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Why work hard and plan early for retirement? (UPDATED)

Monday, June 20, 2016

Reader said...
Actually retire also hard work to make it work well.

AK said...
Oh, I am working very hard in retirement.
Trust me, I know what you mean. ;)

(F.I.R.E. = Financial Independence & Retire Early.)

If you haven't listened to the song, listen, there is a hidden message.

Our conversation continues:

My reply:

Hi iwimsasl,

I believe that everyone's life can be and should be better.

I know people who belonged to the low income group who took affirmative action to change their lives for the better and I have shared some of their stories here in my blog too.

If you are born poor it's not your fault but if you die poor it's your fault.” Bill Gates.

This is true especially in societies like Singapore where everyone has equal access to education and opportunities are available to those who are willing to work hard and look for them.

There is no point for the low income workers to complain or feel sorry for themselves. 

Unfortunately, many do and it doesn't change anything.

I see some complaining on FB all the time. 

They have time to complain, why not spend time to improve their lives?

Asking for CPF LIFE to start paying them earlier is unlikely to make a big difference in such an instance since there is probably not enough in their CPF-RA to last them very long. 

Pay them a monthly income from a smaller sum for life? 

The monthly payout has to be much smaller to be equitable. 

I don't think it is a reduction of only 7% or 8%.

Accumulating for only 5 years at 5% per annum (bearing in mind that the first $30K is paid 6% p.a. while the next $30K is paid 5% p.a.), CPF-RA money would only grow 27% while accumulating for 10 years, it would grow 63%!

So, with this understanding, we see that the monthly payout, proportionally, would have to be 22% lesser to be equitable if payout were to start at age 60 instead of 65.

The prudent thing to do for these CPF members would be to continue working for as long as possible, putting off retirement and allowing their CPF-RA money to accumulate for at least 10 years.

Unfortunately, for many low income workers who are much older, it might be the reality they must face as the probability for upward mobility dims for them. 

Younger low income workers who are physically and mentally whole should not give up.

I shared before in my blog that what pushed me to work harder in my younger days, holding 3 jobs at one time, working 7 days a week, and to plan early for retirement was mainly the fear of growing old and destitute. 

人无远虑, 必有近忧.

Many people just don't think ahead and I hope more people will.

Related post:
Worried you won't live to enjoy all your CPF?


iwimsasl said...

Once again, thanks for your reply and enlightenment.
Yes, 人无远虑, 必有近忧 is may motto all these years.
I too came from a poor family, thus "work hard and plan early for retirement?" has always been my objective in life.

Back to my main subject: Would you consider topping up extra money to your CPF RA in order to gain early draw down say at 62 years old and maintain that same amount monthly that you desire?

Of course CPF rules do not cater this option how but instead for the other way(delay). Do you know why?" Maths can work both ways right?"

Will appreciate your further enlightenment.

Singapore Man of Leisure said...


All of sudden cheena so powderful?

So you were trolling us all this time pretending your cheena half-past six?

Or let me guess.

Your learned 人无远虑, 必有近忧 from the MRT station?


AK71 said...

Hi iwimsasl,

Once our CPF-SA has hit the MS or the FRS, we are not allowed to do any Top Ups. The CPF-RA is only created at age 55 and not earlier. Only at that age are we given the option of going for the ERS if we like. This is what the system currently offers.

I would like to contribute more to my CPF-SA beyond the FRS earlier (with a condition that this excess must go into the CPF-RA and not withdrawn at age 55) if allowed but not necessarily because I would like an earlier payout age. 65 or 70 are both fine for me.

Anyway, this is all an academic discussion since it is unlikely that this option will ever be available.

AK71 said...


Alamak. My Chinese is not exactly zero, you know. Not very good but at least I got a B3 lah. After years of neglect, it is probably a C6 or maybe a D7 now... -.-"

Singapore Man of Leisure said...


You win!

My cheena C6.

I remember seeing that Confucius saying on our MRT stations many many years ago ;)

Idiot. Next time you ask for translation from cheena to England I come kick you!

iwimsasl said...

Never say never - President Tony Tan, or ever.

Looks like the govt only worry about the low income group which may not have enough in their CPF RA for self sufficiency after retirement. Thus, come the compulsory CPF life which pool everybody's resources together for the fund's self sustainability. Obviously, the most beneficial from it are those who choose the standard plan and bless with longevity. While the most disadvantage ones are those who choose the same plan but pass on early < 85.
So how many people actually choose the standard plan? CPF said Basic plan more popular as for now. It's also interesting to know how many in this group(choose SP) can live beyond 85 in years to come.

