CPF Easy Info Thread. :)

[maple96]

Thank you Maple96 for your valuable input!

I have just checked with my mum and aunt. My aunt has about 25k in MA, is it feasible to top it all the way up to the basic healthcare sum when she sells away the house?

And yes, i overlooked the part about LPA, I will talk to my aunt about this arrangement too.



Thanks Value.Matrix!

To Maple96 and Value.Matrix, since I saw a couple of replies suggesting RSS so I asked my mum and aunt about it too. Looks like if my aunt doesn't take up the silver housing bonus, she doesn't need to go for CPF Life, would you guys suggest RSS over CPF Life if she doesn't take up the bonus?

I calculated that if she sells her flat at 450k,
returns to her cpf account the accrued part of 60k
and pays 150k for new one.
She will have 240k left.

By then her OA+RA will have 80k and top up to the full retirement sum (200k maybe)?

then spare cash
1) top up to MA till basic healthcare sum
2) save about 6 months worth of emergency cash
3) remaining go to OA?



Thanks BBCW, my aunt has two not so kind children who will make themselves visible whenever my aunt has monies and disappear whenever she is penniless. i don't think my mum wants her sister to be saving anything for her children, we are just looking at being self-sufficient for my aunt (be it daily expenses and if need be, medical costs).

my aunt doesn't foresee herself living beyond 90 actually so if possible, RSS might be a better choice for her.

Based on the info u provided in your first post, she is going to get her new flat soon. She applied under SHB, so I doubt she can change her mind.

Do confirm with CPFB/HDB if I am right.

If she is under SHB, read this https://www.hdb.gov.sg/cs/infoweb/r...-seniors/right-size-with-silver-housing-bonus

If Net Sale Proceeds >160k,
CPF topup required= 60k+further topup (ie net sale proceeds -60k-100k)
Net sale proceeds to be kept in cash = 100k+ remaining after further topup
Cash Bonus=20k

So if she is under SHB, she will have to join CPF Life. I would suggest join at 65, choose Standard Plan (whether she die before 90 or not is no longer an issue for discussion).

I assume CPF is her only source of funds based on info provided by u.

For MA, depends on her health conditions now. If healthy, I will not put max into it, cos survival is more important. I will just put an amt to earn interest sufficient to pay annual premiums. Dun forget under Merdeka Gen, she gets annual topup from govt plus additional subsidies for premium payment. I will not lockup too much funds here as it cannot be withdrawn other than for medical, but can always be topup in future should it run low.

I will keep more monies on OA for emergency funds and survival, it is an on demand high interest savings account. My plan (deleted this is not yet available ) u have to do it mthly online using Paynow for instant transfer of funds from CPF OA/SA to bank account ). If I have excess funds, either put it back to OA or RA (like a windfall, strike toto maybe ).

(I have no experience with SHB, but good that I am learning for future use )

I am more concerned about "emergency funds" as another source of fund for survival, besides the mthly CPF life payout, after reading recent cases of complaints where old folks have money with CPF but cannot touch and no money to survive. Also u have to look at how much u get mthly from CPF Life.

Just share my own experience with MA, now I max it (I can afford to and need to ) in case my siblings need, I will use it to pay their medical. In the past, I use it to pay for my parents hospitalisation bills and medicals, for outpatient treatment claimable from MA, I use credit card first then claim and earn the difference. Now most lobang gone liao

 

[maple96]

No, she can certainly leave a legacy: potentially as much as every other scrap of wealth she has, as soon as her 65th birthday if she wishes. They're called "lifetime gifts," and escalating guaranteed life annuities make it hugely easier to give away as much as everything else, as early as right away (annuity payout start).


No, that's the opposite of selfish. With an escalating CPF LIFE payout stream and a modest 2 room HDB unit (with sufficient leasehold remaining) she's guaranteeing only that her basic lifestyle needs are taken care of, that she's never an enormous burden on her children or other loved ones, and then she's free to give away as much as all other wealth just as soon as the annuity payouts start.

