Retirement account question

[qhong61]

If already above 55, and still abt $150k in OA from sales of flat, how can we best utilise this money to grow for retirement? Thanks.

 

[hwmook]

Think all the life expectancy figures would change in future because of Covid. Not just the deaths. Find my heart beating faster easily after vacination. I'm sure some long term side effect will surface eventually.

This is not EDMW, such unfounded speculation please keep it to EDMW.

Vaccination make me feel stronger and better. I feel I will live longer after vaccination.

 

[BBCWatcher]

Whoa, there's a lot of (sorry to say) COVID-stupid that suddenly popped up. Not cool!

Leaving that important point aside, this isn't how you make a realistic financial plan for retirement. The realistic plan is to estimate what you need based on optimistic lifespan -- the pessimistic financial case. That's how you properly "stress test" your retirement financial plan if you're a rational, logical, prudent individual trying to develop a reliable plan.

 

[andyhtc]

If already above 55, and still abt $150k in OA from sales of flat, how can we best utilise this money to grow for retirement? Thanks.

$150k when you are above 55 does not give you a lot of buffers to take higher risks for higher gains.

I would at most withdraw to invest in bank shares for the dividends or top-up into CPF RA for a higher payout.

 

[qhong61]

$150k when you are above 55 does not give you a lot of buffers to take higher risks for higher gains.

I would at most withdraw to invest in bank shares for the dividends or top-up into CPF RA for a higher payout.

But can we still return to OA after selling the shares in future?

 

[henrylbh]

But can we still return to OA after selling the shares in future?

Yes if you transact in shares through CPFIA, all proceeds from sale will go back to OA.

 

[Andrew833]

If already above 55, and still abt $150k in OA from sales of flat, how can we best utilise this money to grow for retirement? Thanks.

Few options;
1) Keep in OA, collect yearly interest 2.5%.
2) Withdraw and top-up RA, interest 4% but at 65 if choose CPF Life 4% interest gone. (I don't want to go into detail, I'm not good at that too)
3) Withdraw and invest in REITs (stock market), average dividend 4-5%. Dividend is auto deposit into your bank account every 3-6 mths depend on which REITs. $150k say 4.5% is $6750 a year. (of course there are risk and may pick the wrong REITs, so learn before investing).
4) Using CPF money to invest - less choice and high charges as compare to cash.

I currently using CPF money to invest REITs + other dividend stock, this year dividend earn is $4.5k (about 4%). Not much as limited by stock limit (35%).

 

[hwmook]

Few options;
1) Keep in OA, collect yearly interest 2.5%.
2) Withdraw and top-up RA, interest 4% but at 65 if choose CPF Life 4% interest gone. (I don't want to go into detail, I'm not good at that too)
3) Withdraw and invest in REITs (stock market), average dividend 4-5%. Dividend is auto deposit into your bank account every 3-6 mths depend on which REITs. $150k say 4.5% is $6750 a year. (of course there are risk and may pick the wrong REITs, so learn before investing).
4) Using CPF money to invest - less choice and high charges as compare to cash.

I currently using CPF money to invest REITs + other dividend stock, this year dividend earn is $4.5k (about 4%). Not much as limited by stock limit (35%).

I used CPF OA to invest in unit trust. This year only gain 12.91%, drag down by China....

 

[Andrew833]

I used CPF OA to invest in unit trust. This year only gain 12.91%, drag down by China....

I invest in UT too but didn't calculate the percentage. Last year the best earning.

 

[qhong61]

Few options;
1) Keep in OA, collect yearly interest 2.5%.
2) Withdraw and top-up RA, interest 4% but at 65 if choose CPF Life 4% interest gone. (I don't want to go into detail, I'm not good at that too)
3) Withdraw and invest in REITs (stock market), average dividend 4-5%. Dividend is auto deposit into your bank account every 3-6 mths depend on which REITs. $150k say 4.5% is $6750 a year. (of course there are risk and may pick the wrong REITs, so learn before investing).
4) Using CPF money to invest - less choice and high charges as compare to cash.

