Talking Point >>> Is your CPF enough for retirement?

[Throttle2]

I can use cash to top up RA after 55?  Wow !  
So if i top my own account up to $1m when i am 55 to earn the compounding 4% for the next 10 yr, at 65 i can receive $7k-$8k per mth until i die.

Not too bad leh.

even though i can invest for more, investing bears a risk.  4% risk free is not bad leh.  
what if i put in $2mil?  Hhhhmmmmmmm…….

[Mkl22]

On 5/28/2025 at 10:19 AM, Throttle2 said:

My latest take is that since i am already so invested in the markets, regardless of how knowledgeable or good i am in investing, the smarter move is to diversify and therefore reduce my risk by putting into govt guaranteed 4% return in the RA, especially since i am holdng so much cash in CPF already.

Benefit of leaving in OA vs put in RA, is that if one dies early then money is gone or goes subsidizing the rest of the population. At least in OA money still yours and can be passed down. 

Edited Wednesday at 03:57 AM by Mkl22

[Voodooman]

On 5/28/2025 at 6:17 AM, Mkl22 said:

Guess you do know about the difference between ERS and FRS. 
I’m still thinking if I should do ERS or FRS and leave the difference in OA. 

If you have $xm AUM, is familiar with financial instruments like fixed income, ETF etc and have kids, why throw additional $200k into ERS and after certain age, everything goes into the pool? 

If you have $xm AUM, don't know what is fixed income and have no kids, I think ERS is fine.

Between 3-4% yield for an IG bond fund and CPF Life (ERS) at 6.35% payout ratio, the difference on $200k is around $6k a year. Not going to move the needle if you have a decent AUM. Bonus is $200k goes to your descendants on passing and you have flexibility for that money in next 30 years. 

So FRS for me. No right and wrong, depends on your own circumstances.

 

Edited Wednesday at 04:01 AM by Voodooman

[Mkl22]

On 5/28/2025 at 11:02 AM, Ct3833 said:

From investment return point of view, if one can generate about 4% of return or more with the same amount of money, then there is no need to bother about ERS. The only GOOD thing about CPFLife is that it is a perpetual payout annuity program, so if one outlive the average life expectancy, the guaranteed monthly payout will continue to come in. 

Investment involves asset allocation, so assuming one has total liquidity of X amount, CPF OA may form about 20 to 30% of his total liquidity(lets not include properties into the wealth consideration), the other 70% of his case can go into equities, bonds, Tbills etc etc. Then the OA amount in fact can be let alone to earn that humble 2.5% interest with principal sum guaranteed. Let the other 70% of money expose to the rest of instrument. 

 

You can also use cash to top up both yours and your wife's RA account, leaving behind the OA to do the 2.5%. One point to note is though one can withdraw up to 20% of the RA amount before starting his CPFLife payout, the cash topup portion cannot be part of the 20%.  

Ya exactly, the money in OA is sort of a cash/FD type of buffer. 
maybe I’m being morbid…. I think I might die early…. And not reap the benefits of ERS! 🤣

[Throttle2]

On 5/28/2025 at 11:57 AM, Mkl22 said:

Benefit of leaving in OA vs put in RA, is that if one dies early then money is gone or goes subsidizing the rest of the population. At least in OA money still yours and can be passed down. 

you are absolutely wrong

Money is not gone lah. 

Even if you die at 66 yrs old remaing RA goes to your nominees.

Money is still passed down.

Edited Wednesday at 04:16 AM by Throttle2

[Throttle2]

On 5/28/2025 at 12:00 PM, Mkl22 said:

Ya exactly, the money in OA is sort of a cash/FD type of buffer. 
maybe I’m being morbid…. I think I might die early…. And not reap the benefits of ERS! 🤣

The only down side of ERS is you cant withdraw like OA.  Getting the 4% is already reaping benefit 

eRS truly favors the cash rich

wooohooo

[Ct3833]

On 5/28/2025 at 12:12 PM, Throttle2 said:

Money is not gone lah. 

Even if you die at 66 yrs old remaing RA goes to your nominees.

 

Ok lah, that is a realtively smaller sum, dont forget still have unused cash , properties that are leaving behind to the next of kins. Just remember, there is no need to leave behind too much legacy.

[Throttle2]

My only question is does RA only earn 4% until 65 or until you die?

my understanding is it pays 4% until you die on the remaining sum which is not paid out to you

And if thats the case, its the simplest best thing for cash rich people to put ERS.

but if you dont even have at least $1m in your Cpf by 55, then thats a different story

Edited Wednesday at 04:33 AM by Throttle2

[Ct3833]

On 5/28/2025 at 12:00 PM, Mkl22 said:

Ya exactly, the money in OA is sort of a cash/FD type of buffer. 
maybe I’m being morbid…. I think I might die early…. And not reap the benefits of ERS! 🤣

Some said wanted to draw out their OA and invest  it themselves or buy T bills, i always advise them not to, they can invest using cpf investment acct, or buy t bills from OA directly, dont take it out if not necessary. See now, t bills begin to drop below 2.5%, now oa interest begin to look sexy.

[Ct3833]

On 5/28/2025 at 12:25 PM, Throttle2 said:

My only question is does RA only earn 4% until 65 or until you die?

my understanding is it pays 4% until you die on the remaining sum which is not paid out to you

 

Short answer is 4% all the way but if one choose the standard or escalating llan, the 4% interest wont go into his acct anymore once he start ls his monthly payout(eg 65) , the money will go to the common pool to support those who outlive the avg life expectancy. 