There's also zero "competence risk." This is the government as the paying agent -- an extremely high quality, AAA-rated one with a high quality, convertible currency. No matter what she does in the future in terms of her own investment decisions -- she could go bonkers and "invest" in OneCoin -- as long as the Singapore government exists her basic lifestyle will be well defended every month for life. The government will make sure of it.

Said another way, an escalating, guaranteed life annuity is the strongest longevity insurance. If you and your loved ones want the utmost peace of mind and financial security -- and the freedom to enjoy life together with bigger and earlier lifetime gifts -- then this is how you do it. It's effectively like the trust fund construct that wealthy families so highly value for each of their members, but it's available in some measure to middle class Singaporeans from the government. And it's a lovely, powerful thing.

Confimed, this is the your standard answer, regardless of family/financial situation. Only one correct route to rome!

Short answer: Choose CPF Life Escalating Plan and start payout at 70

Edit: except for the "secret recipe" posted a few days ago here where only Basic Plan is in the recipe

 

[SKenny]

Confimed, this is the your standard answer, regardless of family/financial situation. Only one correct route to rome!

Short answer: Choose CPF Life Escalating Plan and start payout at 70

Edit: except for the "secret recipe" posted a few days ago here where only Basic Plan is in the recipe

I am opting for Basic plan, with payout at 65.

I find the Escalating plan too expensive. There is a cheaper way (on average) to have similar protection.

 

[lifeafter41]

I am opting for Basic plan, with payout at 65.

I find the Escalating plan too expensive. There is a cheaper way (on average) to have similar protection.

Hi Kenny, I will opt for basic too when the time comes, hopefully the goalpost don’t shift. As for payout, still undecided as yet.

Anyway, why do you say that escalating plan is too expensive, what is meant by similar protection. Thanks!!

 

[dork32]

No, that's the opposite of selfish. With an escalating CPF LIFE payout stream and a modest 2 room HDB unit (with sufficient leasehold remaining) she's guaranteeing only that her basic lifestyle needs are taken care of, that she's never an enormous burden on her children or other loved ones, and then she's free to give away as much as all other wealth just as soon as the annuity payouts start.

i am amazed by your definition of selfish. by taking more for myself, leaving less for my kids when i die is unselfish.

 

[dork32]

Hi Kenny, I will opt for basic too when the time comes, hopefully the goalpost don’t shift. As for payout, still undecided as yet.

yes you are so selfish. and so it kenny and dork and all the other idiots that will choose basic

 

[dork32]

Anyway, why do you say that escalating plan is too expensive, what is meant by similar protection. Thanks!!

do not read wat bbc says. he toks like a typical salesman. he will mentioned all the good things about escalating plan. did he mention if there are any bad points.

the bad points are real bad. this is wat kenny means by expensive, you will be taking big cuts in your initial payout. it will take you 12 years for the payout to catch up with. if you start your payout at 70, you will be 82 by then.

surviving to 82 still does not make escalating more attractive. many more years for the amount received to catch up.

to enjoy the benefit of the 2% increase in payout, you have to make this sacrifice. to us this cost is too expensive.

we are all aware of inflation. kenny intends to top up his ra yearly. the increased ra will result in a higher payout every year, this is similar to an escalating payout. this is the protection he is talking about.

there are drawbacks. kenny is rich. putting 4k into the ra every year is not a problem. if you are struggling to make ends meet, you can forget about kenny's protection.

 

[maple96]

No, that's the opposite of selfish. With an escalating CPF LIFE payout stream and a modest 2 room HDB unit (with sufficient leasehold remaining) she's guaranteeing only that her basic lifestyle needs are taken care of, that she's never an enormous burden on her children or other loved ones, and then she's free to give away as much as all other wealth just as soon as the annuity payouts start.

i am amazed by your definition of selfish. by taking more for myself, leaving less for my kids when i die is unselfish.

I shared what I heard over radio958 discussion, eastern and western have different value systems, beliefs, culture lor. They like to gift away all their other wealth when still alive to show off they are wealthy, well to do, etc, also to reduce estate duty they have to pay upon death.

