Trust in CPF?

[BBCWatcher]

For those who are unaware, bbcw previously declared that he wasn't from Singapore.

Yes, that's correct.

He is a really good example that we shouldnt stick our head in the mud and just happily constrain our choices.

I try to be flexible and adaptable, and it's worked for me. YMMV.

Anybody who says luck isn't a factor is either lying or delusional. Luck starts from birth since only an infinitesimally small percentage of gametes even get that far. Being born in a particular place, time, and set of circumstances is up to random chance, too. (How'd you like to be born in Syria right now -- another country beginning with the letter S?)

All you can do, really, is to take whatever bit of luck you get and try to make something of it. I've missed a couple such occasions, but I'm not complaining.

In certain locations; income is tax free in addition to no CPF contribution (but of course, I still advocate having maximum contribution to your CPF accounts)

I would caution that you ought not focus much on the taxes but rather on the opportunities, the "top line."

 

[NealKoh]

Off topic a bit here:

Middle (3-5) to Long term (>5 years) overseas working experience can really be eye opener for many locals. A different exposure & perspective to life in general is what I observed with most locals whom spend a long time overseas, mostly for the good.

In certain locations; income is tax free in addition to no CPF contribution (but of course, I still advocate having maximum contribution to your CPF accounts)

Would encourage the younger ones to go overseas if the opportunity arises, even if there are no superstar package waiting for you. The experience alone is well worth it.

Yup, I know. Spending time overseas really broaden one's perspectives.
I've backpacked on my own through Europe for about 3 months, and would say that I very much prefer their lifestyle. But I will not give up my citizenship because of our nice income tax rates, visa, etc etc.
What I'll do instead is hold my citizenship in Singapore and travel to enjoy myself wherever I please.

Coming back to your point, of course I try to gain overseas exposure. I almost got a role that required 3 months upfront in Philippines. But too bad I didn't get it.
My goal is to work overseas to increase my own value so that I can command a higher pay and live like an expat in my own country.

 

[RoLanTo]

back to topic. TS, if you dont trust CPF, what you going to do?
i believe if u still working in Singapore, the best is dont top up SA and use money in CPF OA ASAP for property, rent it out and convert that to cash... other than that, what other options??

if u have a little trust in cpf, just top up a bit here n there and treat it as a low hanging fruits.. 4% actually quite good and v easy to achieve with cpf for zero effort.. Provided we can take back the money.. haha

i personally not v good in investment, the dividend game also may not sound as good as it is.. i can lose my 10years of dividend gain just from paper loss on same stocks.. of course ppl can say because i didnt monitor closely and sell when times are good..

anyway.. for me, i need to find those low risk low profit investment vehicles that doesnt require much monitoring.. with kids, work and family matters... hard to ja-gar so many things

 

[NealKoh]

back to topic. TS, if you dont trust CPF, what you going to do?
i believe if u still working in Singapore, the best is dont top up SA and use money in CPF OA ASAP for property, rent it out and convert that to cash... other than that, what other options??

if u have a little trust in cpf, just top up a bit here n there and treat it as a low hanging fruits.. 4% actually quite good and v easy to achieve with cpf for zero effort.. Provided we can take back the money.. haha

I just wanted to gather opinions and sort out what the general public feels about the CPF. How the game changes as the government dictates. It’s always good to gather different opinions rather than make my own assumptions.

As for what I’m going to do.
2 pronged approach.
1) personal portfolio enough to live an enriching life once I retire at 45-50 meaning I’ll spend 1/4 of my time overseas. Rent a house and enjoy the culture and scenery in the western world. Move whenever I feel like it. Play golf.
2) CPF - reap dry OA and maximize SA.

