CPF after 55

[somewhat]

Kindly help...
I am 56+, still working, no confidence in myself to do investing and hoping to get a better return through putting my cash in the bank or FD.
If a cash deposit of the CPF Annual Limit ($37,740) is made in January to the 3 accounts, and since I am still working and getting a CPF contribution from my employer, will the monthly contributions still be deposited into the CPF since the limited is reached? If not allowed, then, what happens to the monthly amount from the company and my salary?

Maybe you can try to put money into CPF using the voluntary housing refund instead of a cash deposit? This will ensure you won't hit the annual limit.

 

[antro65]

Thanks for the CPF annual limit information and that the excess of the deposited amount will be returned without interest, I did not think of this.
My RA was at ERS when it was first created. I thought my ERS amount was fixed when my RA was created. I did not know that can top-up to the yearly increase, then will the payout per month at 65 be more than the amount from the first ERS? Where to see this information of the top-up vs the monthly payout?

 

[zoneguard]

Where to see this information of the top-up vs the monthly payout?

https://www.cpf.gov.sg/eSvc/Web/Schemes/LifeEstimator/LifeEstimator

 

[8zaoyu]

Some questions. My dad turned 55 a few yrs ago and went down to cpf board.

He has enough to meet BRS but not enough for FRS so cpf say can do property pledge which he did.

Fast forward, he quit his job after 55 and been withdrawing cpf for as and when he like. I was shocked that goondu was depleting his retirement sum before 65. Why isnt the RA locked at 55? He ***** blur cock keep withdrawing and messing up his retirement plan.

Since he has property for sale and after empty nested, senior citizen can buy himself short-term lease 2 room flexi. Actually can buy 99 year 2 room flexi BUT must pay all up, no mortgage loan given anyway, many post 65 seniors actually has the minimum Draw -down of $250 only or even none and till the Retirement Sum finished for those NOT converting to CPFLife plan. For males, statistically OK (rarely long life) If he Lives LIfe and spends every penny, Medifund will pay his last hospitalizations after means testing.

 

[vsvs24]

Since he has property for sale and after empty nested, senior citizen can buy himself short-term lease 2 room flexi. Actually can buy 99 year 2 room flexi BUT must pay all up, no mortgage loan given anyway, many post 65 seniors actually has the minimum Draw -down of $250 only or even none and till the Retirement Sum finished for those NOT converting to CPFLife plan. For males, statistically OK (rarely long life) If he Lives LIfe and spends every penny, Medifund will pay his last hospitalizations after means testing.

I'm curious about medifund. Besides passing mean testing, do they require that you can't borrow from family members or no assets eg no flat to sell ?

 

[a4973]

I'm curious about medifund. Besides passing mean testing, do they require that you can't borrow from family members or no assets eg no flat to sell ?

Or withdrawable funds from OA and SA?

 

[BBCWatcher]

My RA was at ERS when it was first created. I thought my ERS amount was fixed when my RA was created. I did not know that can top-up to the yearly increase, then will the payout per month at 65 be more than the amount from the first ERS? Where to see this information of the top-up vs the monthly payout?

That's correct. Funds added to your CPF Retirement Account will definitely boost your monthly retirement income. By the way you don't have to start payouts at age 65, and (unless you need the payouts) you probably should accept the default of age 70 payout start. You can also start payouts at any age in between.

The CPF Board doesn't seem to offer a calculator that illustrates the "ERS plus" scenario, where you boost your Retirement Account to the ERS within your 55th birthday month then also boost your Retirement Account each time the ERS is raised. But that's what happens, and the outcome is very fair. Obviously earlier boosts have a bigger impact in nominal dollar terms since there's more time for the money to earn interest before payout start, but it's always a very fair offer (or better than fair).

 

[BBCWatcher]

I'm curious about medifund. Besides passing mean testing, do they require that you can't borrow from family members or no assets eg no flat to sell ?

Or withdrawable funds from OA and SA?

It's pretty basic, conceptually anyway. Medifund is for Singaporean citizens who are in B2 or C ward in public hospitals (or subsidized outpatient) who genuinely cannot afford to pay even these heavily subsidized rates. The Medifund committees take into account both the individual's and his/her family's ability to pay. So...yes, if you've got a pile of dollars in SA/OA, that'll be taken into account. Yes, if (for example) you have a spouse with a $100,000 fixed deposit, that'll be taken into account.

 

[8zaoyu]

I'm curious about medifund. Besides passing mean testing, do they require that you can't borrow from family members or no assets eg no flat to sell ?

Ya, I heard only ha - Means Testing really mean no way can be employed (will not recover, submit ALL your bank accounts AND no property to recover the fees

 

[zoneguard]

But that's what happens, and the outcome is very fair.