Singaporeans dun have to pay estate duty, except if u buy SRS annuity which pays after the first 10 year duration.

 

[maple96]

do not read wat bbc says. he toks like a typical salesman. he will mentioned all the good things about escalating plan. did he mention if there are any bad points.

Wonder who engage him to sell? Because of the stats below, he is back with the strong sell again

JT said earlier this mth:

"What about the CPF LIFE Escalating Plan?

She also brought up the CPF LIFE Escalating Plan, which is an option that was introduced in 2018 for members who are concerned about inflation risk.

Under this plan, instead of fixed payouts for life, the payouts grow at 2 per cent every year, for as long as the member lives.

However, this means that the starting payout is lower than that of the default Standard Plan, by about 20 per cent.

Teo revealed that CPF members were not enthusiastic about the plan, despite the fact that it was a good hedge against inflation."

 

[lifeafter41]

do not read wat bbc says. he toks like a typical salesman. he will mentioned all the good things about escalating plan. did he mention if there are any bad points.

the bad points are real bad. this is wat kenny means by expensive, you will be taking big cuts in your initial payout. it will take you 12 years for the payout to catch up with. if you start your payout at 70, you will be 82 by then.

surviving to 82 still does not make escalating more attractive. many more years for the amount received to catch up.

to enjoy the benefit of the 2% increase in payout, you have to make this sacrifice. to us this cost is too expensive.

we are all aware of inflation. kenny intends to top up his ra yearly. the increased ra will result in a higher payout every year, this is similar to an escalating payout. this is the protection he is talking about.

there are drawbacks. kenny is rich. putting 4k into the ra every year is not a problem. if you are struggling to make ends meet, you can forget about kenny's protection.

Hi dork, thanks for the detailed explanation.

Yes, I feel the escalating plan looks like a lousy plan, where one have to go with a much lower payout and catch up Much later, with the so call 2%.

On the protection, just to catch up with inflation to aim for in ones top up.

Or could be 4K is the figure where Kenny has worked out, in order to catch up with inflation l.

 

[lifeafter41]

Wonder who engage him to sell? Because of the stats below, he is back with the strong sell again

JT said earlier this mth:

"What about the CPF LIFE Escalating Plan?

She also brought up the CPF LIFE Escalating Plan, which is an option that was introduced in 2018 for members who are concerned about inflation risk.

Under this plan, instead of fixed payouts for life, the payouts grow at 2 per cent every year, for as long as the member lives.

However, this means that the starting payout is lower than that of the default Standard Plan, by about 20 per cent.

Teo revealed that CPF members were not enthusiastic about the plan, despite the fact that it was a good hedge against inflation."

Perhaps all plan should be inclusive to catch up with inflation.
Much like the TIPS.......

 

[lifeafter41]

I shared what I heard over radio958 discussion, eastern and western have different value systems, beliefs, culture lor. They like to gift away all their other wealth when still alive to show off they are wealthy, well to do, etc, also to reduce estate duty they have to pay upon death.

Singaporeans dun have to pay estate duty, except if u buy SRS annuity which pays after the first 10 year duration.

This is perhaps the sole reason why they want to give away their wealth when they are alive, estate duty.....

 

[maple96]

Hi dork, thanks for the detailed explanation.

Yes, I feel the escalating plan looks like a lousy plan, where one have to go with a much lower payout and catch up Much later, with the so call 2%.

On the protection, just to catch up with inflation to aim for in ones top up.

Or could be 4K is the figure where Kenny has worked out, in order to catch up with inflation l.

Why people are taught to invest? One reason is to grow their monies to fight inflation. Why we put our monies in high interest savings account, eg 2.44% to 3.65%? Also to help fight inflation.

If your monies in CPF are earning interest of 4%, aren't u fighting inflation with better guaranteed returns already? Can u just depend on CPF Life Payout to survive?

