CPF after 55

[reddevil0728]

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

cannot just learn it once if from now till 55 is still sometime away

 

[Andrew833]

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.

If the person still continue to work after 55, OA will grow to a size that make people want to withdraw it. And this will be the situation when we need to shield SA again.
My guess is 5 years after 55 bah.

 

[Andrew833]

cannot just learn it once if from now till 55 is still sometime away

True, need to keep updating even after 55

 

[a4973]

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.

So it looks like the recent change to the withdrawal sequence has kinda succeeded in discouraging shielding of SA.

 

[polyglob]

If the person still continue to work after 55, OA will grow to a size that make people want to withdraw it. And this will be the situation when we need to shield SA again.
My guess is 5 years after 55 bah.

Ok, I didn't think of people still working, since I am no longer.

I'm still doing the spreadsheet, but for my own situation I am ok to slowly draw down SA then start to draw down OA once SA is cleaned out.

 

[polyglob]

So it looks like the recent change to the withdrawal sequence has kinda succeeded in discouraging shielding of SA.

No, I am only talking about shielding SA past 55, for the purpose of withdrawing OA without cleaning out SA first.

For going into 55, shielding SA so that RA is formed mainly from OA still makes sense.

 

[a4973]

Ok, I didn't think of people still working, since I am no longer.

I'm still doing the spreadsheet, but for my own situation I am ok to slowly draw down SA then start to draw down OA once SA is cleaned out.

Hi polyglob, may I know the objective of your spreadsheet? I'm also not working and intended to keep on VC3A using funds from lower yielding accounts then drawdown SA and OA interest monthly but now with the recent change not sure if I want to VC3A $37740 this end January for 2022. So what does the spreadsheet aid you? Thank you.

 

[a4973]

No, I am only talking about shielding SA past 55, for the purpose of withdrawing OA without cleaning out SA first.

For going into 55, shielding SA so that RA is formed mainly from OA still makes sense.

Okay thanks, I do get it now.

 

[Andrew833]

Ok, I didn't think of people still working, since I am no longer.

I'm still doing the spreadsheet, but for my own situation I am ok to slowly draw down SA then start to draw down OA once SA is cleaned out.

You good life lah
Btw I plan to keep my SA to compound interest to 65, then start withdrawing yearly interest after that. Hopefully I don't need to withdraw from OA after 55.

"As an example, an investment that has a 4% annual rate of return will double in 20 years."

 

[peterlim95]

Anybody here did lease buyback scheme before ? How long does the whole process take from initial consultation with hdb to signing of documents? 3 months ?

 

[Okenba]

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.

I generally agree. I'm just stating why OA isn't that liquid post 55.
ie. Because one has to withdraw at least 40k SA first before we can withdraw OA.

I intend to shield at 55, and withdraw all OA.
There is a situation where I might consider shielding SA after 55. Which is if I have continued working and therefore building up monies in OA. In that case, at the point of retirement, I might choose to shield again just to withdraw all OA again.

But to consider OA as liquid would entail constant shielding of SA just to withdraw OA. Don't think I will do that.

 

[Okenba]

Hi polyglob, may I know the objective of your spreadsheet? I'm also not working and intended to keep on VC3A using funds from lower yielding accounts then drawdown SA and OA interest monthly but now with the recent change not sure if I want to VC3A $37740 this end January for 2022. So what does the spreadsheet aid you? Thank you.

Assuming you've met FRS, any VC3A that is supposed to go to MA will go to OA instead. So there is a large portion of your VC3A that will end up in OA instead of SA.
I think the effective interest rate is about 2.7% or thereabouts.

 

[RoLanTo]

sorry to hijack this thread. some questions i have.

my dad currently on RSS plan. if start withdrawal at 70, can get about 630/mth.. last 17 years.. (dunnoe why not 20 years).. if change to cpf-life will be 560/mth till dead.


May i ask what happen to the remaining in cpf if he remains in RSS vs CPF-life, if he pass away?
RSS seems more straightforward, remaining (cpf balance + interests earned - disbursed amount) just distributed according to nomination..

What about cpf-life? how the remaining is being derived?
cpf balance + interest earned + (cpf-life premium balance + cpf-life premium balance interest earned ) - disbursed amount ?

 

[BBCWatcher]

If you're trying to withdraw OA dollars ahead of SA dollars (after age 55), you might be able to convert OA dollars via the CPF Investment Scheme (OA) to cash. The CPF Board seems to allow that still. It's a bit complicated, though, but it seems to be viable. Anyone age 55+ tried it (or familiar with it)?

 

[BBCWatcher]

my dad currently on RSS plan. if start withdrawal at 70, can get about 630/mth.. last 17 years.. (dunnoe why not 20 years).. if change to cpf-life will be 560/mth till dead.

May i ask what happen to the remaining in cpf if he remains in RSS vs CPF-life, if he pass away?
RSS seems more straightforward, remaining (cpf balance + interests earned - disbursed amount) just distributed according to nomination..
What about cpf-life? how the remaining is being derived?