I currently using CPF money to invest REITs + other dividend stock, this year dividend earn is $4.5k (about 4%). Not much as limited by stock limit (35%).

Thanks

 

[qhong61]

Yes if you transact in shares through CPFIA, all proceeds from sale will go back to OA.

Thanks

 

[Moonwalker0921]

I used CPF OA to invest in unit trust. This year only gain 12.91%, drag down by China....

any good unit trust to recommend ?

 

[fontsize88]

Here's a question.

I'll be 55 in 2027 and I note the new ERS will be $342,300. This should yield an estimated monthly payout from 65 onwards of $2,690 according to the news.

If I top up my RA until the new yearly ERS each year from 55 to 65, how much extra monthly payout will I get (assuming I choose the Standard plan and payout to start from 65)?

I am trying to see if it's worth topping up and CPF won't give me a straight reply. Wonder if anyone here has asked this before or maybe you're already doing this so you know the increase in monthly payouts.

Also, does it matter to the eventual payout when I top up the ERS? For example, will the payout at 65 be the same if I top up yearly for 10 years from 55 to 65 til the ERS, versus topping up fully to the ERS only when I reach 65 (i.e. I don't top up til the ERS from 55 to 64)? Will one approach yield a higher eventual payout from 65 onwards?

 

[reddevil0728]

Here's a question.

I'll be 55 in 2027 and I note the new ERS will be $342,300. This should yield an estimated monthly payout from 65 onwards of $2,690 according to the news.

If I top up my RA until the new yearly ERS each year from 55 to 65, how much extra monthly payout will I get (assuming I choose the Standard plan and payout to start from 65)?

I am trying to see if it's worth topping up and CPF won't give me a straight reply. Wonder if anyone here has asked this before or maybe you're already doing this so you know the increase in monthly payouts.

Also, does it matter to the eventual payout when I top up the ERS? For example, will the payout at 65 be the same if I top up yearly for 10 years from 55 to 65 til the ERS, versus topping up fully to the ERS only when I reach 65 (i.e. I don't top up til the ERS from 55 to 64)? Will one approach yield a higher eventual payout from 65 onwards?

There’s the compounding effect

 

[vsvs24]

Here's a question.

I'll be 55 in 2027 and I note the new ERS will be $342,300. This should yield an estimated monthly payout from 65 onwards of $2,690 according to the news.

If I top up my RA until the new yearly ERS each year from 55 to 65, how much extra monthly payout will I get (assuming I choose the Standard plan and payout to start from 65)?

I am trying to see if it's worth topping up and CPF won't give me a straight reply. Wonder if anyone here has asked this before or maybe you're already doing this so you know the increase in monthly payouts.

Also, does it matter to the eventual payout when I top up the ERS? For example, will the payout at 65 be the same if I top up yearly for 10 years from 55 to 65 til the ERS, versus topping up fully to the ERS only when I reach 65 (i.e. I don't top up til the ERS from 55 to 64)? Will one approach yield a higher eventual payout from 65 onwards?

The earlier you topup, the interest start to grow earlier so payout will be higher compared to when you only topup at 65.

Top up amount to ERS will not be exponentially the same as payout. This is because part of RA goes to the commonpool once you decide to start payout.

You are still 5 years away from 55. For now just focus on growing your SA from now till age 55. And OA if you have spare money that can't earn more than 2.5%. Think about whether to topup to ERS when you are 54.

 

[BBCWatcher]

I'll be 55 in 2027 and I note the new ERS will be $342,300. This should yield an estimated monthly payout from 65 onwards of $2,690 according to the news...

