CPF SA

[Andrew833]

What I mean is ur SA has ERS amount but u don’t opt for ERS.

U opt for FRS. then the remaining from ERS-FRS will still be in SA available for ur withdrawal anytime at any amount

Then I compute I withdraw the difference in payout of frs and ers from sa directly every month

Turns out that I still have remaining left in sa from that initial sum while having the same payout as ers by combining manual withdraw from sa and FRS payout, if I were to die at 85.

I didn’t take into consideration of the bequest difference between frs and ers because I can’t find more information on that to compute.

Ah now I understand what you mean.
FRS to RA acc
BRS keep in SA acc
Before creating RA, SA need to have ERS amt to do so.
Got it.
Btw you have excel for this to compute?

 

[Kaypohji]

Please see my edited post... I posted some qns or assumptions

I am still a bit confused over how bequest works and I can’t calculate an amount out.

Ya I did an excel for this. Just a simple one by having 90k the brs amount/diff in sa earning 4% every year from age 55, then I start to drawdown from age 65 onwards. Then match the payout from ERS by combining it with FRS.

I think the key will be the bequest left... to see which one is better...

Hope some expert can share with me their calculation too

Ah now I understand what you mean.
FRS to RA acc
BRS keep in SA acc
Before creating RA, SA need to have ERS amt to do so.
Got it.
Btw you have excel for this to compute?

 

[iceblendedchoc]

I think i would just opt for BRS with property pledge, which i have no intention to sell.

Do the SA shield before 55th birthday and then restore the money back to SA after CPF Life BRS sum has been deducted.

 

[lordofthering]

sorry, may i ask what is SA shield?

 

[Tiger9119]

sorry, may i ask what is SA shield?

To prevent SA money being transfer to RA at 55.

Read this article:
https://www.straitstimes.com/business/invest/four-ways-to-optimise-your-cpf-savings

 

[BBCWatcher]

sa definitely has higher returns than ers.

That isn't quite right as you've written it. Let's see if I can be more precise (which is proving difficult on this occasion)....

For a significant span of time there's a higher effective annualized yield on CPF Special Account funds than on CPF Retirement Account funds (those above the $60,000 bonus interest limit) fed into CPF LIFE. But it's only a "significant span of time," not "always." There are three basic time segments. (1) For deaths before payout start (which can be as late as age 70), the effective annualized yield is penny for penny identical: SA earns 4.0% interest, and RA earns 4.0% interest (above the $60,000 bonus interest limit). (2) For deaths after CPF LIFE payout start until a certain age (which varies and cannot be precisely pinned down in advance), the effective annualized yield on SA funds would end up higher. (3) For deaths after that certain age, the effective annualized yield on CPF RA funds would end up higher.

for ers, part of the money is taken out to buy insurance just in case you cannot die. because you have a lower principal, your returns will definitely be less.

As seen above, no. Effective annualized yields will be identical for deaths within segment #1, lower on RA in segment #2, and higher on RA in segment #3.

Segment #1 can be as long as 15 years, please note. Indeed, if you're in relatively poor health at 55+ and want to do something really nice for your CPF nominees, you probably ought to inject as much cash into your CPF Retirement Account as you're allowed and able, consistent with your own cash flow and liquidity needs. (And into MediSave too for that matter.) All that cash will then earn 4.0% interest and, when you die at age 67 (let's suppose) and without starting CPF LIFE payouts -- the "do nothing" default -- your nominees benefit from that juicy 4.0% annually compounded interest, every penny of it.

To put it crudely (and jokingly), CPF members age 55+ who are in relatively poor health who have some top up room in RA and/or MA can be outstanding fixed deposit banks.

There's also the important detail that cash injections into CPF RA after CPF LIFE payouts start can earn exactly the same 4.0% interest rate (while on account) as CPF SA funds...or feed into higher CPF LIFE payouts, as you prefer.

 

[lordofthering]

To prevent SA money being transfer to RA at 55.

Read this article:
https://www.straitstimes.com/business/invest/four-ways-to-optimise-your-cpf-savings

http://dividendpotato.blogspot.com/2019/10/four-ways-to-optimise-your-cpf-savings.html

thanks. that article is premium. but i found the same article here

 

[8zaoyu]

Some details. The accumulated interest exclude interest forgone when transferring my OA to my father's RA. Total transferred to his account was 136k and the amount returned to my OA on his demise was only 88k. The accumulated interest he earned on his RA came to $15,018.52 before year of death.

Joining the guessing game. Presume u are a lucky guy. Your resale blks all got enbloc, so are your parents and in laws' blks All went to heaven one after another including all your single aunties and uncles. You have a share in ALL their CPF nominations and all CPF inputs compounded through the decades.....

 

[lifeafter41]

What I mean is ur SA has ERS amount but u don’t opt for ERS.

U opt for FRS. then the remaining from ERS-FRS will still be in SA available for ur withdrawal anytime at any amount

Then I compute I withdraw the difference in payout of frs and ers from sa directly every month

Turns out that I still have remaining left in sa from that initial sum while having the same payout as ers by combining manual withdraw from sa and FRS payout, if I were to die at 85.

I didn’t take into consideration of the bequest difference between frs and ers because I can’t find more information on that to compute.

I also made another assumption that you have a choice to lock ERS amount at 55 and u did that to choose ERS... so the interest accumulated is locked in RA account and not SA... I’m still confused over what will the differences in bequest/remaining be if we choose to lock ERS in RA at 55(if possible) compared to lock FRS at 55 first then 65 top up to ERS.

Need to also take into consideration the 10% to 20% of the premium payable into CPF Life.

I guess there’s a couple of matrix to work out.