Me for sure will go for the BASIC PLAN - FRS unless there are changes again for sure to come as always.

AK71 said...


Oh, it was by Mister Kong? I didn't know that. You good. ;)

Chinese also got different levels and different types. Classical Chinese (which was the case when I asked for a translation) is Greek to me. -.-"

AK71 said...

Hi iwimsasl,

At the IPS Forum on the CPF, DPM Tharman said that the CPF is not meant to benefit the rich which is why there are contribution cap and MS Top Up cap in place, for examples.

If the CPF rules should change, as long as the changes are reasonable like what happened in the past, I don't have a problem. Unfortunately, many people tend to get very emotional when money is involved and often stop being rational.

iwimsasl said...


It's not mainly money matter, it's about choice/flexibility.

Having more choices doesn't benefit solely the rich right?

Are you looking to cross 90 yrs old? Well, I hope I won't come close to that age. Even if I did, money will become meaningless by then.

AK71 said...

Hi iwimsasl,

It is always good to have options. :)

Are we looking at the CPF as an option or within CPF for options? Our perspectives will shape our answers. ;)

Money will never be meaningless to anyone at any age in a money driven society.

Mao Mao said...

The CPF gets enhanced every few years. It will be interesting to see if CPF Life payouts could really start earlier to appease the majority.

AK71 said...

Hi Mao Mao,

I don't know if the majority want earlier payouts from CPF Life. Many I know actually prefer to leave their money in their CPF accounts after turning 55, for example. Usually, these people are not very vocal unlike the ones on the other side of the fence.

If CPF Life should allow payouts from age 60 instead of 65, for example, the trade offs should be clearly explained and those CPF members who opt for it should go in understanding fully what they are giving up. It is about taking responsibility for the decisions we make.

iwimsasl said...

Hi Ak,

Let me quote:

" Many I know actually prefer to leave their money in their CPF accounts after turning 55" ---> I think these people are either still continue working or risk adverse. Basically, the money will largely remain there and become their estate.

"If CPF Life should allow payouts from age 60 instead of 65, for example, the trade offs should be clearly explained and those CPF members who opt for it should go in understanding fully what they are giving up." ---> Bingo! This is the choice I'm looking for and the trade offs I guess are either lesser amount for draw down monthly or top up more to maintain/increase the amount of monthly draw nice, can retire at 60 liao:-)

AK71 said...

Hi iwimsasl,

I think both of us know where each other are coming from. Unfortunately, in a pooling system with so many members, it is difficult to cater to all circumstances and demands.

One of the things I worry about is whether those who choose to take out all their CPF money at age 55 (if that option should be reinstated) or those who choose to start their CPF Life payouts at age 60 (if that option should become available) have the financial savvy or resources not to become a burden to society.

In your case, I have an inkling that you are probably OK with much smaller CPF Life payouts but that option cannot be available to you only. It has to be available to every CPF member and I can imagine those who are less prepared (i.e. having no other sources of income) would choose the earlier payout too and end up with less to fund their retirement. The basic safety net could become an inadequate one for them.

AK71 said...

LOL. A funny comment in my FB page:

SG John:
When you fall into the following category.....
1. Obviously, you are not super rich.
2. Clearly, you are not rich either.
3. Heng ah, you are ok with some excess money to spend.
4. Sibei Heng ah, you are not the poor.
See, you are not high not low...高不成低不就,他X的,白活了这辈子.

AK71 said...

From my FB wall:

Jimmy Ng:
The gap from 55 - 65 (?) needs to be addressed. One may have to continue fund those 10 years before CPFLife payout. Passive income or continue in workforce....

I sense that most people in Singapore will have to work till age 65.

When to get a private annuity?

AK71 said...

Elaine Keh:
Am I thinking too simplistically ?
-Top up SA til FRS
-Top up CPF according to abilities
- withdraw OA at 55 which should be sufficient for 55-65 years old
Like that can??

If after the creation of the RA, still have enough in OA to be withdrawn to fund 10 years of expenses year after year, that is a good thing. :)

AK71 said...


AK71 said...

Siew Mun Kwan says...

My calculation if I top up to ERS $271K at 55 in 2020.

Forecast to have $412k in RA at 65 in 10 years.

A decent cornerstone of my retirement fund eh?

AK71 said...

Jack James says...
The key differences are .....
Doing nothing but get S$1.5 mil at age 65 versus continue to work to get S$1.5 mil at age 65 in CPF.
I still think you owe us the secret . 😃😃

AK says...
Er... weather very nice today hor?

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