I use the LIFE Estimator with Standard plan to compare 2022's FRS $192K and ERS $288K's payout:
1. FRS $1,550. Effectively $124 of RA for $1 of payout.
2. ERS $2,280. Effectively $126 of RA for $1 of payout.

If the payout linearly follow ERS's relationship (/2*3) with FRS, it should yield $2,325. But ERS's payout is $2,280.

I think I know how I would handle my own CPF monies with this knowledge.

 

[a4973]

I use the LIFE Estimator with Standard plan to compare 2022's FRS $192K and ERS $288K's payout:
1. FRS $1,550. Effectively $124 of RA for $1 of payout.
2. ERS $2,280. Effectively $126 of RA for $1 of payout.

If the payout linearly follow ERS's relationship (/2*3) with FRS, it should yield $2,325. But ERS's payout is $2,280.

I think I know how I would handle my own CPF monies with this knowledge.

Would that be drawing down to FRS with property pledge just before commencement of cpf life?

 

[vsvs24]

I use the LIFE Estimator with Standard plan to compare 2022's FRS $192K and ERS $288K's payout:
1. FRS $1,550. Effectively $124 of RA for $1 of payout.
2. ERS $2,280. Effectively $126 of RA for $1 of payout.

If the payout linearly follow ERS's relationship (/2*3) with FRS, it should yield $2,325. But ERS's payout is $2,280.

I think I know how I would handle my own CPF monies with this knowledge.

The figures given by the CPF estimator, are they guaranteed ? Or like insurance policies where the projections are not guaranteed ? Eg now show FRS 1550. But will it be like when you hit 65 and start payout, actual payout turn out to be say $1300 ?

 

[zoneguard]

The figures given by the CPF estimator, are they guaranteed ? Or like insurance policies where the projections are not guaranteed ? Eg now show FRS 1550. But will it be like when you hit 65 and start payout, actual payout turn out to be say $1300 ?

They already say it is an annuity (subject to prevailing interest rates and mortality rates) and there's a disclaimer you need to agree to use the LIFE Estimator.

Anyway I don't think the relationship between FRS payout and ERS payout will change favourably.

BTW what's the changes to the deduction sequence for SA/OA withdrawal you mentioned in the other thread? Can share?

 

[vsvs24]

BTW what's the changes to the deduction sequence for SA/OA withdrawal you mentioned in the other thread? Can share?

Went down to CPFB yesterday. The staff say for partial withdrawal, sequence is from this month's SA contribution, this month's OA contribution, SA balance then OA balance. I told her people say from accrued interest first. She said change from this year no more from accrued interest.

The staff don't seem very experienced. She went to check with someone before giving me this reply.

I have emailed to CPF to get a written reply. Did not want to alarm everyone yet until this is verified.

Or have to wait till Feb to see the withdrawable amount vs SA and OA balance to verify.

 

[BBCWatcher]

I use the LIFE Estimator with Standard plan to compare 2022's FRS $192K and ERS $288K's payout:
1. FRS $1,550. Effectively $124 of RA for $1 of payout.
2. ERS $2,280. Effectively $126 of RA for $1 of payout.
If the payout linearly follow ERS's relationship (/2*3) with FRS, it should yield $2,325. But ERS's payout is $2,280.
I think I know how I would handle my own CPF monies with this knowledge.

I'm pretty sure this point has been covered many times. What you're seeing is the effects of bonus interest. Bonus interest is paid on the first $60K into RA.

However, just because the CPF LIFE deal is a great deal for the first increment doesn't mean it's a bad deal for the next increment. That would be a logical fallacy. Let's suppose someone says, "Zoneguard, I'll sell you the first iPhone 13 for S$600 and the second one for S$650, brand new with warranty. How many would you like?" Would you say, "Oh, damn, that second iPhone is such a terrible deal! It costs $50 more than the first!" You could say that, but if you're sensible you'd evaluate that second incremental iPhone on its own merits: is it still a good deal or not? And yes, it's still a very good deal. If you can't afford the second $650, OK, fair enough, but otherwise sure! I'll take that one, too!(*)

Also, as I mentioned, the CPF LIFE Estimator only lets you run scenarios involving age 55 birthday month balances. You won't be able to use even the $126:$1 figure (let's assume it's correct) and apply that to ERS top ups in subsequent years. Those top ups are made later, after your 55th birthday month, and so they don't have as much time to accumulate as much interest in CPF. (They're hopefully doing something elsewhere, or maybe they're dollars you're earning later from a salary.) If you have dollars earning 15 years of interest (age 55 to 70), they'll generate a bigger monthly payout than dollars earning 12 years of interest. However, that said, after adjusting for interest you're still going to get the same basic life annuity performance out of those incremental dollars, topping up to the new ERSes.