Personal -
Going to continue to finish my CFA level 2 and 3 once I’m done upgrading myself for work. Continue live on low expenses. Idk much about children currently, but I intend to spend just the bare minimum on it. My dividends should cover its expenses. My salary will never be used to fund it. If I need my salary, then I’m spending too much on it.
Meanwhile, I’ll just keep saying I’m poor and never reveal my salary. Tell the kids we can’t have this and that because we don’t make enough for it. Look at salary as only 30% of take home pay because that’s how much I entitle myself to. The rest is paid into my money machine. Heck, people in the past can live on so little, I should be able to do it too. HAHA

CPF
I’ll look at CPF as an additional income tax of 20% and disregard how it can help me in retirement.
In essence, not to have any hopes that CPF can do anything for me. I’ll run my own portfolio.
Buy resale HDB instead of condos, no intention to resell them. Use only OA to pay off.
SA - top up to reduce to lower income bracket. Treat it as donation to charity so that I will not have hopes for it. Leverage on compounded interest. Don’t need to put too much when I’m earning little. Don’t need to maximize compounding here anyway. Probably need just $400k in minimum sum in 40 years time. Value derived from calculating future value of $170k in 40 years time

The remaining problem that I’m unsure is: if my OA remains depleted at 55 years old. And my SA meets minimum sum. Will the acurred interest be carried over in the sense that my SA money needs to cover for the OA?
I.e.
OA = $0
SA = $400k
My Retirement sum should be $400k and nothing less right.

At the end of the day, if the money from CPFLife does happen, good. If it doesn’t come, I couldn’t care less either.

 

[fr33d0m]

CPF has lower risk than any of your investments in Singapore and more than enough of your investment overseas.

You can choose other investments over CPF based on return or liquidity, but not on risk.

For risk adjusted return, CPF is superior than most investments for people with little knowledge.

The government provides a good service for CPF to form the backbone of your retirement.

 

[beefjerky]

I don't think I will see CPF as part of my investment. Basically just a leave it in and forget about it kind of system ba. Until the govt becomes more transparent in the system, it is not one i will place my full trust in. just look at our neighbour

 

[mummy1234]

I just wanted to gather opinions and sort out what the general public feels about the CPF. How the game changes as the government dictates. It’s always good to gather different opinions rather than make my own assumptions.

As for what I’m going to do.
2 pronged approach.
1) personal portfolio enough to live an enriching life once I retire at 45-50 meaning I’ll spend 1/4 of my time overseas. Rent a house and enjoy the culture and scenery in the western world. Move whenever I feel like it. Play golf.
2) CPF - reap dry OA and maximize SA.

Personal -
Going to continue to finish my CFA level 2 and 3 once I’m done upgrading myself for work. Continue live on low expenses. Idk much about children currently, but I intend to spend just the bare minimum on it. My dividends should cover its expenses. My salary will never be used to fund it. If I need my salary, then I’m spending too much on it.
Meanwhile, I’ll just keep saying I’m poor and never reveal my salary. Tell the kids we can’t have this and that because we don’t make enough for it. Look at salary as only 30% of take home pay because that’s how much I entitle myself to. The rest is paid into my money machine. Heck, people in the past can live on so little, I should be able to do it too. HAHA

CPF
I’ll look at CPF as an additional income tax of 20% and disregard how it can help me in retirement.
In essence, not to have any hopes that CPF can do anything for me. I’ll run my own portfolio.
Buy resale HDB instead of condos, no intention to resell them. Use only OA to pay off.
SA - top up to reduce to lower income bracket. Treat it as donation to charity so that I will not have hopes for it. Leverage on compounded interest. Don’t need to put too much when I’m earning little. Don’t need to maximize compounding here anyway. Probably need just $400k in minimum sum in 40 years time. Value derived from calculating future value of $170k in 40 years time

The remaining problem that I’m unsure is: if my OA remains depleted at 55 years old. And my SA meets minimum sum. Will the acurred interest be carried over in the sense that my SA money needs to cover for the OA?
I.e.
OA = $0
SA = $400k
My Retirement sum should be $400k and nothing less right.

At the end of the day, if the money from CPFLife does happen, good. If it doesn’t come, I couldn’t care less either.

You r not being realistic. U need a wife to have kids . Forgot to factor in her expectations of a decent lifestyle.

 

[BBCWatcher]

I’ll look at CPF as an additional income tax of 20% and disregard how it can help me in retirement.
In essence, not to have any hopes that CPF can do anything for me. I’ll run my own portfolio.