With his escalating plan/payout, u have to be "rich" to tahan until 70 to start payout. U have to be "rich" to tahan a 20% lower payout at 65.

Short answer: u have to be "rich" to tahan his escalating plan/payout and live beyond mid 80-90 to live on monies from the CPF Life pool. Live on other people's monies so u can gift away your own monies when still alive!

 

[maple96]

Perhaps all plan should be inclusive to catch up with inflation.
Much like the TIPS.......

"the best written english" is to psycho u, sway or influence your thinking with fear and greed to choose what they want u to choose to meet their own "hidden agenda"

 

[maple96]

I am opting for Basic plan, with payout at 65.

I find the Escalating plan too expensive. There is a cheaper way (on average) to have similar protection.

100% agree!

We should not just depend on CPF Life payout alone, if u can afford and start your retirement planning early on a correct note.

If u have another source of "income", together with CPF Life payout, is a form of "escalation" to help u fight inflation.

U can use CPF to build your own "escalating" payout, like withdrawing from your big SA interest/principal (u hacked at 54+) or OA monies.

There are so many ways of giving yourself more payout, on top of CPF Life payout, using your own golden goose to lay the golden eggs. Dun just depend on all your eggs in one basket, on other people's monies ie CPF Life escalating payout!

 

[dork32]

Hi dork, thanks for the detailed explanation.

Yes, I feel the escalating plan looks like a lousy plan, where one have to go with a much lower payout and catch up Much later, with the so call 2%.

On the protection, just to catch up with inflation to aim for in ones top up.

Or could be 4K is the figure where Kenny has worked out, in order to catch up with inflation l.

this 4k is an estimate. every year, the ers is raised. you are allowed to topup this amount. i assume that this amount is 4k. it will not be too far off.

i can tell you: kenny's plan is way superior to bbc's. my explanation is this: the comparison i made was for standard vs escalating. standard gives a payout of 300 more than escalating at frs. you use this 300 a month or 3600 a year to top up your ra. this will allow an increase in monthly payout in the second year. this will make escalating more difficult to catch up. it makes escalating even more undesirable.

we all agree that basic is better than standard. what does that make of escalating?

but kenny's plan is very troublesome. if you are the type that do not want to manage your funds, you are not going to benefit from it.

 

[SKenny]

Hi Kenny, I will opt for basic too when the time comes, hopefully the goalpost don’t shift. As for payout, still undecided as yet.

Anyway, why do you say that escalating plan is too expensive, what is meant by similar protection. Thanks!!

The breakeven age of escalating plan is 90+. This means that you will need to live betyond 90+ before your total payout is higher than the standard plan.

When you compare against the average lifespan of Singaporeans of 80+, this means that the average Singaporeans will lose out when they opt for the Escalating plan.

Otoh, the escalating plan has its advantages. It is best for people who do not want to be bother and do not want to do anything. They will just need to pay more for this services loh. Btw, this service does not come cheap.

 

[SKenny]

yes you are so selfish. and so it kenny and dork and all the other idiots that will choose basic

I am an idiot...

BTW, I am not rich. Don't spread fake news. I have been jobless since my 40's. Really emo nao.

 

[BBCWatcher]

I shared what I heard over radio958 discussion, eastern and western have different value systems, beliefs, culture lor. They like to gift away all their other wealth when still alive to show off they are wealthy, well to do, etc, also to reduce estate duty they have to pay upon death.

You're comically wrong about this.

It has nothing to due with tax. The U.S. estate tax exemption for U.S. persons is US$11.4 million (2019), or unlimited between U.S. citizen spouses. There are very few households that would owe any U.S. estate tax.

Second, gifts in excess of US$15,000 per year are subtracted from the US$11.4 million exemption. Gifts are really not a way to avoid U.S. estate tax if it even applies.

No, you're really quite persistently dumb about this, sorry to say. The answer why lifetime gifts are so darn great is based on basic time value of money, a concept understood by sensible people east, west, north, AND south. The earlier you give somebody some money, the more useful it often is to that person. Money is certainly not less useful when given earlier.