(*) Relatedly, there are some CPF members repaying OA dollars because that's (usually) the sole remaining CPF-related option they have left AND 2.5% interest is still very attractive to them. Yes, it's a darn shame the 4.0% interest offer is capped, but that doesn't mean the 2.5% interest offer is bad. It's certainly a heck of a lot better at age 55+ (or at least approaching age 55) compared to bank fixed deposits. You always look at the next best available offers and ignore whether some past deal no longer available happened to be better.

 

[zoneguard]

You could say that, but if you're sensible you'd evaluate that second incremental iPhone on its own merits: is it still a good deal or not? And yes, it's still a very good deal. If you can't afford the second $650, OK, fair enough, but otherwise sure! I'll take that one, too!(*)

I'm just saying we don't need 2 iPhone 13s for one person at a cost of $1,250 but at the household level, 1 iPhone for $600 and another iPhone for $630 for the spouse as the ladies' special edition seem to cost more. And we save $20, very good deal indeed.

Anyway when the spouse is happy, we are happy too.

 

[BBCWatcher]

You're really missing the point of the analogy. You can take that $650 second iPhone and resell it if you wish -- and make a tidy profit. It's almost as good as cash. Here we're literally talking about cash in, monthly cash out.

 

[tyongchi]

I use the LIFE Estimator with Standard plan to compare 2022's FRS $192K and ERS $288K's payout:
1. FRS $1,550. Effectively $124 of RA for $1 of payout.
2. ERS $2,280. Effectively $126 of RA for $1 of payout.

If the payout linearly follow ERS's relationship (/2*3) with FRS, it should yield $2,325. But ERS's payout is $2,280.

I think I know how I would handle my own CPF monies with this knowledge.

Payout based on CPF Life Estimator. Amount is at age of withdrawal. You can work backward to find out the amount needed at 55 or any age.

Standard Plan
Amt at 65 66 67 68 69 70
$415,000 $2,230
$420,000 $2,260
$425,000 $2,280
$430,000 $2,310 $2,350
$435,000 $2,330 $2,370
$440,000 $2,360 $2,400
$445,000 $2,390 $2,430
$450,000 $2,410 $2,450 $2,500
$455,000 $2,440 $2,480 $2,520
$460,000 $2,460 $2,510 $2,550
$465,000 $2,490 $2,530 $2,580
$470,000 $2,520 $2,560 $2,600 $2,650
$475,000 $2,540 $2,580 $2,630 $2,680
$480,000 $2,570 $2,610 $2,660 $2,700
$485,000 $2,590 $2,640 $2,680 $2,730
$490,000 $2,620 $2,660 $2,710 $2,760 $2,810
$495,000 $2,650 $2,690 $2,740 $2,790 $2,840
$500,000 $2,670 $2,720 $2,760 $2,810 $2,870 $2,920

Basic Plan
Amt at 65 66 67 68 69 70
$415,000 $2,030
$420,000 $2,060
$425,000 $2,080
$430,000 $2,110 $2,140
$435,000 $2,130 $2,160
$440,000 $2,150 $2,190
$445,000 $2,180 $2,210
$450,000 $2,200 $2,240 $2,270
$455,000 $2,220 $2,260 $2,300
$460,000 $2,250 $2,280 $2,320
$465,000 $2,270 $2,310 $2,350
$470,000 $2,290 $2,330 $2,370 $2,410
$475,000 $2,320 $2,360 $2,400 $2,440
$480,000 $2,340 $2,380 $2,420 $2,460
$485,000 $2,370 $2,400 $2,440 $2,490
$490,000 $2,390 $2,430 $2,470 $2,510 $2,560
$495,000 $2,410 $2,450 $2,490 $2,540 $2,590
$500,000 $2,440 $2,480 $2,520 $2,560 $2,610 $2,660

 

[Okenba]

You're really missing the point of the analogy. You can take that $650 second iPhone and resell it if you wish -- and make a tidy profit. It's almost as good as cash. Here we're literally talking about cash in, monthly cash out.

If the extra cash is just sitting there, sure. If the extra cash is being used for an even greater return, then its not so clear cut.

 

[zoneguard]

You're really missing the point of the analogy. You can take that $650 second iPhone and resell it if you wish -- and make a tidy profit. It's almost as good as cash. Here we're literally talking about cash in, monthly cash out.

We are dealing with a merchant that requires upfront payment at 55 and promises to deliver new iPhones from 65 onwards every year. The valuation of the iPhone is unknown at the moment and may well decline at the actual time it is delivered given there is a growing pool of customers all waiting for their new iPhones and they are living longer.

We also know for each unique customer, the first iPhone is the best deal per dollar and the 2nd iPhone not so much per dollar. But across households, customers can sign up 2 of these deals between 2 customers so let's grab these good deals while they last.

Lastly the merchant is free to change the terms of the delivery so customers need to be aware.