CPF SA

[crimsontactics]

Call me crazy, but I don’t think it is beyond the realm of possibilities that one day CPF members will be allowed to override the account sequence from which withdrawals are made to fund RA at 55. Since it is already allowed through shielding, what is the harm in making it official?

Because shielding prevents lazy or uninformed people from earning more interest.

Gov can save more money that way.

Sent from . using GAGT

 

[Tiger9119]

Shield or not shield is not the main problem.
E.g. RA acc got FRS.
What are you going to do with all the money in OA + SA at 55?
1) Draw out OA to use, keep SA for interest.
2) Draw out all but what are you going to do with the money, spend or invest it.
If invest, where can get risk free 4% interest?
3) Keep all in CPF (not for me )

1. You have to draw from SA first.
3. After 55, SA and OA are just like saving accounts and can draw out anytime you want, with higher interest rates than banks. Deposits in banks are insured only up to S$75,000 by the Singapore Deposit Insurance Corporation Limited (SDIC) per account.

 

[Andrew833]

I would suggest as follows:

If OA is sufficient to offset deduction of SA to create RA after shielding, then go for max.

Ie, before 55,

OA 200K
SA 200K
MA 60K

Age 54 years, 11 months more or less.....lol, assuming reaching 55 in Sep 2020.

OA 200K
SA 40K + raise Shield (160K in SA approved investment)
MA 60K

After age 55years + 1week

OA 59K
SA 160K (Lower shield)
RA 181K
MA 60K

That’s about the size of it. You can choose to withdraw your 59K in OA, if you wish, but has to be done before lowering of SA shield.

After 55 + 1week, my cpf should be;
OA 0
SA BRS ($90.5k for this year, will be more when I reach 55)
RA FRS (as above)
MA BRS (as above)

Not intend to keep too much in SA. Will use the money to invest in stock.

 

[polyglob]

Not intend to keep too much in SA. Will use the money to invest in stock.

You intend to trade actively after 55 while keeping the minimum required in CPF? Garang.

 

[onegoal]

After 55 + 1week, my cpf should be;
OA 0
SA BRS ($90.5k for this year, will be more when I reach 55)
RA FRS (as above)
MA BRS (as above)

Not intend to keep too much in SA. Will use the money to invest in stock.

Please don't put our hard earn money at risk. Just take the pay out, enjoy life. Go tracking or climb mountain overseas.

 

[celtosaxon]

Because shielding prevents lazy or uninformed people from earning more interest.

Gov can save more money that way.

Sent from . using GAGT

There will still be plenty who don’t bother overriding the default sequence if override becomes an option. At least make it easier for those who bother. The option is already there, why make it difficult?

 

[crimsontactics]

There will still be plenty who don’t bother overriding the default sequence if override becomes an option. At least make it easier for those who bother. The option is already there, why make it difficult?

The whole point is Gov don't want you to do it.

Why would they want to pay more interest you?

Sent from . using GAGT

 

[THEMIKOS]

Why the need to keep SA@ BRS when your RA is already at FRS?

And isn’t MA fixed at a specific limit for all? What BRS are u referring to?

Kinda confused by your replies. Pls enlighten me.

After 55 + 1week, my cpf should be;
OA 0
SA BRS ($90.5k for this year, will be more when I reach 55)
RA FRS (as above)
MA BRS (as above)

Not intend to keep too much in SA. Will use the money to invest in stock.

 

[THEMIKOS]

So i have been reading this thread and have come to this conclusion. Correct me if i am wrong. For the following scenario, let’s assume it is fully CPF based profits and no investments in stocks nor property purchase.

To get the most out of one’s CPF, they should:

1. Just before 55, make OA be $0, SA be $40k and MA at 60k (so called SA shielding).

2. Top up RA to FRS or ERS using cash.

3. Lower shield to put OA/SA funds back to the respective accounts.

4. Enjoy the yearly interests that OA/SA/MA generates while keeping the principal amount. RA is not affected as RA interests add up to the CPF LIFE pool.

Am i correct to say this dear gurus?

