CPF Withdrawl @ 55 years old

[vacuumes5]

Yes, you can zero SA and OA anytime, but die die cannot touch RA.

But leaving $100K in SA is a good idea, unless you can get >4%pa outside.

If you have $250K in SA+OA, better to take out and buy those >5%pa bonds

If OA have $ and SA also have $, when you partial withdraw, cpf will take from SA first until $=0. Then take from OA. I asked them before. Thought can leave $ in SA and earn higher interest and draw from OA first. But turn out they dont allow.

 

[AnTiLooP]

Last year I went to CPF and asked this question, here is an example what will happen (if wrong please correct me):

Just before 55:
OA $90,000
SA $150,000

At 55:
OA $74,000
SA $0
RA $166,000 (FRS)

You can withdraw all from OA & SA anytime, cannot touch RA.

If you don't touch OA & SA, at 60:

OA $84,000 ($74,000 + est interests)
SA $0
RA $202,000 (FRS + est interests)

You can only withdraw all from OA & SA anytime, cannot touch RA.

So essentially I get to withdraw everything aside ex the FRS/brs and whatever interests earned after my Ra account is created.

Ok got it. Thank you.

 

[limpoop]

If OA have $ and SA also have $, when you partial withdraw, cpf will take from SA first until $=0. Then take from OA. I asked them before. Thought can leave $ in SA and earn higher interest and draw from OA first. But turn out they dont allow.

I think CPF's intentions are:

1) So that you can use OA for housing if needed because SA cannot be used easily

2) To lure you with 4%pa so you will keep $$ in OA+SA with CPF

 

[koja6049]

Well, maybe you do! That's called a reverse mortgage paid as an immediate (or deferred) life annuity. It'd be an interesting CPF LIFE option for some.

actually it already exist
http://www.hdb.gov.sg/cs/infoweb/re...hdb-flat/for-our-seniors/lease-buyback-scheme

but I heard the take up rate is low. This concept is not suitable for singapore as most singaporeans want to leave an asset for their children

 

[henrylbh]

Well, maybe you do! That's called a reverse mortgage paid as an immediate (or deferred) life annuity. It'd be an interesting CPF LIFE option for some.

Reverse mortgage interesting option? You know the interest rate involved?

 

[dork32]

Since smaller principal = lower benefit, why do I need to pledge my property then? What happens to this pledged property?

the idea is half of your payout is used for your rental. since you already have a property, you dont have to pay rental. so you can draw a smaller amount and yet not die. since you dont need so much, you can withdraw part of it.

if you continue to keep your pledged property, nothing happens. if you sell your property, then you need to start to pay rental. so you must put the pledged amount back to your ra, such that your payout can be higher to settle your rental.

i know you can stay free with your relatives and not pay any rental. but to our garmen, nothing is free

 

[BBCWatcher]

Reverse mortgage interesting option?

Sure, but as always value for money is important. If one restaurant is charging $100 for a bowl of noodles, that doesn't have to mean all noodles are expensive.

 

[BBCWatcher]

This concept is not suitable for singapore as most singaporeans want to leave an asset for their children

Assuming they even have children; many don't. However, that said, I'm not in favor of elderly people living with too little income to support a decent lifestyle (not talking about a lavish lifestyle) when they can tap property equity. That'd be like eating cat food in order to avoid selling a Van Gogh painting. That wouldn't make a lot of sense.

A reverse mortgage (leasehold buyback) is a reasonable option, and it ought to be a fairly priced one.

 

[koreanlover]

Assuming they even have children; many don't. However, that said, I'm not in favor of elderly people living with too little income to support a decent lifestyle (not talking about a lavish lifestyle) when they can tap property equity. That'd be like eating cat food in order to avoid selling a Van Gogh painting. That wouldn't make a lot of sense.

A reverse mortgage (leasehold buyback) is a reasonable option, and it ought to be a fairly priced one.

Yes a reverse mortgage should be considered if they have no children.