55 FRS with 10% premium for CPF Life at 65
55 FRS with 20% premium for CPF Life at 65

Then there’s ERS at 55....... and so on....

 

[BBCWatcher]

I should probably say that I don't plan to shift excess Special Account funds into my future Retirement Account. However, I am highly inclined to push other funds into my future Retirement Account, above the Full Retirement Sum. An excellent deal is still an excellent deal.

CPF Retirement Accounts only look "subpar" compared to CPF Special Accounts, within "Segment #2." But there's no way to add other funds exclusively to CPF Special Accounts from age 55, so that particular offer isn't on the table. CPF Retirement Account top ups (up to the Enhanced Retirement Sum) are available. All you can do is evaluate the available offers, not the ones that you wish were available but aren't. As it stands today, as I look ahead, the CPF Retirement Account top up offer is an outstanding offer on its own merits. Thus I am highly inclined to take that offer, and fortunately I expect to be in a position to do so. And that's despite the fact all interest, including simple CPF interest and imputed CPF LIFE interest, is taxable for me, a U.S. person. That too is part of the offer in my situation. I could imagine a hypothetical world in which CPF interest wasn't taxable, but that's not my world. I evaluate the offers I have available, not the offers that aren't.

 

[lordofthering]

I choose ERS although a lot of people say it not good.

To have a guaranteed 2k/2k for spouse is attractive. That mean no need to wipe table/pick cardboard at old age. We dont spend 4k per month now

I ask before but doesnt seems to have a structured product that cover us from 55-65. Having 5k (real terms) per month from that age will be good.

My thinking is if something can give me a stable income from age 45-65 (that wishful thinking), then I really can treat 45 years old as a retirement age

 

[Tiger9119]

I choose ERS although a lot of people say it not good.

To have a guaranteed 2k/2k for spouse is attractive. That mean no need to wipe table/pick cardboard at old age. We dont spend 4k per month now


I ask before but doesnt seems to have a structured product that cover us from 55-65. Having 5k (real terms) per month from that age will be good

In 20 or 30 yrs time, 2k + 2k won't be of same value because of inflation. May still need to depend on savings outside of CPF or whatever amount left in SA/OA.

 

[lordofthering]

In 20 or 30 yrs time, 2k + 2k won't be of same value because of inflation. May still need to depend on savings outside of CPF or whatever amount left in SA/OA.

2k+2k is in real terms. that why ERS keep rising every year to account for inflation

 

[crimsontactics]

What I mean is ur SA has ERS amount but u don’t opt for ERS.

U opt for FRS. then the remaining from ERS-FRS will still be in SA available for ur withdrawal anytime at any amount

Then I compute I withdraw the difference in payout of frs and ers from sa directly every month

Turns out that I still have remaining left in sa from that initial sum while having the same payout as ers by combining manual withdraw from sa and FRS payout, if I were to die at 85.

I didn’t take into consideration of the bequest difference between frs and ers because I can’t find more information on that to compute.

I also made another assumption that you have a choice to lock ERS amount at 55 and u did that to choose ERS... so the interest accumulated is locked in RA account and not SA... I’m still confused over what will the differences in bequest/remaining be if we choose to lock ERS in RA at 55(if possible) compared to lock FRS at 55 first then 65 top up to ERS.

I see...

Sent from . using GAGT

 

[BBCWatcher]

I would use the Escalating Plan payout estimates for your CPF LIFE planning purposes, whether or not you choose the Escalating Plan -- although that is the only explicit inflation fighting choice. That'll help you factor inflation into your retirement financial planning, or at least start to understand it.

CPF LIFE is also a little "weird" in that there's no explicit provision for protecting couples. That is, in a dual CPF LIFE household, when the first recipient passes, total monthly CPF LIFE income is cut approximately in half. (Typically slightly more than half since a male spouse is often the first to go and the female second. Female CPF LIFE payouts are slightly lower with identical funding.) So that's another planning consideration to take into account, and it's a little tricky, actually.

 

[Kaypohji]

55-65 is insurance annuity liao...

I choose ERS although a lot of people say it not good.

To have a guaranteed 2k/2k for spouse is attractive. That mean no need to wipe table/pick cardboard at old age. We dont spend 4k per month now

I ask before but doesnt seems to have a structured product that cover us from 55-65. Having 5k (real terms) per month from that age will be good.

My thinking is if something can give me a stable income from age 45-65 (that wishful thinking), then I really can treat 45 years old as a retirement age

 

[Kaypohji]

I just went to cpf website and see... bequest is 0 at age 82 onwards for a standard plan...

 

[Tiger9119]

I just went to cpf website and see... bequest is 0 at age 82 onwards for a standard plan...

Should be zero before 81.

 

[lordofthering]

I would use the Escalating Plan payout estimates for your CPF LIFE planning purposes, whether or not you choose the Escalating Plan -- although that is the only explicit inflation fighting choice. That'll help you factor inflation into your retirement financial planning, or at least start to understand it.

CPF LIFE is also a little "weird" in that there's no explicit provision for protecting couples. That is, in a dual CPF LIFE household, when the first recipient passes, total monthly CPF LIFE income is cut approximately in half. (Typically slightly more than half since a male spouse is often the first to go and the female second. Female CPF LIFE payouts are slightly lower with identical funding.) So that's another planning consideration to take into account, and it's a little tricky, actually.

When one pass on the expense is reduced by half. Assuming hdb is paid, which mine is

I live frugally. So 4k (real term) as a couple may mean able to travel every 2-3 months to asia country

 

[lordofthering]

55-65 is insurance annuity liao...

Insurance annuity does not have 10 yrs. And there is chance that insurance firm will collapse