 

[crimsontactics]

So i have been reading this thread and have come to this conclusion. Correct me if i am wrong. For the following scenario, let’s assume it is fully CPF based profits and no investments in stocks nor property purchase.

To get the most out of one’s CPF, they should:

1. Just before 55, make OA be $0, SA be $40k and MA at 60k (so called SA shielding).

2. Top up RA to FRS or ERS using cash.

3. Lower shield to put OA/SA funds back to the respective accounts.

4. Enjoy the yearly interests that OA/SA/MA generates while keeping the principal amount. RA is not affected as RA interests add up to the CPF LIFE pool.

Am i correct to say this dear gurus?

It is not advisable to put cash into CPF in your 50s unless you're rich as 50s is the time when your employability is low and cash on hand is crucial.

Sent from . using GAGT

 

[The_Davis]

So i have been reading this thread and have come to this conclusion. Correct me if i am wrong. For the following scenario, let’s assume it is fully CPF based profits and no investments in stocks nor property purchase.

To get the most out of one’s CPF, they should:

1. Just before 55, make OA be $0, SA be $40k and MA at 60k (so called SA shielding).

2. Top up RA to FRS or ERS using cash.

3. Lower shield to put OA/SA funds back to the respective accounts.

4. Enjoy the yearly interests that OA/SA/MA generates while keeping the principal amount. RA is not affected as RA interests add up to the CPF LIFE pool.

Am i correct to say this dear gurus?

Why would you deposit few hundred thousand into cpf at age 55?

In 2030 this is likely to be 260k or more.

 

[BBCWatcher]

It is not advisable to put cash into CPF in your 50s unless you're rich as 50s is the time when your employability is low and cash on hand is crucial.

You have tons of cash on hand in the outlined scenario: your SA and OA. And even a little RA. All earning 2.5% interest and 4.0+% interest, all available for immediate withdrawal in any amount.

Why would you deposit few hundred thousand into cpf at age 55?
In 2030 this is likely to be 260k or more.

Uh, because that cash was earning 1% interest maybe, then it starts earning 4.0+% interest (to protect a pension) and you have hundreds of thousands (or more) in your OA+SA immediately available for withdrawal in any amount, also earning 2.5% and 4.0% interest? This is terrific!

Remember, all SA+OA (and a little RA usually) turns into liquid cash from age 55, assuming you’ve funded your RA at least decently. That IS cash on hand, weirdly high yielding cash on hand especially for government guaranteed accounts.

THEMIKOS is presenting a very sensible, logical idea here, especially for those of you who are dragging along way too much cash in your early 50s (or longer) at, what, 1% interest? You’ve got to fund your RA decently somehow, so why NOT end up with gobs of OA+SA (and a little RA) on demand cash? The run up to age 55 is a once in a lifetime opportunity to inject cash into RA such that you dramatically boost residual SA and OA. Then you can have your cake and eat it, too.

With respect to liquidity, want to know the best way to maximize liquidity in Singapore? Don’t buy a house, especially not a HDB leasehold. Does anyone want to recommend selling your home at about age 45 in order to maximize liquidity because the subsequent years are “scary”? Because if you care so much about liquidity, that’s what you must do. To be clear, the scenario THEMIKOS outlines at most reduces liquidity by the difference between the FRS and BRS (and only briefly since higher interest rapidly closes that amount), which for most people doesn’t even begin to compare to the amount of liquidity you can get by avoiding home ownership.

 

[dork32]

But my cleverer kid not doing that for me leh

because he rather keep his money for himself

 

[dork32]

You have tons of cash on hand in the outlined scenario: your SA and OA. And even a little RA. All earning 2.5% interest and 4.0+% interest, all available for immediate withdrawal in any amount.


Uh, because that cash was earning 1% interest maybe, then it starts earning 4.0+% interest (to protect a pension) and you have hundreds of thousands (or more) in your OA+SA immediately available for withdrawal in any amount, also earning 2.5% and 4.0% interest? This is terrific!

Remember, all SA+OA (and a little RA usually) turns into liquid cash from age 55, assuming you’ve funded your RA at least decently. That IS cash on hand, weirdly high yielding cash on hand especially for government guaranteed accounts.

