued interest, my queries:

The accrued interest is money you owe yourself and you can ignore it if you aren't planning to sell the HDB.

1. The cash will landed back to OA?

OA used will go back to OA. SA used will go back to SA. From CPF portal you can see how much used from each account.

2. Assuming I attained FRS (using only SA) for RA @ 55, means I can withdraw out whatever balance from OA (assuming my SA=0 after formation of RA) including those accrued interest that I repaid using cash?

Yes

 

[fr33d0m]

Yes. But no tax relief as it is a CPF transfer. And you can't use it to withdraw, only to top-up RA up to ERS.


Its not really liquid. You can't withdraw it unless you want to withdraw the part earning 4%pa first...

The CPFIS trick is liquid enough

 

[Okenba]

The CPFIS trick is liquid enough

If you're talking about shielding, you can't shield the first $40k from your SA.
So if needing to withdraw $40k from SA every time you want your OA to be liquid is liquid enough for you, then okay.

 

[XiaoFu99]

The accrued interest is money you owe yourself and you can ignore it if you aren't planning to sell the HDB.



OA used will go back to OA. SA used will go back to SA. From CPF portal you can see how much used from each account.



Yes

Thanks.

Just thinking of the possibility to use "OA" like a bank when @ 54 while maintaining liquidity from 55 onwards. Of course, that depends also on how the interest rate environment looks like when the time comes.

 

[Okenba]

Wow! This thread super chim at times especially on the withdrawal. Go in easy, come out difficult! haha.

Anyway, just to check, today I have a fully paid HDB. However, the accrued interest is still running till today.

I'm wondering, when I'm at 54, if I were to use cash to settle the accrued interest, my queries:

1. The cash will landed back to OA?

2. Assuming I attained FRS (using only SA) for RA @ 55, means I can withdraw out whatever balance from OA (assuming my SA=0 after formation of RA) including those accrued interest that I repaid using cash?

Thanks

You sound like you're not aware of the practice of shielding?
In essence, before your 55th birthday, you invest all your SA (first $40k cannot be invested) into a bond fund or something similar that is stable and not volatile.
When your 55th birthday hits, CPF will draw $40k from SA to fill your RA, and will draw from OA after that to hit FRS. (Can't draw more from SA as the rest is invested.)
Once that is done, you sell your investments so your money goes back to SA. And essentially, instead of using OA as a bank, you now have SA as a bank that yields 4%pa.

 

[andyhtc]

A business proposal is for a financial institution to set up a CPFIS fund and provide the SA shielding service for a small fee. This saves everyone the hassle and risks

 

[demoforce1]

The accrued interest is money you owe yourself and you can ignore it if you aren't planning to sell the HDB.



OA used will go back to OA. SA used will go back to SA. From CPF portal you can see how much used from each account.



Yes

what ways to use SA? only for investment, right?

 

[polyglob]

what ways to use SA? only for investment, right?

The portal showed I used a small amount of SA for housing. I think was for stuff like stamp duty. I believe SA got priority for VHR, becoz SA usage got covered up first.

 

[polyglob]

If you're talking about shielding, you can't shield the first $40k from your SA.
So if needing to withdraw $40k from SA every time you want your OA to be liquid is liquid enough for you, then okay.

I consider 40k a big sum of money based on Singapore's median income being ~50k pa. Post 55, what situations make sense to take out 40k from SA one shot?

Since CPF withdrawal post 55 from SA is easy, can withdraw small amounts like 5k each time any time. Withdrawing 40k one shot from SA should only be for emergencies. If it is for making a big purchase (that cannot use OA), can explore cheaper funding rather than taking from account that yields 4%.

So I don't see much point in shielding SA past 55.

 

[Andrew833]

Wow! This thread super chim at times especially on the withdrawal. Go in easy, come out difficult! haha.

Anyway, just to check, today I have a fully paid HDB. However, the accrued interest is still running till today.

I'm wondering, when I'm at 54, if I were to use cash to settle the accrued interest, my queries:

1. The cash will landed back to OA?

2. Assuming I attained FRS (using only SA) for RA @ 55, means I can withdraw out whatever balance from OA (assuming my SA=0 after formation of RA) including those accrued interest that I repaid using cash?

Thanks

Agree very cheam but after you learn the knowledge will benefit when going into 55.