Withdrawal from CPF at 55

[BBCWatcher]

How much of SA can I "shield"? Like let's say BRS is 150k/FRS is 300k and my OA has 150k but SA has 300k, can I shield all 300k in SA? Or can only shield up to 150k to ensure I have enough up to FRS? If I have a property that is worth 150k or more, can I shield the entire 300k in SA?

The FRS is unlikely to be $300K soon. It’s currently (2023) under $200K.

You can “shield” all SA excluding the greater of: (a) $40K, or (b) cash top ups to SA plus interest on the top ups. So in your example you could probably shield up to $260K of SA. Then your RA would be funded with the remaining $40K from SA plus $150K from OA.

But then you haven’t quite met the Full Retirement Sum. If for example you add a bit of cash to your RA the top up would qualify for tax relief (up to $8,000), and once you hit the Full Retirement Sum you unlock that $260K in your SA in any increment at any time. Another option is if a qualified family member (such as a spouse) transfers some of their OA dollars to your RA. Or you could make a property pledge (or have an outstanding property charge) sufficient to close the gap, but that seems a bit silly especially for such a small gap.

 

[bluezzy]

The FRS is unlikely to be $300K soon. It’s currently (2023) under $200K.

You can “shield” all SA excluding the greater of: (a) $40K, or (b) cash top ups to SA plus interest on the top ups. So in your example you could probably shield up to $260K of SA. Then your RA would be funded with the remaining $40K from SA plus $150K from OA.

But then you haven’t quite met the Full Retirement Sum. If for example you add a bit of cash to your RA the top up would qualify for tax relief (up to $8,000), and once you hit the Full Retirement Sum you unlock that $260K in your SA in any increment at any time. Another option is if a qualified family member (such as a spouse) transfers some of their OA dollars to your RA. Or you could make a property pledge (or have an outstanding property charge) sufficient to close the gap, but that seems a bit silly especially for such a small gap.

Planning ahead haha...I am not that close to 55. By the time I reach that, won't be surprised if it reaches close to 300k

So if I don't want to top up or get another person to top up for me, am I right to say that I should only shield up to an amount that will allow my RA to meet FRS? Eg FRS is 300k, OA is 150k, SA - shield up to 150k and let 150k be there to be combined with OA to form 300k in RA?

 

[BBCWatcher]

Planning ahead haha...I am not that close to 55. By the time I reach that, won't be surprised if it reaches close to 300k

Assuming a 3% per year increase in the Full Retirement Sum it won’t reach $300K until the year 2037.

 

[bluezzy]

Assuming a 3% per year increase in the Full Retirement Sum it won’t reach $300K until the year 2037.

Yes, that's roughly when I will reach that age

So if I don't want to top up or get another person to top up for me, am I right to say that I should only shield up to an amount that will allow my RA to meet FRS? Eg FRS is 300k, OA is 150k, SA - shield up to 150k and let 150k be there to be combined with OA to form 300k in RA?

 

[chong18]

By 2037 I'm sure govt would.have closed the shielding loophole.

 

[royalmix]

By 2037 I'm sure govt would.have closed the shielding loophole.

Spot on! Many rules or policy might change too, including govt!

 

[Dividends Warrior]

If I pledge my flat at 55 yrs old, can I still join the HDB lease buyback scheme at 65?
Thanks.

 

[zeroX26]

If I pledge my flat at 55 yrs old, can I still join the HDB lease buyback scheme at 65?
Thanks.

No point knowing this now. You are at least 15 to 20 years away from your 55th bday. HDB could / might have changed policies along the way (which isn't unlikely).

 

[BBCWatcher]

So if I don't want to top up or get another person to top up for me, am I right to say that I should only shield up to an amount that will allow my RA to meet FRS? Eg FRS is 300k, OA is 150k, SA - shield up to 150k and let 150k be there to be combined with OA to form 300k in RA?

That's up to you. If you don't meet your age 55 FRS then the dollars you "shield" won't be available for lump sum withdrawal until either:

1. You raise your RA to your age 55 Full Retirement Sum, or
2. You make a property pledge (or have a property charge) and meet the Basic Retirement Sum.

Subsequent compulsory contributions (and possible transfers) may be enough to raise your RA to the FRS.

