CPF SA

[BBCWatcher]

ERS is good for you if you are cash rich.

I'm quite sure this is the "Money Mind" forum. We're all aspiring to be wealthy, right?

Firstly CPFL is not liquidity, mean money inside is lock, payout to you monthly after 65.

Your various Retirement Account withdrawal options close once you start CPF LIFE payouts, which can be as late as age 70. It doesn't seem like an Enhanced Retirement Sum (ERS) top up alters or interferes with your preexisting RA withdrawal options, although I suggest confirming that particular arcane detail with the CPF Board if it matters. (The ERS top up itself is not generally available for lump sum withdrawal.)

[Side comment to Dork32: Please note that I wrote "net effective interest."]

 

[crimsontactics]

Wah, I really start to feel anxious about CPF...

I don't know why?

Do you all know how to cope?

Sent from . using GAGT

 

[dork32]

"the monthly payouts under the Basic Plan are lower and will get progressively lower when your combined CPF balances eventually fall below $60,000. This is because the extra interest is earned in your Retirement Account and paid as part of your monthy payouts, which will decline when balances fall as payouts are made."

the above statement is unlikely to happen to me and many others.

People like us will not draw down on our SA. so SA itself is always above 60k, meaning i will continue to earn extra interest till i die, whatever the age may be.

the statement is based on a 0 ma, 0 oa and 0 sa.

 

[dork32]

I'm quite sure this is the "Money Mind" forum. We're all aspiring to be wealthy, right?

you do not have to be in money mind to be aspiring to be wealthy. everyone aspires to be wealthy. aspiring to be wealthy is different from being actually wealthy.

many people that comes into money mind are not wealthy. we have thread of people going bankrupt and asking for advice.

 

[dork32]

Wah, I really start to feel anxious about CPF...

I don't know why?

Do you all know how to cope?

Sent from . using GAGT

you can do like wat our ministers did:
"i look at my cpf statement and feel very rich". you will feel much better.

 

[Taloona]

At age 55, is it better to have more money in SA rather than OA after setting aside the FRS?

 

[BBCWatcher]

"the monthly payouts under the Basic Plan are lower and will get progressively lower when your combined CPF balances eventually fall below $60,000. This is because the extra interest is earned in your Retirement Account and paid as part of your monthy payouts, which will decline when balances fall as payouts are made."

the above statement is unlikely to happen to me and many others.

People like us will not draw down on our SA. so SA itself is always above 60k, meaning i will continue to earn extra interest till i die, whatever the age may be.

the statement is based on a 0 ma, 0 oa and 0 sa.

Not actually. The CPF Board is describing the CPF LIFE Basic Plan rather fairly here, I think.

First of all it's important to understand what they're saying. They're saying the Basic Plan payouts will eventually sag a bit(*) if you live long enough due to the way bonus interest crediting works with that specific plan. That's absolutely true, and it's true even if you have $1 million in your OA+SA+MA in any allocation. They're not saying you won't earn maximum bonus interest, even for the rest of your life. (You very well might!) They're only describing the CPF LIFE Basic Plan's payout behaviors, exactly as they wrote.

The way this works according to current bonus interest crediting rules is that, once your Retirement Account falls below $40,000 (at the very latest), the bonus interest credited to your Retirement Account starts to fall below the maximum attainable $900/year. If you keep at least $20,000 in your Ordinary Account then you won't lose all bonus interest crediting into your RA, but you'll lose much of it from the $40,000 mark. Specifically, you'll eventually lose $500 out of the maximum possible $900 bonus interest per year.

The loss of the bonus interest at some point is why the Basic Plan has a quirky "burble," where the monthly payout goes falls a bit and stays down after a certain age. This is unavoidable with the Basic Plan because some bonus interest loss in the RA in unavoidable, assuming you live at least long enough to see it.

If your MA+SA+OA+RA is maintained at $60,000 or more, then you'll still earn maximum possible bonus interest. It's just that the bonus interest will start to "stick" in your SA and potentially also MA as well, depending on your balances. It's only OA's contribution to bonus interest that credits to RA, plus RA itself of course.

The CPF Board explains these various bonus interest crediting rules here.

(*) The payout amount won't sag quite as much if you maintain $20,000 in your OA, but it'll still sag a bit.

 

[Tiger9119]

At age 55, is it better to have more money in SA rather than OA after setting aside the FRS?

SA = 4% interest
OA = 2.5% interest

 

[Andrew833]

At age 55, is it better to have more money in SA rather than OA after setting aside the FRS?

OA if you need to pay HDB loan or other purpose.
SA earn 4% so compounding effect is great.

 

[BBCWatcher]

SA = 4% interest
OA = 2.5% interest

OA if you need to pay HDB loan or other purpose.
SA earn 4% so compounding effect is great.

