The email address in "Contact AK: Ads and more" above will vanish from November 2018.


Featured blog.

1M50 CPF millionaire in 2021!

Ever since the CPFB introduced a colorful pie chart of our CPF savings a few years ago, I would look forward to mine every year like a teena...

Past blog posts now load week by week. The old style created a problem for some as the system would load 50 blog posts each time. Hope the new style is better. Search archives in box below.


"E-book" by AK

Second "e-book".

Another free "e-book".

4th free "e-book".

Pageviews since Dec'09

Recent Comments

ASSI's Guest bloggers

Tea with EY: Is our CPF LIFE payout going to be sufficient?

Saturday, May 30, 2015

It has been a while but here is another wonderfully crafted guest blog by EY as she asks some questions which we might be afraid to ask ourselves:

Is having a CPF LIFE payout of $2500/month sufficient?

Which do you prefer?

Let your desired quality of life determine your retirement sum?


Let your retirement sum determine the quality of your life?

In Singapore, quality of life does not come cheap. More so if we are projecting decades into the future.

Based on 3% annual inflation rate, what we can buy with $2500 today will cost us $5234 in 25 years’ time, $6068 in 30 years’ time, and $8155 in 40 years’ time.

Those of us intending to depend solely on CPF LIFE payout for retirement should do a reality check. Even in the case where we could set aside the Enhanced Retirement Sum (ERS) which is 3 times the Basic Retirement Sum (BRS) and 1.5 times the Full Retirement Sum (FRS).

I have produced a reference table detailing the CPF LIFE payout using the CPF LIFE Payout Estimator based on the FRS and ERS that are adjusted for 3% inflation each year. To derive a more conservative payout projection, I have chosen the uppermost range for ‘Annual Value of Property’ and ‘Annual Assessable Income’.



Annual Value of Property (AV): More than $30,000     Annual Assessable Income (AI): More than $60,000         Gender: F

From the table, the FRS will likely be around $236,000 and ERS around $354,000 in Year 2029 when I turn 55 years old. Considering that my current SA balance is >$170,000, and if I continue to be economically active for at least another 5 years, I should have no problem achieving the ERS. This would translate to a CPF LIFE payout of approximately $2300 - $2600 per month at my drawdown age of 65. (NB: The CPF LIFE payout of $2300 - $2600 is extrapolated from the Year 2028 ERS payout as the CPF LIFE estimator caps input for calculation at $350,000)

At 65, what I receive from the CPF LIFE Payout is likely worth only $1131 - $1279 in today’s dollars.

Fast forward to 80 years old in Year 2054, my CPF LIFE Payout is probably worth only $726 - $821 in today’s dollars.

So, if I wish to maintain a quality of life equivalent to $2500 in today’s dollars, I would need an increasing income stream to make up for the loss of value due to inflation. The table below outlines the additional income I need at the various age to combat the 3% inflation that is chipping away the value of my money.

Looks like the comfortable retirement that I desire will have to be fuelled by a lot more hard work now and in the next 10 or even 20 years!

Related posts:
1. Changes to the CPF system. BRS, FRS and ERS.
2. Achieving Level 1 financial security.
3. Upsize $100K to $225K in 25 years.


Hosaybo said...

This is one of the reason why people are in property with the thinking that by investing in one additional property and finish paying by retirement, the rental will be their source of income. Going by the idea that rental should be inflation adjusted, one should get a decent monthly payout. Any opinion on this?

AK71 said...

Hi Hosaybo,

The idea that investing in real estate in Singapore is safe is quite entrenched. I am not sure how things will pan out in future, of course. This is especially with the high speed rail and MRT link up with Malaysia a reality in another few years.

My own approach is to have real estate investment as a part of our portfolio but if we are too heavy in it, it could be risky. I do have friends who have nothing but Singapore properties in their portfolio.