However, if you're +/-14 years away I really wouldn't put too much planning into this endeavor since the rules could change. Of course you'll want to plan for your retirement, and more dollars both in and out of CPF (and well invested) are great.

 

[sohguanh]

Not true.

For those of you who are reaching 55 please consider the "hack" of investing your CPF OA and withdrawing/changing it into a cash investment with your CPF agent bank and cpf.

That way you withdraw 2.5% money without having to empty your SA first.

I have already investing my OA and SA for many years so don't need this hack. I let govt give me guaranteed interest while some I try earn more outside

 

[BBCWatcher]

If I pledge my flat at 55 yrs old, can I still join the HDB lease buyback scheme at 65?

Under current rules it appears so. But you probably wouldn't be happy doing this. The typical reason for monetizing your HDB flat is because you really need the money since you've exhausted other assets. But you really need the money because...your BRS-level CPF LIFE retirement income is too low! Or in other words you've shot yourself in the foot at age 55 by making a property pledge to withdraw from your CPF Retirement Account, then you've discovered you've come up short again. (BRS-level CPF LIFE sucks, to put it simply.)

The way to avoid this unhappy combination is to bolster your retirement future now, while you still can. Position yourself so you don't need to raid your Retirement Account so that you can nail down at least a FRS-level CPF LIFE income stream (if not more than that). If you can. You may still wish to monetize your flat at age 65+, but you're starting from a higher CPF LIFE baseline when you do it and have more options for how you manage the proceeds from your flat buyback.

 

[henrylbh]

That means if I go with the standard choice of FRS, my OA and SA will go towards forming the RA then I can still withdraw the amount I want from RA? They won't lock up the amount?

FRS is not a choice. At 55 CPF will automatically transfer all your SA and if not enough then your OA savings to your RA to meet FRS. Any savings above FRS left in SA/OA can be withdrawn anytime in any amount.

RA savings locked up?

For members turning age 65 from 2023 onwards, they can also withdraw up to 20% of their RA savings in a lump sum anytime from age 65 onwards.

In addition, from age 55 you can withdraw RA savings above BRS with adequate property pledge.

 

[bluezzy]

That's up to you. If you don't meet your age 55 FRS then the dollars you "shield" won't be available for lump sum withdrawal until either:

1. You raise your RA to your age 55 Full Retirement Sum, or
2. You make a property pledge (or have a property charge) and meet the Basic Retirement Sum.

Subsequent compulsory contributions (and possible transfers) may be enough to raise your RA to the FRS.

However, if you're +/-14 years away I really wouldn't put too much planning into this endeavor since the rules could change. Of course you'll want to plan for your retirement, and more dollars both in and out of CPF (and well invested) are great.

I know I am still many years away but it's always a good thing to plan ahead. Plus I might be making some changes in my career which might affect my contribution to the CPF hence wants to be prepared beforehand.

I guess if I am not able to shield the money in SA, I can only let the RA be formed using money in SA first then OA. Means I will be able to generate less interest in SA between 55 and 65 years old.

Between 55 and 65, I can decide anytime to pledge my property right? Might change again in the future but would like to know about this based on the current rule.

 

[henrylbh]

How much of SA can I "shield"? Like let's say BRS is 150k/FRS is 300k and my OA has 150k but SA has 300k, can I shield all 300k in SA? Or can only shield up to 150k to ensure I have enough up to FRS? If I have a property that is worth 150k or more, can I shield the entire 300k in SA?

Before age 55, your can invest all your OA above first 20k and SA above 40k.

At 55, whatever is left in OA and SA excluding savings already invested will be automatically transferred to your RA. Upon returning the invested sum to the respective accounts and any shortfall in FRS will then be made good from the respective accounts.

 

[bluezzy]

FRS is not a choice. At 55 CPF will automatically transfer all your SA and if not enough then your OA savings to your RA to meet FRS. Any savings above FRS left in SA/OA can be withdrawn anytime in any amount.

RA savings locked up?

For members turning age 65 from 2023 onwards, they can also withdraw up to 20% of their RA savings in a lump sum anytime from age 65 onwards.

In addition, you can withdraw RA savings above BRS with adequate property pledge.

Yup, I understand this part now after reading all the good advice here. Many thanks for enlightening me.