It depends a little on the payout plan chosen, but the residual for his nominee(s) is guaranteed to be at least equal to this amount: the principal (at the start of CPF LIFE) less CPF LIFE payouts. For example, if he enters CPF LIFE at age 70 with $70,000 in his CPF Retirement Account, lives for 10 years, and receives $560/month, then that's $67,200 of CPF LIFE payouts. His CPF nominee(s) are guaranteed to receive at least $2,800 ($70,000 minus $67,200) in this example. (Adjust the numbers for real numbers -- $70K is most probably substantially wrong for the payout figure you cited.) Plus remaining OA, SA, and MA balances of course.

cpf balance + interest earned + (cpf-life premium balance + cpf-life premium balance interest earned ) - disbursed amount ?

No, the interest helps pay for the (important!) lifetime payout guarantee, subject to a little variation depending on payout plan chosen. "There's no free lunch." Of course with both the classic RSS and CPF LIFE the residual falls every month, and there's no guarantee there will be any residual from RA/CPF LIFE. If he merely lives long enough there's no residual from that source. The key difference is that CPF LIFE payouts don't end until he does, and classic RSS payouts end on a fixed date even if he doesn't.

If he's in average or better health there are rather high odds he will outlive a 17 year classic RSS payout. Singstat publishes national life tables that give some idea, although they're too conservative for forward projections since they're based on past mortality experiences.

 

[Andrew833]

If you're trying to withdraw OA dollars ahead of SA dollars (after age 55), you might be able to convert OA dollars via the CPF Investment Scheme (OA) to cash. The CPF Board seems to allow that still. It's a bit complicated, though, but it seems to be viable. Anyone age 55+ tried it (or familiar with it)?

OA to CPFIS (agent bank) to investment, investment devest back to CPFIS (agent bank) to OA.
You can't take cash from CPFIS (agent bank).

 

[vsvs24]

If you're trying to withdraw OA dollars ahead of SA dollars (after age 55), you might be able to convert OA dollars via the CPF Investment Scheme (OA) to cash. The CPF Board seems to allow that still. It's a bit complicated, though, but it seems to be viable. Anyone age 55+ tried it (or familiar with it)?

It would be great if someone can share experience on this. Can it be done partially like transfer selected stocks to CDP instead of closing the entire CPFIS account ?

 

[polyglob]

Hi polyglob, may I know the objective of your spreadsheet? I'm also not working and intended to keep on VC3A using funds from lower yielding accounts then drawdown SA and OA interest monthly but now with the recent change not sure if I want to VC3A $37740 this end January for 2022. So what does the spreadsheet aid you? Thank you.

The simplest spreadsheet looks like this. Based on these made up numbers SA drops below 40k in 2029.

Year​	Account​	Start Bal​	Withdraw​	New Start Bal​	Interest​	End Bal​
2022​	SA​	250000.00​	0​	250000.00​	4.0%​	260000.00​
	OA​	500000.00​	0​	500000.00​	2.5%​	512500.00​
2023​	SA​	260000.00​	40000​	220000.00​	4.0%​	228800.00​
	OA​	512500.00​	0​	512500.00​	2.5%​	525312.50​

Most people can compute in their heads current SA bal / annual withdraw amount => roughly how many years SA can last. So the interesting bit is to finetune the spreadsheet based on your own circumstances, like full amount MC+VC3A injection, what if invest some more of the OA money (with attendent risk of capital loss), etc.

Basically consider overall financial picture holistically.

Under the old interest-only withdrawal sequence, CPF would've been a perpetual motion machine. Too good to last when more and more people do it, since the grease for said perpetual motion machine is external and not risk free. Too bad Singapore got no oil wells.

 

[vsvs24]

The simplest spreadsheet looks like this. Based on these made up numbers SA drops below 40k in 2029.

Year​	Account​	Start Bal​	Withdraw​	New Start Bal​	Interest​	End Bal​
2022​	SA​	250000.00​	0​	250000.00​	4.0%​	260000.00​
	OA​	500000.00​	0​	500000.00​	2.5%​	512500.00​
2023​	SA​	260000.00​	40000​	220000.00​	4.0%​	228800.00​
	OA​	512500.00​	0​	512500.00​	2.5%​	525312.50​

Most people can compute in their heads current SA bal / annual withdraw amount => how many years SA can last. So the interesting bit is to finetune the spreadsheet based on your own circumstances, like full amount MC+VC3A injection, what if invest some more of the OA money (with attendent risk of capital loss), etc.

Basically consider overall financial picture holistically.

So your plan was to withdraw $40000 every year from SA/OA ?

 

[polyglob]

So your plan was to withdraw $40000 every year from SA/OA ?

Under old sequence I was planning to withdraw all 20+k interests every Dec. With this new scheme, I also only need to withdraw max 25k. The 40k is just for example.