For retirement, I think it would be safer to have different sources of income:

1. Dividends from stocks.
2. Rental from property.
3. Coupons from bonds.
4. Lifelong income from an annuity.

Don't put all our eggs in one basket. Be pragmatic. Don't be too pessimistic. Don't be too optimistic. We should do well enough this way.

Singapore Man of Leisure said...


Typical of single folks like you (and me) to leave out this source of income during our retirement:

5. Pocket allowances from grown-up children who have turned out alright ;)

CPF Life is an annuity of sorts; so no need to buy a private one. In fact, I would be surprised if anyone who can find a private annuity plan that can beat CPF Life ;)

Most of us would have 2 or more out of the 5 possible sources of retirement income.

Just look at our parents or grandparents ;)


5 out of 5 would be "over"! But then, for the kiasu, kiasi amongst us, more is never enough!


Unknown said...

Hi AK71

3 percent inflation per annum is a sad fact of life. We can't avoid the inflation on food prices and necessities.

The CPF life payout only starts paying out at age 65. It is only rewarding if one lives a long age. But don't forget illnesses come creeping when one ages. It can wipe out your entire savings with a major surgery or expensive sessions of chemotherapy.

Hoping in future we are also entitled to a card with similar benefits to 'PG card' when we turn 65.

Perhaps we must indeed not be so pessimistic or optimistic.


AK71 said...


No. 5 is speculative. I wouldn't include that even if I had children. -.-"

When I penned no. 4, I was thinking of CPF Life. What you thought I was thinking about? Insurance agents no need business from me lah. ;p

AK71 said...

Hi DC,

This is why a good H&S is a must. If we can afford it, get some critical illness (CI) coverage too. I have both H&S and CI policies. Otherwise, we would have to join the ranks of Singaporeans who say that "in Singapore, we can die but cannot fall sick". -.-"

If we are financially prudent and continue to invest for income, saving this extra income and invest again at opportune times, I believe we should be able to have a more comfortable lifestyle in retirement be it 55 or 65. :)

Singapore Man of Leisure said...


a) It's a sugar-coated poke to married couples with children - all the money in the world means little if their children did not turn out alright. Somethings are more important than money ;)

b) Precision of language my friend. Judging by the level of sophistication the questions you get, just doing my national service bit to make it crystal ;)

Call me kaypoh.

RayNg said...

Tea with EY: Is our CPF LIFE payout going to be sufficient?

In the first place... CPFLife never be sufficient for retirement planning.

CPFLife is the 1st line of defend (perpetual income) which provide min income to sustain a basic life style.

If one needs better lifesyle, then he/she needs to supplement with other passive income via equity; real estate investment, etc.

AK71 said...


Alamak. Giving parenting advice now har? OK, I leave that job to you. I don't want later some people say AK no children give simi advice on how to be parents. Cham... -.-"

I can always depend on you to be cryptic but to be crystal? That takes some imagination. Or do you mean a dark crystal? ;p

AK71 said...

Hi Ray,

Well said. I think EY was thinking of people who are thinking of depending on only their CPF money as retirement income. I am sure we know of such people too. -.-"

It gets worrisome when we realise they are not in the minority if we see how it is one source of great unhappiness amongst Singaporeans who say "money not enough". :(

apex property investment said...

Prepare to eat grass with CPF payout. For sure!

E H said...

I would tend to think of CPF Life payouts as the 'last line of defence', with passive/active as the first few tiers.

Singapore Man of Leisure said...


You found me out!

Hee hee. Was trolling you...

I better stick with being as clear as mud ;)

Don't bully I single with no children OK?

In another alternative universe, if I married at 30 and have my first child at 32, I now would have a 16 year old teenager!!!

Wait... I better stop. I giving myself nightmares!

AK71 said...


I had a classmate who became a father at age 20. He is 44 and his son is now 24 years old. Nightmare? ;p

This could be another can of worms. I better not say anything else. -.-"

Monthly Popular Blog Posts

Bloggy Award