If you choose the basic plan, then the 4% will continue to go intonyour RA, it is why the bequest(the balance when one pass on at certain age)  of basic plan is higher than that of standard and escalating plan. 

[Throttle2]

On 5/28/2025 at 12:17 PM, Ct3833 said:

Ok lah, that is a realtively smaller sum, dont forget still have unused cash , properties that are leaving behind to the next of kins. Just remember, there is no need to leave behind too much legacy.

Yeah, not planning to leave too much.

but a couple million bucks per child probably 

[Ct3833]

On 5/28/2025 at 12:34 PM, Throttle2 said:

Yeah, not planning to leave too much.

but a couple million bucks per child probably 

Not i said one😅

[Volvobrick]

On 5/28/2025 at 12:25 PM, Throttle2 said:

My only question is does RA only earn 4% until 65 or until you die?

my understanding is it pays 4% until you die on the remaining sum which is not paid out to you

And if thats the case, its the simplest best thing for cash rich people to put ERS.

but if you dont even have at least $1m in your Cpf by 55, then thats a different story

https://lifefinance.com.sg/cpf-life-a-primer/

This site probably explains best on the payout and the inheritance issues.

 In summary (based on FRS):

 

Payout

Bequests 

 

Edited Wednesday at 05:12 AM by Volvobrick

[Voodooman]

On 5/28/2025 at 12:25 PM, Throttle2 said:

My only question is does RA only earn 4% until 65 or until you die?

my understanding is it pays 4% until you die on the remaining sum which is not paid out to you

And if thats the case, its the simplest best thing for cash rich people to put ERS.

but if you dont even have at least $1m in your Cpf by 55, then thats a different story

4%pa until 65.

Thereafter,

Interest goes into the pool.

You will drawdown monthly from your P at age 65 till the entire sum is depleted.  Once depleted, you draw from the pool and there will be nothing left for your estate.  

For ERS (assuming you are 55 today), at $3.3k a month and $40k a year, we will use up your entire $625k ($426k today compounded at 4% pa over 10 years) by age 81 or thereabouts.

The best thing about ERS is compounding a bigger amount at 4%pa for 10 years. After 65, you are just drawing down from your zero interest P till age 81. Post age 81, you start to benefit from pool.

 

 

[Ct3833]

On 5/28/2025 at 1:13 PM, Voodooman said:

4%pa until 65.

Thereafter,

Interest goes into the pool.

You will drawdown monthly from your P at age 65 till the entire sum is depleted.  Once depleted, you draw from the pool and there will be nothing left for your estate.  

For ERS (assuming you are 55 today), at $3.3k a month and $40k a year, we will use up your entire $625k ($426k today compounded at 4% pa over 10 years) by age 81 or thereabouts.

The best thing about ERS is compounding a bigger amount at 4%pa for 10 years. After 65, you are just drawing down from your zero interest P till age 81. Post age 81, you start to benefit from pool.

 

 

Hi, i think not 65, it is 65 or later when one starts his payout

[Kxbc]

On 5/28/2025 at 11:57 AM, Mkl22 said:

Benefit of leaving in OA vs put in RA, is that if one dies early then money is gone or goes subsidizing the rest of the population. At least in OA money still yours and can be passed down. 

If I am not wrong, only the interest generated goes into the pool when one dies. The unused principal is not pooled and will go back to the estate of the deceased to be distributed according to his/her will or wishes.

Edited Wednesday at 06:22 AM by Kxbc

[Ct3833]

On 5/28/2025 at 1:13 PM, Voodooman said:

4%pa until 65.

Thereafter,

Interest goes into the pool.

You will drawdown monthly from your P at age 65 till the entire sum is depleted.  Once depleted, you draw from the pool and there will be nothing left for your estate.  

For ERS (assuming you are 55 today), at $3.3k a month and $40k a year, we will use up your entire $625k ($426k today compounded at 4% pa over 10 years) by age 81 or thereabouts.

The best thing about ERS is compounding a bigger amount at 4%pa for 10 years. After 65, you are just drawing down from your zero interest P till age 81. Post age 81, you start to benefit from pool.

 

 

4% to some may not be attractive, the key selling point  of cpflife is that,  if one could live a long life, he gets to receive monthly payout till he pass on. It will be good for those who live beyond 83, free money perpetually. But importanly one must be able to eat and healthy.

[Voodooman]

On 5/28/2025 at 2:21 PM, Ct3833 said:

Hi, i think not 65, it is 65 or later when one starts his payout

First day of the month you turn 65 you can start to draw.  You can opt to drawdown from 65-70 but not sure if it is still compounding at 4% pa during this delayed draw period, it should be.  

So I will aim to draw at 70 to maximize my payout amount.

On 5/28/2025 at 2:24 PM, Ct3833 said:

4% to some may not be attractive, the key selling point  of cpflife is that,  if one could live a long life, he gets to receive monthly payout till he pass on. It will be good for those who live beyond 83, free money perpetually. But importanly one must be able to eat and healthy.

10 years locked up period at 4% is ok but not fantastic in my humble opinion but many will disagree.  

83, not 81? Please share the maths (i took $625k at age 65 / ($3.3k x 12) = 15.8 years. Add 16 to 65 and i got 81. 

 

 

Edited Wednesday at 06:44 AM by Voodooman