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FRS in CPF-SA at age 30? Sharing in detail.

Friday, August 24, 2018

For the benefit of younger readers, the reader who hit the FRS in his CPF-SA at age 30 has decided to share his thoughts in great detail.

Reader says...

This is not about me per se. It is also about helping the next young person who is thinking of topping up his CPF. 🙂

Everyone has different backgrounds, incomes, obligations but sharing some reasons for me to hit the FRS early and to fully maximise our CPF systems.

1) The yearly increase in FRS should be covered by the interest of 4% each year.

This means you are likely to meet the FRS when you hit the retirement age.

I estimate the FRS to be approx $346,815 in 25 years assuming 3% increases but my SA would be a lot higher since it is compounded at 4% and my contributions to SA from work is not added in yet as well as the flow over of interest from MA.

2) Hitting the FRS at 30 means that I can allow for the FRS to compound for at least 25 years till the milestone age of 55.

25 years isn’t a very long time away in my opinion but the compounding can be substantial.

It would be about 2.67x the current amount and likely I would be able to withdraw if I need or aim to hit the ERS.

3) If CPF LIFE is still around by my retirement, it will likely be able to provide me with a decent cash flow when I am not working.

In fact, I don’t look to retire early.

I look to still be gainfully employed till as old as I want to.

The key is to allow me to have a choice in doing what I want at that time and this changes with age!

Some tips of what I used to hit the FRS:

1) Do OA-SA transfers when below 30. I fully transferred my OA to SA at one point in time.

2) Do CPF SA top ups yearly since I started work (taking advantage of $7k tax relief at the same time) and in some years I topped up beyond the $7k if I received good bonuses.

3) VC to your OA/SA/MA and thereafter transferring the OA amount to SA.

4) Used my CPF OA to buy stocks before HDB wiped out the full sum for deposit and thereafter sold the stock and transferred it back to my CPF OA, follow by step 1 again.

5) Using full cash to finance your property and leave the CPF accounts untouched.

I also do not advocate paying off HDB early because I treat them as good debt.

The compounded interest in my CPF (at 2.5%/4%) is substantially higher than the interest saved (2.6%) over 30 years.

This point is difficult for most to see because they compare 2.6% minus 2.5% and they think they are saving on the interest.

Separately, I am obligated to get HPS when taking HDB loan so if I pass on, at least the insurer helps me to pay more.

Ultimately you need to manage your property purchase which I feel is the main expense of a typical Singaporean apart from food and there is honestly no need for a car (I have 2 kids).

My BTO cost less than my 3x annual income. (Live within means like what our PM says)

My background:

Went to Poly, NS, 2 years of Private University after that.

Have 2 young kids and my wife stays home to look after them.

I am just a normal salaried worker with starting salary was $3k like most fresh grads but my annual compensation is a low 6 figures now after 6 years. Good luck!

Related post:
1. FRS in CPF-SA at age 30? Yes!
2. How to grow our CPF savings?
3. 4 ways to boost our CPF savings.


AK71 said...

Jimmy Ng says...
If I can turn back the clock, this will be the 1st aim, rather than BGR and buying cars.

AK71 said...

Jack James says...
That (sharing his background) will stress many more people . Hahaha .
Especially when you have twin turbo engine . 😅😅

Jackson Yang says...
Wah... really stress leh..
FRS 1st, now may be can hit ERS...
Very stress liao

Jack James says...
2 kids , wife not working.

AK71 said...

Jimmy Ng says...
Role model. 6 fig salary, can buy new condo every few years.

Jack James says...
You willing to pour one year salary as ABSD meh ? 🤣🤣

Goh Kah Kiat says...
That salary growth though 😯

AK71 said...

Vincent Chan H S says...
The only job I can think of that can jump so fast from 3k per month to 6 fig annually is investment banking. Curious which industry he is in.

Jack James says...
The fastest industries in SG ( if you are good ) are always :
(1) Banking
(2) Insurance
(3) Real Estate
Can’t run away from these 3 .

Jimmy Ng says...
That "3k per month to 6 fig annually" sounded like a pitch from insurance or MLM recruitment talks. But i'll give him the benefit of doubt lah

Tong Xiang Yap says...
Assuming his 6 digits is 100k pa (assuming no bonus included) which is roughly 8.3k per month, from 3k to 8.3k is about 276% over 6 years and average 46% increment per year.
Pretty amazing for a private uni grad (not looking down on private uni as I am from private uni).

Lmk said...

We all should learn from each other. Cpf is a good tool for retirement adequacy. I am one who benefited from the cpf. Currently I have $1.1m and aim to continue to work and contribute as long as I can. I also top up for my 2 kids to meet Drs at an early age.

AK71 said...


Wow! Congratulations! :D

caelitus said...

If you hit your FRS, MA interest at end of the year will flow over to OA. Similarly, the mandatory MA contribution will flow over to OA.

Just a reminder, CPF does a yearly review of CPF LIFE payouts. It takes place every July and are adjusted based on life expectancies, changes in mortality experience, interest rates, additional top-ups in your RA, refund of money from the sale of your property etc. These might increase or decrease your payout. So do not be surprised if it decreases one year and goes up (all in the name of keeping it viable). We will love the certainty but this is an example of the policy risk that CPF advocates will have to understand.

As AK says, use CPF as one of your retirement tool but not THE retirement tool.

Kah Hwee said...

I have just started working, with a monthly salary of $3x00. I am rather afraid of topping up my CPF using cash, as well as transferring money from OA to SA. The reason is that I am currently building up my war chest as well as my investment portfolio, so it does not sound like a good idea to put cash into CPF. Also, I will probably be getting a flat of my own in a few years' time, and I will need to have money in my OA to help with that.

Should I be putting more cash into CPF, and transferring OA to SA if you were in my situation? Thanks!

AK71 said...

Hi caelitus,

For sure, the CPF is a cornerstone in my retirement funding strategy and not the entire foundation. ;)

AK71 said...

Hi Kah Hwee,

You have to read my follow up blog on this ;p

What is behind hitting the FRS and what is our plan?

We have different circumstances and situations.

So, we will also have different priorities.

If you need the OA money for something else, don't do OA to SA transfer.

Remember that SA money is meant for retirement funding and the transfer from OA to SA is irrevocable.

Similarly, if you need your cash in hand for something else, don't do Top Ups to the SA.

Ben said...

Hi all,

Different people have different circumstances. There is no appropriate fix-all solutions to address the prevailing circumstances. One will need to decide on the type of measures which are applicable and suitable for each of them.


AK71 said...

Hi Ben,

For sure, it is never my way or the highway. ;)

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