No, Tiger9119 is correct. From age 55, and assuming your RA is funded well enough, your SA and OA are both liquid. SA's 4.0% interest is lot better than OA's 2.5%. You would much rather have dollars in SA than in OA if you have the choice, no matter the eventual spending purpose(s).

If you want to withdraw CPF funds to pay your mortgage or other qualified housing expenses, then it's a good idea to draw first from OA if you're allowed since OA is earning the lower interest rate. But that's just how you withdraw, not where you'd prefer the dollars to be if given the choice.

 

[rrr2015]

for me that how i will decide at 55.
say i need topup $XX to bring up FRS > ERS
if i think i don't need $XX for next 10years, i probably decide to go ERS otherwise will stick to FRS

hello, i do understand your view with regards to CPFL Basic Plan but may i know why the consideration between ERS or BRS ? and why totally no consideration for FRS?
thanks

 

[maple96]

Not actually. The CPF Board is describing the CPF LIFE Basic Plan rather fairly here, I think.

First of all it's important to understand what they're saying. They're saying the Basic Plan payouts will eventually sag a bit(*) if you live long enough due to the way bonus interest crediting works with that specific plan. That's absolutely true, and it's true even if you have $1 million in your OA+SA+MA in any allocation. They're not saying you won't earn maximum bonus interest, even for the rest of your life. (You very well might!) They're only describing the CPF LIFE Basic Plan's payout behaviors, exactly as they wrote.

The way this works according to current bonus interest crediting rules is that, once your Retirement Account falls below $40,000 (at the very latest), the bonus interest credited to your Retirement Account starts to fall below the maximum attainable $900/year. If you keep at least $20,000 in your Ordinary Account then you won't lose all bonus interest crediting into your RA, but you'll lose much of it from the $40,000 mark. Specifically, you'll eventually lose $500 out of the maximum possible $900 bonus interest per year.

The loss of the bonus interest at some point is why the Basic Plan has a quirky "burble," where the monthly payout goes falls a bit and stays down after a certain age. This is unavoidable with the Basic Plan because some bonus interest loss in the RA in unavoidable, assuming you live at least long enough to see it.

If your MA+SA+OA+RA is maintained at $60,000 or more, then you'll still earn maximum possible bonus interest. It's just that the bonus interest will start to "stick" in your SA and potentially also MA as well, depending on your balances. It's only OA's contribution to bonus interest that credits to RA, plus RA itself of course.

The CPF Board explains these various bonus interest crediting rules here.

(*) The payout amount won't sag quite as much if you maintain $20,000 in your OA, but it'll still sag a bit.

Who can spot all the seriously incorrect/wrong CPF Facts/Rules above?

 

[Andrew833]

No, Tiger9119 is correct. From age 55, and assuming your RA is funded well enough, your SA and OA are both liquid. SA's 4.0% interest is lot better than OA's 2.5%. You would much rather have dollars in SA than in OA if you have the choice, no matter the eventual spending purpose(s).

If you want to withdraw CPF funds to pay your mortgage or other qualified housing expenses, then it's a good idea to draw first from OA if you're allowed since OA is earning the lower interest rate. But that's just how you withdraw, not where you'd prefer the dollars to be if given the choice.

Yes, I understand what you mean. But did you notice the 'IF". HDB loan is deducted from OA, that's why need to keep some money there. If no more loan to pay, just clear out OA will do.

 

[BBCWatcher]

Yes, I understand what you mean. But did you notice the 'IF". HDB loan is deducted from OA, that's why need to keep some money there. If no more loan to pay, just clear out OA will do.

I don't understand what you mean.

If you have a choice between having a dollar in SA or in OA at age 55+, you'd choose SA. Full stop, as simple as that. It doesn't matter whether you eventually want to use the money for housing, a Tasmanian vacation, or a bottle of whiskey. The 4.0% interest trumps the 2.5% interest, every month.

Special Account "shielding" can give you this particular choice between dollars in OA and dollars in SA, to a degree anyway.

With respect to housing, cash still works! There's absolutely no need to have OA dollars specifically. And you have that much more liquid cash at age 55+ if your dollars are earning 4.0% interest instead of 2.5% interest. But, if you do have dollars in your OA, and if you have housing to pay for (such as mortgage payments to make), of course you'd draw from OA ahead of SA. It's for the same reason: OA is earning 2.5%, so you want to draw down OA first, before touching SA. If allowed, and that's allowed when it comes to housing specifically. That doesn't necessarily mean you would pick OA first, ahead of everything else you have. But you would pick OA ahead of SA.

 

[dork32]

Not actually. The CPF Board is describing the CPF LIFE Basic Plan rather fairly here, I think.