You're correct. Unless the CPF Board changes its practices the Enhanced Retirement Sum will increase every year on January 1. The reference figures they give for monthly payouts are in nominal future Singapore dollars with payouts starting at age 65 and an age 55 birthday month top up to the ERS, once. But that's not the maximum. The maximum monthly payout is obtained with an age 70 payout start, a 55th birthday month top up to the ERS, and additional annual top ups every time the ERS is raised. (For the rest of your life if you wish.)

If I top up my RA until the new yearly ERS each year from 55 to 65, how much extra monthly payout will I get (assuming I choose the Standard plan and payout to start from 65)?

That's hard to say for sure, but (unless the interest rate changes) your top up will earn 4.0% interest computed monthly and compounded annually, and then that'll feed into the same life annuity with the same actuarial value for money as your original ERS top up. If the CPF Board's calculator doesn't answer that question then you can ask the CPF Board to run an estimate when the time comes.

Also, does it matter to the eventual payout when I top up the ERS? For example, will the payout at 65 be the same if I top up yearly for 10 years from 55 to 65 til the ERS, versus topping up fully to the ERS only when I reach 65 (i.e. I don't top up til the ERS from 55 to 64)? Will one approach yield a higher eventual payout from 65 onwards?

Of course earlier helps, because then there are more months of 4.0% interest earnings. The interest feeds into your life annuity.

 

[wira]

Of course earlier helps, because then there are more months of 4.0% interest earnings. The interest feeds into your life annuity.

Hi does this means the cpf life monthly payout will be higher if i top up to ERS when i reach 55 age versus if i only top up to ERS when i reach 65 age ?

 

[wira]

Transfer of CPF OA and SA savings to Retirement Account (RA) at payout start age instead of eligibility age

Previously, for CPF members turning 65 from 2023, savings from their OA and SA will be transferred to their Retirement Account, up to the Full Retirement Sum (FRS), which is when they are eligible to receive monthly payouts.

From January 2023 onwards, this transfer from OA and SA to RA will instead happen when the CPF member chooses to start receiving the payouts. This can happen anytime from 65 to 70 years old, depending on the member. This is to provide more flexibility for CPF members, as delaying the start of your payouts, should you not need them yet, will help compound your CPF monies further. Based on CPF’s calculation, every year of deferment from turning 65 can potentially increase your eventual payouts by up to 7% per year.


Does this means the automatic transfer from SA/OA to RA will not automatically happen when you reach 55 now ?

 

[fontsize88]

You're correct. Unless the CPF Board changes its practices the Enhanced Retirement Sum will increase every year on January 1. The reference figures they give for monthly payouts are in nominal future Singapore dollars with payouts starting at age 65 and an age 55 birthday month top up to the ERS, once. But that's not the maximum. The maximum monthly payout is obtained with an age 70 payout start, a 55th birthday month top up to the ERS, and additional annual top ups every time the ERS is raised. (For the rest of your life if you wish.)

That's hard to say for sure, but (unless the interest rate changes) your top up will earn 4.0% interest computed monthly and compounded annually, and then that'll feed into the same life annuity with the same actuarial value for money as your original ERS top up. If the CPF Board's calculator doesn't answer that question then you can ask the CPF Board to run an estimate when the time comes.

Of course earlier helps, because then there are more months of 4.0% interest earnings. The interest feeds into your life annuity.

Thanks! I guess I’m a bit kan cheong about how much more monthly payouts are possible by topping up to the ERS yearly. Cuz if it’s not worth it then maybe I should park the funds elsewhere. And I plan to do this for my partner too so it’s not a small sum of money. Trying to plan ahead. Wish there was some place people actually post their actual payouts. The new CPF life estimator isn’t that helpful for this purpose.

 

[zoneguard]

Wish there was some place people actually post their actual payouts. The new CPF life estimator isn’t that helpful for this purpose.

Actual payout depends on prevailing interest rates, mortality figures for cohorts, gender of members (females get lower payout) and choice of LIFE plans.

The estimator has a disclaimer that you need to accept to use it.