It's up to you and your mental state of course, but why don't you just treat CPF at least like any/every other part of your financial plan? Then make every part of your financial plan, including CPF, work to its maximum potential, insofar as you're able.

Just as a point of comparison and for reference, in my household we're expecting (with high confidence, which is not quite the same as 100% certainty but darn close) three reliable streams of lifetime retirement income from three high quality sovereigns. Each one involves certain optimization decisions (a few), and of course we're making those decisions as best we can. And we're factoring those streams into overall financial planning, which essentially means we can have a slightly more aggressive investment posture than otherwise. That's all perfectly reasonable and rational, surely. Whether you've got one such tool or three or five, it's silly to pretend that tool isn't part of your financial life. Zero consideration is clearly the wrong answer.

 

[BBCWatcher]

U need a wife to have kids .

For the record, technically not. I can think of a couple fairly rare exceptions:

1. You father a child the old fashioned (or assisted) way, and the birth mother decides/agrees you should have sole custody. Or a court decides that. I hate to break the news, but apparently some men father children with women they're not married to.

2. There are a few countries where legal single residents are allowed to adopt.

 

[Wishdom]

TS is gonna transfer OA to SA and will also be doing periodic top up to SA.

I don't consider that zero consideration. In fact, that's the most aggressive stance one can adopt to maximise cpf returns.

Sent from Ilovennp using GAGT

 

[BBCWatcher]

I don't consider that zero consideration.

I'm reacting to these incongruous comments:

I’ll look at CPF as an additional income tax of 20% and disregard how it can help me in retirement.
In essence, not to have any hopes that CPF can do anything for me.

If that's literally true, then it implies NealKoh would choose a suboptimal (too conservative, ceteris paribus) portfolio allocation for his investments. Or maybe NealKoh is just trying to be provocative and not even taking himself seriously, but I'm not a mind reader.

Zero weighting to CPF in investment portfolio allocation decisions is clearly the wrong answer. You can choose whatever weighting you wish within reason and rationality (I would hope), but zero weighting is not rational when considering a AAA-rated sovereign's defined contribution retirement savings system.

 

[NealKoh]

You r not being realistic. U need a wife to have kids . Forgot to factor in her expectations of a decent lifestyle.

I’m not a provider. The wife should be able to support herself financially.

 

[LiteHouse]

I’m not a provider. The wife should be able to support herself financially.

After married, if she wants to be fulltime housewife with a maid helper. That's nothing you can do about it. Women can get very unreasonable after getting convinced by fellow aunties.

 

[NealKoh]

It's up to you and your mental state of course, but why don't you just treat CPF at least like any/every other part of your financial plan? Then make every part of your financial plan, including CPF, work to its maximum potential, insofar as you're able.

Just as a point of comparison and for reference, in my household we're expecting (with high confidence, which is not quite the same as 100% certainty but darn close) three reliable streams of lifetime retirement income from three high quality sovereigns. Each one involves certain optimization decisions (a few), and of course we're making those decisions as best we can. And we're factoring those streams into overall financial planning, which essentially means we can have a slightly more aggressive investment posture than otherwise. That's all perfectly reasonable and rational, surely. Whether you've got one such tool or three or five, it's silly to pretend that tool isn't part of your financial life. Zero consideration is clearly the wrong answer.

I think that at this point, it really comes down to personal preferences there’s no right or wrong answer.
In my view point, I’m still doing something that will optimize the CPFLIfe to have the highest sum for myself.
But I’m doing it in a way that having it will not make or break my lifestyle.
But I do not want to be pinning my hopes on it as well because what if the government decides to shift retirement age to 68? Already we are seeing signs of that. Then because the government shifted the age till which I can get monthly payouts. Then I’m screwed in the meantime aren’t I? Forced to work.

We live in a world that is designed to keep the commoners working to maximize their life value for the society. I have to work on getting out of that

 

[BBCWatcher]

The wife should be able to support herself financially.

And what if she isn't? What if you aren't?

....Set those questions aside if you like, but then please don't get married or even enter into a committed relationship.