First of all it's important to understand what they're saying. They're saying the Basic Plan payouts will eventually sag a bit(*) if you live long enough due to the way bonus interest crediting works with that specific plan. That's absolutely true, and it's true even if you have $1 million in your OA+SA+MA in any allocation. They're not saying you won't earn maximum bonus interest, even for the rest of your life. (You very well might!) They're only describing the CPF LIFE Basic Plan's payout behaviors, exactly as they wrote.

The way this works according to current bonus interest crediting rules is that, once your Retirement Account falls below $40,000 (at the very latest), the bonus interest credited to your Retirement Account starts to fall below the maximum attainable $900/year. If you keep at least $20,000 in your Ordinary Account then you won't lose all bonus interest crediting into your RA, but you'll lose much of it from the $40,000 mark. Specifically, you'll eventually lose $500 out of the maximum possible $900 bonus interest per year.

The loss of the bonus interest at some point is why the Basic Plan has a quirky "burble," where the monthly payout goes falls a bit and stays down after a certain age. This is unavoidable with the Basic Plan because some bonus interest loss in the RA in unavoidable, assuming you live at least long enough to see it.

If your MA+SA+OA+RA is maintained at $60,000 or more, then you'll still earn maximum possible bonus interest. It's just that the bonus interest will start to "stick" in your SA and potentially also MA as well, depending on your balances. It's only OA's contribution to bonus interest that credits to RA, plus RA itself of course.

The CPF Board explains these various bonus interest crediting rules here.

(*) The payout amount won't sag quite as much if you maintain $20,000 in your OA, but it'll still sag a bit.

uncle, oredy say many times. my sa at least 100k till i die. no need grandma stories. i sure have bonus interest

 

[Andrew833]

I don't understand what you mean.

If you have a choice between having a dollar in SA or in OA at age 55+, you'd choose SA. Full stop, as simple as that. It doesn't matter whether you eventually want to use the money for housing, a Tasmanian vacation, or a bottle of whiskey. The 4.0% interest trumps the 2.5% interest, every month.

Special Account "shielding" can give you this particular choice between dollars in OA and dollars in SA, to a degree anyway.

With respect to housing, cash still works! There's absolutely no need to have OA dollars specifically. And you have that much more liquid cash at age 55+ if your dollars are earning 4.0% interest instead of 2.5% interest. But, if you do have dollars in your OA, and if you have housing to pay for (such as mortgage payments to make), of course you'd draw from OA ahead of SA. It's for the same reason: OA is earning 2.5%, so you want to draw down OA first, before touching SA. If allowed, and that's allowed when it comes to housing specifically. That doesn't necessarily mean you would pick OA first, ahead of everything else you have. But you would pick OA ahead of SA.

"It's for the same reason: OA is earning 2.5%, so you want to draw down OA first, before touching SA."
SA cannot use for HDB loan. As you said, you have to withdraw then pay as cash.
Don't forget after 55, if still working, salary will still deposit into OA.

Anyway, I understand this OA, SA and RA. Just answering one of the guy question.

 

[Kaypohji]

Why would interest stick in sa and not RA in your previous post?

I don't understand what you mean.

If you have a choice between having a dollar in SA or in OA at age 55+, you'd choose SA. Full stop, as simple as that. It doesn't matter whether you eventually want to use the money for housing, a Tasmanian vacation, or a bottle of whiskey. The 4.0% interest trumps the 2.5% interest, every month.

Special Account "shielding" can give you this particular choice between dollars in OA and dollars in SA, to a degree anyway.

With respect to housing, cash still works! There's absolutely no need to have OA dollars specifically. And you have that much more liquid cash at age 55+ if your dollars are earning 4.0% interest instead of 2.5% interest. But, if you do have dollars in your OA, and if you have housing to pay for (such as mortgage payments to make), of course you'd draw from OA ahead of SA. It's for the same reason: OA is earning 2.5%, so you want to draw down OA first, before touching SA. If allowed, and that's allowed when it comes to housing specifically. That doesn't necessarily mean you would pick OA first, ahead of everything else you have. But you would pick OA ahead of SA.

 

[cal3135]

More in SA is way better...

At age 55, is it better to have more money in SA rather than OA after setting aside the FRS?

xs HardwareZone Forums app

 

[dork32]

Who can spot all the seriously incorrect/wrong CPF Facts/Rules above?

i oredy say it.

for me, i will receive bonus throughout my life. my payout will not sag, regardless what i have in my oa. i oredy say he is tokking rubbish.

my sa will have more than 60k thoughout my life. this is not to mention the amount i have in my ma

 

[henrylbh]

SA = 4% interest
OA = 2.5% interest

It gets a little complicating as SA will start to earn extra interest when RA, including balances used to pay for the annuity premium under CPF LIFE drops below 60k.