Although CPF Life is compulsory, there are those who will not be automatically enrolled. If your age and CPF Retirement Account meets the following, you will automatically be enrolled to CPF Life. Otherwise, you stay at the Retirement Sum Scheme. What is the Retirement Sum Scheme? Under this scheme, the CPF Retirement Account will be drawndown on a monthy basis starting 65 (the minimum … [Read more...]
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CPF Life Standard default plan is the worst of the two (22 June 2017 update to the new booklet)
This article was originally written in 8 July 2014 and has been updated to reflect the latest changes. Question: "Wilfred, can you take a few minutes to look at an example of a CPF life annuity plan generated using the CPF LIFE Payout Estimator? A typical screenshot is as attached. Look at the big gap between the bequest amount and the little difference in the monthly payout. Did I overlook … [Read more...]
CPF Top-up at 79 years old, an actual case
One of my client – who is 79 years old - was thinking of how to make his money work harder as his fixed deposit was earning just 1.2%pa. So I suggested to my client to consider to do a CPF top-up to his CPF Retirement Account. Initially he was skeptical because he does not think it is possible to top-up his CPF. So I went down with him to one of the CPF business center to make an enquiry. … [Read more...]
The risk of using investments for retirement are often underestimated
In this article, I want to write about a little-known danger when using investments to support one’s retirement. Very often, I hear of clients using stocks and REITs as a source of income to support their retirement years. I do not have any problem with that except that they underestimate the risk of using such instruments. At the end of this article, I will show you that a portfolio of … [Read more...]
Strange way of how CPF Interest is calculated & retirement planning
CPF has a rather strange way of calculating interest. In this article, I will explain how CPF interest is calculated and how you can make use of this knowledge to reduce the disadvantage of such a system. First, CPF interest is calculated on a monthly basis but it is only credited at the end of the year. The interest that is credited at the end of the year forms the new balance for the … [Read more...]
CPF Withdrawal method to create a 2nd stream of passive income
Those who met the CPF Full Retirement Sum (FRS) are allowed to withdraw their CPF monies above the FRS. But what many did not know is that it is not necessary to withdraw in one lump sum. Instead, the CPF withdrawal can be made over a period of time. Using this method, it is possible to create a second stream of passive income. The first stream of passive income is the CPF Life. Thus, I have … [Read more...]
CPF Lifetime Retirement Investment Scheme unlikely to achieve economies of scale
I wrote the following letter to the Straits Times on 5 August 2016 which expresses my opinion on the CPF Lifetime Retirement Investment Scheme: I am glad that the Government will be introducing the Central Provident Fund (CPF) Lifetime Retirement Investment Scheme (LRIS) ("Simpler investment scheme to grow retirement nest egg"; yesterday). However, more needs to be done to ensure the … [Read more...]
Get Full Report on CPF Life with Escalating payouts and the Lifetime Retirement Investment Scheme
The government announced that it has decided to introduce two new CPF schemes: CPF Life with escalating payout feature and the Lifetime Retirement Investment scheme. CPF Life with Escalating payout There will be a new CPF Life plan in which its payout increases at 2% per annum. Below is an illustration on how the CPF Life with Escalating Payout looks like: The blue color is the CPF Life … [Read more...]
Why you should NOT select your CPF Life plan at 55
CPF Life has undergone another change. Before the CPF Life change At age 55, the CPF Member has to choose whether he or she wish to enrol in the CPF Life Standard Plan or CPF Life Basic Plan. After the Change With effect from 1 January 2016, the CPF Member does not need to select his CPF Life plan until the payout age. So when should you select the CPF Life plan? Here is what I did. I key in … [Read more...]
Case study on CPF valuation limit
Question from an existing client (figures changed): I want to know how much CPF monies I can use for the mortgage with the aim to reduce amount of interest paid over time. I've done some calculation and I still am not really sure! On top of my $1987 monthly installment which is using CPF, can I make lump sum payments of perhaps $35K from the CPF? Will this cause my usage to exceed the CPF … [Read more...]
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