 

[BBCWatcher]

But I’m doing it in a way that having it will not make or break my lifestyle.

Literally nobody is suggesting that. CPF is foundational, and it's not supposed to be the entirety of your financial life in retirement. Although it could be if the rest of your financial plan goes pear shaped.

But I do not want to be pinning my hopes on it as well because what if the government decides to shift retirement age to 68?

Well sure, that's possible. I can't guarantee you won't get run over by a bus tomorrow. (Please try to avoid that as best you can.) Every aspect of your life, including your financial life, is chock full of uncertainties and risks. Comparatively, though, CPF is your foundational bedrock.

Already we are seeing signs of that. Then because the government shifted the age till which I can get monthly payouts.

Sort of. CPF has never not allowed withdrawals at age 55, and it still allows withdrawals at age 55. The minimum withdrawal age for some amount has never changed. How much you can withdraw, and when, and at what pace, has changed. Why has it changed? Because six decades ago Singaporeans didn't live very long, and now Singaporeans are the third longest lived people in the world. Now, I could choose to get upset about many things, and I do get upset about some things, but I don't get upset when a government prevents me from doing something that I should not be doing in my own self-interest. And if I'm living longer (and healthier) than my hypothetical alternate self who lived 60 years ago -- and I am -- then it's really dumb for me to raid my bedrock foundational retirement savings prematurely. That part, the AAA-rated sovereign part, needs to carry me for the rest of my days if nothing else does.

Then I’m screwed in the meantime aren’t I? Forced to work.

Only if you're basically broke at 65, in which case thank goodness for CPF! You're not planning to be poor from age 65 to 68, are you? Is that your plan?

We live in a world that is designed to keep the commoners working to maximize their life value for the society. I have to work on getting out of that

Yes, by all means, go for it. Use CPF to nail down your golden years at a foundational level, and if you want to assume that's age 68+ for your planning purposes, by all means feel free. Then set the rest of your financial plan accordingly.

Personally, my plan is to defer all three expected sovereign lifetime annuity streams until their maximum monthly payout age (i.e. age 70). And I have high confidence now that's exactly what we'll do. See how that works? CPF rules are currently minimum age 55 (for some), minimum age 65 (for monthly lifetime)...and I'm not even going to choose those minimums, in all likelihood.

 

[w1rbelw1nd]

I have to agree with BBCW here. I begrudge some of the choices that the government give me, but does that mean I don't optimise it? Obviously no. But our opinions will shape our preference and execution of certain financial planning decisions around accounts controlled by government.

For example, BBCW thinks CPF SA topup should prioritised over SRS top ups (pls correct me if I am wrong) , while I am less positivity in the assumption than 4%, and withdrawal rules are gonna stay the same, so I prefer SRS. Maybe for BBCW, he will be happy with a 7% tax savings to top up CPF SA, but for yourself, maybe you will only be happy with a 22% tax savings. I don't think it's right to say who's smarter/dumber when decisions are made from this logic.

It's up to you and your mental state of course, but why don't you just treat CPF at least like any/every other part of your financial plan? Then make every part of your financial plan, including CPF, work to its maximum potential, insofar as you're able.

 

[SibehHL]

pay and pay will be voted out .

by then , its too late .

ponzi wiped out all your $$$ .

So Malaysians EPF finished? US citizens no longer receive Social Security payments when Obama's term end?

It's OK to dislike the current ruling party but do have a little more confidence with the system. We are still pretty far from the Zimbabwe scenario.

 

[mummy1234]

Impt to get disability income insurance and passive income for financial independence in case of illness or unemployment. I think we should plan for that since many in their 40s or even younger lose their jobs. That is why I bought a second property in Malaysia , now paid up and can pay up our condo too and rent out for passive income. And was hoping to invest the rest in Malaysian FDs but hubby very against it. If I lose my job for whatever reason, I hope by now, we can still survive.

 

[JuniorLion]

I’m not a provider. The wife should be able to support herself financially.

Awesome thoughts there. It never came across your mind that you should be a provider for your family (of which your wife is a part of) ?