CPF optimisation for retiree

[henrylbh]

I meant it when i said "her current main source of income is contributions from her kids, which is higher than her monthly expenditure." The pile of cash she's sitting on, generating 0.05% interest, is growing year by year.

Hypothetically her children could redirect some or all of the contributions to her 0.05% interest earning cash pile to her CPF Retirement Account.

Directing some or all of the contributions (to her 0.05% interest earning cash pile?) to her RA?

To the mother, receiving cash contribution is surely a different feeling compare to cash contribution to her RA, whether some or all. Obviously she feeling shiok with cash piling up, oblivious of better alternative.

 

[Squaredot]

Directing some or all of the contributions (to her 0.05% interest earning cash pile?) to her RA?

To the mother, receiving cash contribution is surely a different feeling compare to cash contribution to her RA, whether some or all. Obviously she feeling shiok with cash piling up, oblivious of better alternative.

Yes!!! Cash is KING!
Probably give her the cash first then physco her to put it in RA

 

[henrylbh]

Yes!!! Cash is KING!
Probably give her the cash first then physco her to put it in RA

My father is more interested in looking at the little monthly cash allowance that I deposit into his POSB account than the 136k that I transferred to his RA from my OA.

 

[lifeafter41]

My father is more interested in looking at the little monthly cash allowance that I deposit into his POSB account than the 136k that I transferred to his RA from my OA.

Money on hand is worth much much more than those in CPF Board......

 

[reddevil0728]

Money on hand is worth much much more than those in CPF Board......

That’s to you la

 

[qhong61]

My father is more interested in looking at the little monthly cash allowance that I deposit into his POSB account than the 136k that I transferred to his RA from my OA.

Are u the sole nominee?

 

[lifeafter41]

That’s to you la

Moi referring to Henry’s dad la......

 

[BBCWatcher]

Directing some or all of the contributions (to her 0.05% interest earning cash pile?) to her RA?

To the mother, receiving cash contribution is surely a different feeling compare to cash contribution to her RA, whether some or all. Obviously she feeling shiok with cash piling up, oblivious of better alternative.

It’s a voluntary choice. There’s no legal requirement I’m aware of to hand cash to a parent (absent some sort of agreement, such as a private loan), and there’s no legal impediment I’m aware of to depositing funds into her CPF Retirement Account instead. Moreover, given the tax relief involved, each child could put more dollars into her RA without any change in net contributions. For example, if a child is in the 7% tax bracket then the child could either hand her $7,000 in cash or deposit $7,490 into her RA and that’s the same cost to the child since the extra $490 comes back in tax savings. (Ignoring time value of money, but that could be included, too.)

And that’s one possible way to make the offer if you don’t want to just make the decision on your own. Example: “Mom, I can afford to give you either $600/month in cash or $630/month into your Retirement Account. I recommend $630/month since you get much more.”

 

[henrylbh]

As usual. Talking to ownself

 

[qhong61]

It’s a voluntary choice. There’s no legal requirement I’m aware of to hand cash to a parent (absent some sort of agreement, such as a private loan), and there’s no legal impediment I’m aware of to depositing funds into her CPF Retirement Account instead. Moreover, given the tax relief involved, each child could put more dollars into her RA without any change in net contributions. For example, if a child is in the 7% tax bracket then the child could either hand her $7,000 in cash or deposit $7,490 into her RA and that’s the same cost to the child since the extra $490 comes back in tax savings. (Ignoring time value of money, but that could be included, too.)

And that’s one possible way to make the offer if you don’t want to just make the decision on your own. Example: “Mom, I can afford to give you either $600/month in cash or $630/month into your Retirement Account. I recommend $630/month since you get much more.”

Give cash better...

 

[qhong61]

As usual. Talking to ownself

Meaning?...

 

[BBCWatcher]

Give cash better...

Well, in this case cash is clearly better for DBS/POSB (the bank only has to pay 0.05% p.a. interest to attract this deposit), better for mortgage borrowers (who thank this mother and the many others like her for helping to keep mortgage interest rates ridiculously low), and better for IRAS and other taxpayers (the children pay more income tax since they're not claiming this tax relief).

 

[dork32]

“Mom, I can afford to give you either $600/month in cash or cpf life gives you $630/month. I recommend $630/month since you get much more.”

 

[BBCWatcher]

“Mom, I can afford to give you either $600/month in cash or cpf life gives you $630/month. I recommend $630/month since you get much more.”

No, that's not what I wrote, and it's not correct.

A child in the 7% income tax bracket who can afford to give $600/month in cash to a parent can afford, instead, to deposit $630/month into the parent's CPF Retirement Account. That $30/month is 5% more, but 7% of that $600/month (up to the first $7,000/year, or $490/year) is returned in income tax savings.

You can phrase it however you wish, but it should be phrased accurately and truthfully. The bottom line is that the tax relief has value, and you can use that value to give a raise to your parent. And it's your choice, actually. Benefactors can choose whether and how they wish to be generous, although obviously it's nice to take the recipient's wishes into account.

 

[henrylbh]

“Mom, I can afford to give you either $600/month in cash or cpf life gives you $630/month. I recommend $630/month since you get much more.”

you think old lady cannot think?

 

[BBCWatcher]

you think old lady cannot think?

Where did that come from?

 

[henrylbh]

Where did that come from?

What asking you? What you write too short, can't help. When you write too long, you talking to yourself.

 

[dork32]

No, that's not what I wrote, and it's not correct.

A child in the 7% income tax bracket who can afford to give $600/month in cash to a parent can afford, instead, to deposit $630/month into the parent's CPF Retirement Account. That $30/month is 5% more, but 7% of that $600/month (up to the first $7,000/year, or $490/year) is returned in income tax savings.

You can phrase it however you wish, but it should be phrased accurately and truthfully. The bottom line is that the tax relief has value, and you can use that value to give a raise to your parent. And it's your choice, actually. Benefactors can choose whether and how they wish to be generous, although obviously it's nice to take the recipient's wishes into account.

what i meant is if you top up cpf. it will give you a higher interest, higher interest will translate to a higher payout.

it is like i put 60k into a biscuit tin. every month you draw 500 from it. at the end of 10 years, there will be no money in the biscuit tin.

or i put 60k in cpf ra, at 6% interest, you can draw 666 per month from and it dries up in 10 years

 

[dork32]

Where did that come from?

it come from the fact that he just want to hit watever i post.

 

[BBCWatcher]

what i meant is if you top up cpf. it will give you a higher interest, higher interest will translate to a higher payout.

That too, and it's quite important. Unfortunately, this parent evidently doesn't understand and/or appreciate the "back side" benefits, so she's (apparently) hoarding too much cash in a 0.05% interest bearing DBS/POSB account while her 5+% (!) CPF Retirement Account remains comparatively underfunded. In other words, she's probably grossly mismanaging the gifts she's receiving given her particular circumstances. It could be a lot worse; she's not using her childrens' cash gifts to buy heroin. But it sure seems like she could do a lot better.

The bottom line is that her children don't have to tolerate what she's currently (not) doing. They can be generous as they choose to be, or not at all. It's solely their decision, ultimately. However, this parent just might like the idea of a monthly raise on the "front side," so that's one possible way to explain the modification.