You can test this basic concept with your electricity company. Ask them if they'd like to be paid by the deadline on your electric bill or 8 years later. And when they sensibly object to forcing them to wait 8 years to receive payment, then maybe you'll understand that earlier generosity is more generous.

 

[nyl3v3]

BHS from next year is 60k so her flat should be able to top it up all the way...

Maybe get her to make an appt with CPF board and talk it through with them?

It's 55. She has less than 60k when she turned 55, so i think she's still on RSS unless she opts for CPF Life.

Yeah, I will do so with her when I am back in town next month.

I will stick to the current flat until the picture is clear...

If she takes silver housing bonus...
Sounds like she is entitled to quarterly SSS (as much as $750), the amount is according to flat type from age 65.

She's living alone in a 5-room flat and still working. hardly any savings so really depending on the flat sales. No intention to leave for her children, maybe a few grand for her grandchildren.

What's SSS?

Based on the info u provided in your first post, she is going to get her new flat soon. She applied under SHB, so I doubt she can change her mind.

Do confirm with CPFB/HDB if I am right.

If she is under SHB, read this https://www.hdb.gov.sg/cs/infoweb/r...-seniors/right-size-with-silver-housing-bonus

If Net Sale Proceeds >160k,
CPF topup required= 60k+further topup (ie net sale proceeds -60k-100k)
Net sale proceeds to be kept in cash = 100k+ remaining after further topup
Cash Bonus=20k

So if she is under SHB, she will have to join CPF Life. I would suggest join at 65, choose Standard Plan (whether she die before 90 or not is no longer an issue for discussion).

I assume CPF is her only source of funds based on info provided by u.

For MA, depends on her health conditions now. If healthy, I will not put max into it, cos survival is more important. I will just put an amt to earn interest sufficient to pay annual premiums. Dun forget under Merdeka Gen, she gets annual topup from govt plus additional subsidies for premium payment. I will not lockup too much funds here as it cannot be withdrawn other than for medical, but can always be topup in future should it run low.

I will keep more monies on OA for emergency funds and survival, it is an on demand high interest savings account. My plan (deleted this is not yet available ) u have to do it mthly online using Paynow for instant transfer of funds from CPF OA/SA to bank account ). If I have excess funds, either put it back to OA or RA (like a windfall, strike toto maybe ).

(I have no experience with SHB, but good that I am learning for future use )

I am more concerned about "emergency funds" as another source of fund for survival, besides the mthly CPF life payout, after reading recent cases of complaints where old folks have money with CPF but cannot touch and no money to survive. Also u have to look at how much u get mthly from CPF Life...

her birthday falls on 1 Jan 1957, so I think she's still in RSS.

The thing about SHB is very strange. I wrote a couple of emails to HDB about it asking how to go about applying it. When my aunt was selecting her flat, there wasn't any mention about it.

The replies given by HDB was also unclear. I figured that SHB will only apply or be given only after she sells the flat and gets the flexi flat, around that period of time. In this case, I believe she still can choose not to get it.

And spot-on! you pointed out that she has cpf as her only assets (through her sales of flat in 1-2 years time). if she can live comfortably and without having to worry about daily expenses or medical costs, that's already good enough. She has no ability to leave any assets (also no intention) for anyone from what we can see.

I am also worried about having to get her parked everything into RA, just in case, she needs to pay for a surgery or what. Not too sure if MA can cover all the medical costs too.

In time to come when she sells her house, be it RSS or CPF Life, i should get her to do the following steps?

1) a sum of monies parked into RA
2) some monies in MA (enough to earn interest for annual premiums)
3) cash (emergency like six months)
4) the rest in OA?

Just that RSS, i assume she parks the Full Retirement Sum?

If she's on CPF Life, because of SHB, she will also have to park FRS too? And choose standard payouts for sure.

Thank you gentlemen, for your valuable input. Especially maple96 for the detailed breakdown, much appreciated! And sorry for the super long post too.