CPF SA

[eyz]

got that bro.

so should I transfer my OA to SA to 181k?

OA 60K
SA 156K

I'm turning 40 this year.

it's hard to get a new BTO in mature area, so I don't think I'll be using the OA anytime soon.

Even so, I'll be able to fund my new BTO after selling my current flat, right?

If you have a HDB flat whether just MOPed 5 yrs or a old 50 yr old flat, and had used CPF for housing before, CPF will retrieve back the CPF plus accrued interests, you will see a new statement then. Buy next property, it is up to you whether you want to pay by CPF or cash. Some high net worth people used cash in the millions having cashing out their old properties!

 

[BBCWatcher]

Just out of curiosity, which products did you buy or intend to buy for your life annuity #1, 2 and 3?

They're sovereign life annuities, already "purchased" via compulsory contributions (mostly) and some voluntary contributions.

 

[d3n]

Even u kena retrench in 20s or 30s its still ok.

Cos u still got plenty of time to look for new job and even if u got a house u at least got 15-20 years to finance.

Imagine getting retrenched in 40s , chances of find a job (same pay range) is much harder. Let alone your OA is empty and SA gao gao. And whats worst you probably still have 10 years at least to pay off your house. So whats the use of SA gaogao but cannot pay your house and you still have to find money to top up OA to pay your house till you got a job?

The above scenario is very real.

Just find anyone in their 40s with hdb loan still outstanding haven clear finish. OA account every month enough to pay hdb installment cos the rest is transferred to SA to make it gao gao.

One day suddenly got retrenched.

There's no such thing as a retrenchment age in this age. You don't have to be old to be retrenched. Early 20s is also at risk. I was retrenched at 36. One should not think one is at risk only past 40 or a certain age

www.dennislee.co HardwareZone Forums app

 

[Kaypohji]

Eh the chart shows 2-3% annualized returns.

That is considered returns and more than breakeven right ?

Yes, take into consideration of the bequest payout.
The "breakeven" definition they use I think means if you die before 92 years old (for CPF basic), then you do not get all the money that is originally supposed to be yours back.

You can see here for old calculations:

https://make-money-secrets.blogspot.com/2014/08/cpf-life-annuity-return-calculation-for_29.html

https://make-money-secrets.blogspot.com/2014/08/cpf-life-annuity-return-calculation-for.html

CPF Life give their payout and bequest in a range, so above calculations use range, but don't think we can get the high range for payout and bequest right? Should use average then.

 

[Kaypohji]

Do you all think insurance annuity plans are a better alternative to cpf ?

Their guaranteed returns not as high as cpf sa but could be comparable to cpf oa (it depends on a lot of factors of your plan)

But non guaranteed could be as high as 4% plus ( slightly more than cpf sa)

Like start at age 30 payment terms for about 10-27 years, withdraw at age 60 to 80.

 

[d3n]

I rather do my own investment... newbie but i doing both posb invest saver (regular monthly top up) + dbs digitportfolio but dun requires me to monitor.

Do you all think insurance annuity plans are a better alternative to cpf ?

Their guaranteed returns not as high as cpf sa but could be comparable to cpf oa (it depends on a lot of factors of your plan)

But non guaranteed could be as high as 4% plus ( slightly more than cpf sa)

Like start at age 30 payment terms for about 10-27 years, withdraw at age 60 to 80.

www.dennislee.co HardwareZone Forums app

 

[celtosaxon]

Does breakeven take into consideration of the bequest?

I was using npv to calculate the payout compared to the amount ‘invested’ which is frs. it was a good deal... hmm let me calculate again

You should use IRR instead of NPV. When CPF LIFE reaches an IRR of 4% that is breakeven compared to having left the money earning 4% interest. It is true that Standard reaches 4% parity faster than Basic. However, Standard has an IRR of 0% for roughly the first 15 years. Around this 15 year mark is also where the advantages of Basic over Standard hits the peak. From there, Standard starts to make a “sprint” to catch up and eventually overtake Basic. Make it to your 90’s and you’ll see a higher IRR from Standard. But, if the bequest is not a factor for you, just take the higher payment from Standard and enjoy.

