I have been pretty consistent in my message that beefing up our CPF-SA early would help us achieve retirement adequacy in our golden years.
Even if we were to stop mandatory contributions after some time, once there is a critical mass in our CPF-SA, the interest received annually would go a long way to meeting the (much feared) annual increases in the minimum sum over time.
In my case, I significantly beefed up my CPF-SA in the first 4 years of my life as a working adult.
That would be from my mid to late 20s.
I transferred all the funds in my CPF-OA to CPF-SA in those years.
From time to time, I would make voluntary contributions too.
I am 44 this year and here is what I have to show for my efforts today after 19 years in the workforce:
|AK's CPF SA.|
I still do some voluntary contributions which I have marked with the letters V.C. above.
As I am still gainfully employed, I still have mandatory CPF contributions.
What I want to draw attention to is the interest paid to my CPF-SA:
As a sum of money, it might not look like much but if we were to think deeper, we would start to look at it differently.
What do I mean?
Now, I know that many people complain about how the minimum sum keeps increasing and how they find it difficult to meet the minimum sum running on their own steam.
Well, many years ago, my thought went like this:
"Why not let the government help me meet the minimum sum?"
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If I were to push the balance in my CPF-SA significantly higher, the government would have to pay me more in interest.
The much higher interest paid to me would then go towards meeting the minimum sum required.
Sounds good but does it work?
Well, the interest I received in my CPF-SA has been higher than my mandatory contributions to it for many years by now.
This means that the government have been working harder than me in those years to help me achieve retirement adequacy.
Don't you like it when others work harder than we do to help ourselves?
If we look at the schedule below, I think it is safe to say that the interest paid to my CPF-SA yearly is more or less able to keep pace with the yearly increases to the minimum sum.
So, the strategy works!
|Source: CPF Board.|
At age 55, I could withdraw a nice sum of money in excess of the minimum sum (instead of only $5,000) with a smile on my face.
I would probably have an even bigger smile on my face when I recall that a big chunk of the money is actually from the government and I am not just taking back my own money.
You want satisfaction?
Well, then, why stop at taking back our own money?
Isn't it more satisfying to take the government's money (legally)?
1. Don't be stupid to top up your CPF-SA.
2. Upsize $100K to $225K in 20 years.
3. Get a lifetime income of >$2K a month.