THEMIKOS is presenting a very sensible, logical idea here, especially for those of you who are dragging along way too much cash in your early 50s (or longer) at, what, 1% interest? You’ve got to fund your RA decently somehow, so why NOT end up with gobs of OA+SA (and a little RA) on demand cash? The run up to age 55 is a once in a lifetime opportunity to inject cash into RA such that you dramatically boost residual SA and OA. Then you can have your cake and eat it, too.

With respect to liquidity, want to know the best way to maximize liquidity in Singapore? Don’t buy a house, especially not a HDB leasehold. Does anyone want to recommend selling your home at about age 45 in order to maximize liquidity because the subsequent years are “scary”? Because if you care so much about liquidity, that’s what you must do. To be clear, the scenario THEMIKOS outlines at most reduces liquidity by the difference between the FRS and BRS (and only briefly since higher interest rapidly closes that amount), which for most people doesn’t even begin to compare to the amount of liquidity you can get by avoiding home ownership.

i agree with bbc and themikos.

lets put this case up

oa 200k
sa 100k
cash 140k

use themikos method of shielding and topping up, after all the process,
oa 200k
sa 60k
ra 180k
cash 0

if do nothing
oa 120k
sa 0
ra 180k
cash 140k

on the surface it seems that he will have 140k cash on hand if he does nothing, and no cash if he had done the shielding.
but not to forget at 55, oa and sa is as good as cash. so for either cases, he will have 260k liquid assets. Except that with shielding his liquid assets are earning more interest

 

[dork32]

Why would you deposit few hundred thousand into cpf at age 55?

In 2030 this is likely to be 260k or more.

because at 55, cpf oa and sa are real money

 

[The_Davis]

i agree with bbc and themikos.

lets put this case up

oa 200k
sa 100k
cash 140k

use themikos method of shielding and topping up, after all the process,
oa 200k
sa 60k
ra 180k
cash 0

if do nothing
oa 120k
sa 0
ra 180k
cash 140k

on the surface it seems that he will have 140k cash on hand if he does nothing, and no cash if he had done the shielding.
but not to forget at 55, oa and sa is as good as cash. so for either cases, he will have 260k liquid assets. Except that with shielding his liquid assets are earning more interest

Can use scenario of FRS 300k?? That's about 18 to 20 years away

 

[dork32]

It is not advisable to put cash into CPF in your 50s unless you're rich as 50s is the time when your employability is low and cash on hand is crucial.

Sent from . using GAGT

no. it is advisable to pump up your cpf after 55 if you have frs ra, rather than keep it in posb savings, whether you are employed or not.

cash in cpf is as good as cash on hand.

But please take note of the deposit and withdrawal sequence. it is easy to put cash into oa but not sa. it is easy to withdraw from sa but not oa. repeated deposits and withdrawal will end up with a depleted sa and puffed up oa

 

[henrylbh]

So i have been reading this thread and have come to this conclusion. Correct me if i am wrong. For the following scenario, let’s assume it is fully CPF based profits and no investments in stocks nor property purchase.

Start already salah. What CPF based profits? No contribution to CPF, no investments in stocks or property to talk about.

 

[dork32]

Can use scenario of FRS 300k?? That's about 18 to 20 years away

lets put this case up

oa 200k
sa 100k
cash 140k

use themikos method of shielding and topping up, after all the process,
oa 80k
sa 60k
ra 300k
cash 0

if do nothing
oa 0
sa 0
ra 300k
cash 140k

does it really matter what the minimum sum is? as long as you can hit frs, it is ok

 

[rrr2015]

am i missing something? i thought remaining OA 20k used for mortgage payment so how it end up back in OA again?

lets put this case up

oa 200k
sa 100k
cash 140k

use themikos method of shielding and topping up, after all the process,
oa 80k
sa 60k
ra 300k
cash 0

if do nothing
oa 0
sa 0
ra 300k
cash 140k

does it really matter what the minimum sum is? as long as you can hit frs, it is ok