 

[a4973]

Before age 55, your can invest all your OA above first 20k and SA above 40k.

At 55, whatever is left in OA and SA excluding savings already invested will be automatically transferred to your RA. Upon returning the invested sum to the respective accounts and any shortfall in FRS will then be made good from the respective accounts.

But what is the benefit of doing this since the shortfall in FRS will still be made good from SA then OA?

 

[sohguanh]

I know I am still many years away but it's always a good thing to plan ahead. Plus I might be making some changes in my career which might affect my contribution to the CPF hence wants to be prepared beforehand.

I guess if I am not able to shield the money in SA, I can only let the RA be formed using money in SA first then OA. Means I will be able to generate less interest in SA between 55 and 65 years old.

Between 55 and 65, I can decide anytime to pledge my property right? Might change again in the future but would like to know about this based on the current rule.

From someone a few years away to 55 let me share my experience. If possible stomach some risk and invest your OA SA over the long period from you start work till 55.

You just need to research what investment instrument. Try not to leave only bare minimum in OA SA unless your investment super good returns. Retain some let govt give you the guaranteed interest the rest you try invest outside to get more.

E.g last year bear market you don't invest put inside let govt do the job and give you the guaranteed interest. In bull market venture outside to get more than what govt can give you

 

[henrylbh]

I know I am still many years away but it's always a good thing to plan ahead. Plus I might be making some changes in my career which might affect my contribution to the CPF hence wants to be prepared beforehand.

I guess if I am not able to shield the money in SA, I can only let the RA be formed using money in SA first then OA. Means I will be able to generate less interest in SA between 55 and 65 years old.

Between 55 and 65, I can decide anytime to pledge my property right? Might change again in the future but would like to know about this based on the current rule.

To plan ahead, you need to know all the relevant rules and intricacies of CPF and keep up with the updates as what can be done now may be changed anytime tomorrow So far you still have not got the correct or full pictures. Better read up from CPF website and question money instead, if not clear instead of just relying on answers from money mind.

 

[bluezzy]

From someone a few years away to 55 let me share my experience. If possible stomach some risk and invest your OA SA over the long period from you start work till 55.

You just need to research what investment instrument. Try not to leave only bare minimum in OA SA unless your investment super good returns. Retain some let govt give you the guaranteed interest the rest you try invest outside to get more.

E.g last year bear market you don't invest put inside let govt do the job and give you the guaranteed interest. In bull market venture outside to get more than what govt can give you

May I know what you invest in currently? I was thinking of investing my OA in T-Bills but the interest now seems to be going down.

Very hard to find anything that can top the stable 4% interest in Special Account. I know can get if I go for the higher risk investments but I am also quite risk adverse especially when CPF monies are concerned. I do use my own personal savings to invest in the higher risk ones though.

 

[BBCWatcher]

Between 55 and 65, I can decide anytime to pledge my property right? Might change again in the future but would like to know about this based on the current rule.

Yes. Just to reiterate, though, a property pledge is an integral part of reducing (or keeping) your RA below the Full Retirement Sum. You don't make a property pledge "just because." The property pledge e-form essentially says "How much do you want to withdraw now?" And if you can already withdraw your desired amount there's no point in making a property pledge.

In other words, to my knowledge the CPF Board doesn't have any mechanism for "advance property pledges." It's "pledge and withdraw," not "pledge then (maybe) withdraw."

You can pledge and withdraw from your Retirement Account as late as age 69.9. How? Start your CPF LIFE payouts at age 70. Which is the default, actually. If you want to start them earlier you have to contact the CPF Board.

But what is the benefit of doing this since the shortfall in FRS will still be made good from SA then OA?

SA "shielding" generally doesn't make much sense unless you're going to meet or exceed the Full Retirement Sum. But you can fund your Retirement Account in a variety of ways:

1. Your own OA;
2. Cash;
3. Transfers of OA from qualified family members (such as a spouse).

Typically what you'd do in a SA shielding scenario is raise the shield just before age 55, allow your Retirement Account to be funded from your OA, and (if you're still below the FRS) top it up with cash and/or OA transfers from family members. (An $8,000 dollop of cash is a good idea for tax relief.) You could top it up as high as the Enhanced Retirement Sum if you wish. (Guess what I'm doing.)