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Want to withdraw $500,000 from CPF at 55?

Thursday, June 15, 2017

Hi AK,

A quick intro about myself. I am 34 this year, staying in a bto hdb flat and have existing housing loan of $20k outstanding (serviced by my wife and myself).

Checking with you on my strategy for CPF. I have around $5k in ordinary account, and $145k in special account. Already met my min sum for medisave. Am hoping to hit my S.A. min sum when I reach 35yo. 

My thinking is that once my min sum (FRS of $166k) for S.A. is met, all employment contribution will flow into my ordinary account(~$2k a mth), and I would be able to hit around $500k when I reach 55 ( $24k x 20yrs - not including contribution from bonuses) and withdraw this amount. 

Am I missing out on anything here? Thanks!





Hi,

Once you have hit the FRS, you will still be making mandatory contributions to your SA. So, monthly CPF contribution goes to OA and SA but nothing to your MA if it has maxed out.

When you hit 55, the prevailing FRS goes to the newly created RA and you can withdraw whatever is left in your OA and SA, if you like.

Best wishes,
AK

If we do the right things, we could withdraw a more meaningful sum of money from our CPF account at age 55 instead of a token $5,000. Do you like that? I know I do.

Related posts:
1. Changes to the CPF and SRS.
2. My CPF-SA (Jan 2016).

18 comments:

pirate said...

Hi AK

Will you go for FRS or ERS?

Based on 3% increase per year, the ERS is likely to reach 400K and more in another 15-20 years' time. So based on what you mentioned, whatever is available to be drawn out will be less this 400K.

Thanks always,
Pirate

Spur said...

If there isn't any pressing need, I'll probably leave my excess in CPF after 55. Treat it as AAA bond as you've monologued many times liao.

And since I'll be gainfully unemployed for the foreseeable future, I can simply withdraw any excess above FRS anytime if I really need to.

Enough worries liao on managing cash portfolio performance, no need to add more worries about managing big lump sum withdrawal from CPF. Hahaha!!

Just have to keep an eye out for changes to CPF policies and ratings downgrade (maybe many years in the future who knows?).

AK71 said...

Hi Pirate,

I could very well go for ERS unless I have better use for the money when I turn 55. Same idea applies to the balance in my CPF OA after setting aside the ERS using money from my CPF SA. I will have to decide 9 or 10 years from now. :)

AK71 said...

Hi Spur,

Peace of mind is priceless. I will enjoy the good times while they last since, indeed, who knows what the future might bring. I will blog about this. ;)

pirate said...

Yes, I will prefer to go for ERS too especially for singles.

jasper quek said...

Hi AK,
for BRS -> payout is $700~$750
for FRS (2XBRS) but payout is < 2x $700
for ERS (3XBRS) but payout is < 3x $700.

Why Ah Gong maths is not to our benefit?

Regards
JQ

AK71 said...

Hi pirate,

Having more certainty in retirement funding is a good thing. ;)

AK71 said...

Hi JQ,

The CPF is really to help the less well off which explains the higher interest rate for the first $60K when we turn 55. It is one way to lessen the gap between the poorer and the richer folks. Don't complain, rich man. ;)

AK71 said...


Lee Keh Yi:

The max monthly contribution for ordinary wages is $2,220 ($6k x 37%). If MA is maxed out, max that can go to OA at 35yo or younger is $1,860 ($6k x 31%). He probably didn't realise that 6% will still flow to SA even when FRS is reached and thought all will go OA.

Laurence said...

Reference your question to AK -------- "Am I missing out on anything here?"

Yes. There are still 21 years to go before you are 55. When it comes to the CPF scheme, goalposts move periodically. And the fine prints change even more frequently.

AK71 said...

Hi Laurence,

Things could change in future. If they have to change for good reasons, then, it would be reasonable to accept them. Crossing fingers. ;)

jalan Jalan said...

what about the interest that have used to pay for the BTO HDB? Does it need to be refunded?

AK71 said...

Hi JJ,

If you are referring to the accrued interest from borrowing from their CPF-OA to pay for their HDB flat, if they are not selling their flat, they won't have to repay.

jalan Jalan said...

Thanks AK for the reply. So assuming a couple has fully paid up the HDB at the 5th year and they decide to sell the house at the 10th year. They would have to pay back the accrued interest up to the 5th or 10th year?

AK71 said...

Hi JJ,

Yes, if you have used your CPF-OA money to pay for the flat, you would have to repay all the borrowed money and the accrued interest if you choose to sell the flat.

Accrued interest stacks year after year as long as you did not refund the money borrowed from your CPF-OA. It doesn't stop once your flat is fully paid.

AK71 said...

"Later on in life, to grow our CPF-OA savings faster, if we have spare cash, we can always think about doing voluntary refunds to our CPF-OA."
From:
AK showing off his CPF-OA.

Ernestsyx said...

Hi AK,

Can I choose to repyay the accrued interest earlier rather than later when I sell the flat?

AK71 said...

Hi Ernest,

Here you go:
How to stop accrued interest from growing?

Gambatte! :)

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