 

[what88]

Yes a reverse mortgage should be considered if they have no children.

Do agreed on this, at least they have an option to get extra money.

 

[BBCWatcher]

Yes a reverse mortgage should be considered if they have no children.

Only then?

What if the child has a net worth of $50 million, the elderly parent has a net worth of $1 million, the parent has no appreciable income, and all of the parent's $1 million is tied up in owner-occupied housing? Does it make any sense for the parent to eat cat food (or worse) in order to leave a real estate bequest that adds 2% to the child's net worth instead of upgrading to chicken rice and leaving a bequest that still adds 1.7% to the child's net worth?

There are plenty of wealthy children in Singapore who will do quite well no matter what size inheritances they might be fortunate enough to receive.

 

[royalmix]

Only then?

What if the child has a net worth of $50 million, the elderly parent has a net worth of $1 million, the parent has no appreciable income, and all of the parent's $1 million is tied up in owner-occupied housing? Does it make any sense for the parent to eat cat food (or worse) in order to leave a real estate bequest that adds 2% to the child's net worth instead of upgrading to chicken rice and leaving a bequest that still adds 1.7% to the child's net worth?

There are plenty of wealthy children in Singapore who will do quite well no matter what size inheritances they might be fortunate enough to receive.

wah, are u one of them?

 

[BBCWatcher]

wah, are u one of them?

No, I am not an elderly parent eating cat food.

 

[kzonexx]

come to think of it, based on average mortality, we die at 80+. By then our kids will be on average 50+? y do they need any bequest at that age? Its like we are funding their retirement...

 

[numbers]

come to think of it, based on average mortality, we die at 80+. By then our kids will be on average 50+? y do they need any bequest at that age? Its like we are funding their retirement...

maybe before u die, u went to hospital XXX amount of times and funded by the poor kids? hehe....unless u still rich can fund all medical expenses yourself then ya no need bequest for kids

 

[kzonexx]

maybe before u die, u went to hospital XXX amount of times and funded by the poor kids? hehe....unless u still rich can fund all medical expenses yourself then ya no need bequest for kids

insurance can cover?

 

[henrylbh]

Sure, but as always value for money is important. If one restaurant is charging $100 for a bowl of noodles, that doesn't have to mean all noodles are expensive.

But all reverse mortgage is expensive as far as I know. Name me one that's not. Have you read of a case in which a couple end up with nothing but regret.

 

[what88]

But all reverse mortgage is expensive as far as I know. Name me one that's not. Have you read of a case in which a couple end up with nothing but regret.

What about sell partial of the lease period back to HDB ?

 

[BBCWatcher]

What88 asks a good question.

Have you read of a case in which a couple end up with nothing but regret.

OK, but where would I read about couples (or widows or widowers) who are satisfied or delighted with their reverse mortgages? I would expect to hear from people who aren't happy with them. I wouldn't necessarily expect to hear from people who are happy with them. "Squeaky wheel" and all. Also, reverse mortgages are all about tapping personally owned assets to provide a stream of current income. Is anybody truly "happy" to do that? It's not the sort of financial maneuver that you would expect to inspire joy like this:

That said, the key problem with reverse mortgages is that they're financial products that (in many countries) are the worst possible combination: out-of-the-ordinary (small market problems), poorly regulated, more complex than they need to be, and poorly explained. They are, in other words, too often excellent vehicles for financial services firms to prey on and to abuse customers -- for wolves to act like wolves. Which, in turn, is an excellent argument for why CPF and/or HDB ought to offer reverse mortgages. (HDB does, to a degree.) Assuming, of course, those government agencies make fair reverse mortgage/lease buyback offers that are as simple as possible and explained well.

I'm a moderate fan of reverse mortgages conceptually, but I agree they need to be better in the real world, in most countries. CPF could help. So could community organizations. In some countries there are trusted membership organizations that endorse simple, fairly priced financial products. Maybe that too would be possible in Singapore -- the "People's Association Simple Reverse Mortgage," for example. Or NTUC, perhaps.