 

[Kaypohji]

I am doing a bit of this too.

Just thinking if I should diversify in a way.... cause economic situation really hard to predict.

I rather do my own investment... newbie but i doing both posb invest saver (regular monthly top up) + dbs digitportfolio but dun requires me to monitor.

 

[d3n]

I dun find insurance good way for me. Bad experience. Last time i use my oa to invest (anyway have to park some sum aside before hdb wipeout, so in anycase if need to withdraw and finance house still able to and luckily i did that cos i was jobless for 2 years back then), thru out the 3 years didn’t get any good returns when i withdraw i just break even with less then $500 returns. Invested $15k oa.

Not sure about your annunity plan. As long as principle protected then should be fine. Mine cpf investment is not principle protected.

I am doing a bit of this too.

Just thinking if I should diversify in a way.... cause economic situation really hard to predict.

www.dennislee.co HardwareZone Forums app

 

[Kaypohji]

Oh I finally get what you guys mean by breakeven.

So even if Standard first 15 years irr is 0% u will still prefer standard than basic ?

You should use IRR instead of NPV. When CPF LIFE reaches an IRR of 4% that is breakeven compared to having left the money earning 4% interest. It is true that Standard reaches 4% parity faster than Basic. However, Standard has an IRR of 0% for roughly the first 15 years. Around this 15 year mark is also where the advantages of Basic over Standard hits the peak. From there, Standard starts to make a “sprint” to catch up and eventually overtake Basic. Make it to your 90’s and you’ll see a higher IRR from Standard. But, if the bequest is not a factor for you, just take the higher payment from Standard and enjoy.

 

[celtosaxon]

Oh I finally get what you guys mean by breakeven.

So even if Standard first 15 years irr is 0% u will still prefer standard than basic ?

I would choose Standard if the bequest was not a factor for me.

I would choose Escalating if my parents & grandparents mostly lived to ripe old ages and I lived a very healthy lifestyle myself.

Outside of that, I would choose Basic.

But that is me.

 

[chrisloh65]

Under old RSS, you will be paid 4% p.a. for your money in CPF RA.
The chart shows return of 2-3% p.a. means that you are not being paid interest of 4% p.a., and the interests are forfeited by CPF Life (so you "lost" vs 4% p.a. and did not "breakeven").

Eh the chart shows 2-3% annualized returns.

That is considered returns and more than breakeven right ?

 

[fandango]

thanks found a table and what you said is true. so most likely need keep contributing as my friend is not salaried worker

2021 will be $200,000.

Same as 2009.

 

[Kaypohji]

how to calculate the bequest from cpf life that I will have if I die at 85 years old?

cpf website didn't state down examples but just a vague description

 

[KnyghtRyder]

Basic plan means more bequest? You want to leave more for the next generation?

Why not . I doesn't make much diff to the payout but yet increases the bequeath sum quite significantly.. sounds like a win to me.

 

[The_Davis]

CPF is not very clear on this I believe. The underlying rule is that any monies above FRS can be withdrawn, top-up or not. It’s like what the other edmwers have shared. I wrote to CPF to ask before.

SA believer here too. Have been topping since I started work. Aim is to be CPF SA millionaire by retirement!

So if done go for brs but instead go for FRS, any amount above FRS can withdraw? Dont need shield this shield that???

 

[KnyghtRyder]

This isn't automatic and certain is it? What you have transferred to her is hers and not divisible but what remains in your account might be, without a fixed formula. If a marriage ends with the woman being wealthier, I don't think the household wealth will be evenly distributed.

CPF nomination trumps everything.
Pls nominate wisely.

 

[Kaypohji]

Hmm I just did a calculation. Cpf life frs and ers indeed only offer 3% plus irr if someone pass away at 85

But that’s without taking into consideration of the bequest

 

[mycashewhouse]

How much annual income to earn before one shd think abt topping up cpf to earn tax rebates? Anyone knows

 

[henrylbh]

I rather do my own investment... newbie but i doing both posb invest saver (regular monthly top up) + dbs digitportfolio but dun requires me to monitor.

I no need investment Till end of 2019, interest on all CPF accounts amounted to $412,148.83