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Withdrawing CPF savings: How much and how? (Maximising CPF-SA savings and returns?)

Thursday, December 26, 2019

Although I hope I wouldn't have to do it, if things should go terribly wrong, I might have to withdraw some savings from my CPF account in future.

So, I will have a newly created Retirement Account (RA) at age 55.

Funds will be taken from from my Special Account (SA) to make up the Full Retirement Sum (FRS).

For those who do not have sufficient funds in their SA, funds will be taken from the Ordinary Account (OA) to make up the shortfall.

Of course, we can also intentionally make it so that we have insufficient funds in our SA so that funds from the OA will make up the bulk of the funds to be transferred to our RA.

This might or might not change in future but, as of now, this hack is still possible. 

If you are interested in finding out more, you could read the following blog and newspaper article.

See the blog conversation here:
Exploit CPF-RA. (Hacking CPF-SA.)

Read the article in The Straits Times on:
Maximising Special Account Savings.

As I am planning on having the FRS in the RA, I will be able to withdraw up to 100% of my remaining CPF savings with the exception of the funds in the Medisave Account (MA).

In the event that I choose to make such a withdrawal, savings in the SA has to be withdrawn first before savings in the OA.

Alternatively, I could choose to have the Basic Retirement Sum (BRS) in the RA by pledging my home which I own.

This would allow me to withdraw more of my CPF savings.

However, that is not what I am planning to do.

So, what is the plan again?

If nothing terrible happens, the plan is really to leave the savings in my CPF untouched to earn 4% to 6% interest yearly till I am age 65.

Age 65 is the earliest I can have CPF LIFE start paying me a monthly income for life.

Of course, I can also wait till age 70 before having CPF LIFE pay me.

Waiting for another five years before receiving payouts would mean a bigger monthly income for the rest of my life.

Not going to lose sleep over this, I will cross that bridge when I come to it.

OK, I might have to talk to myself about CPF LIFE in the near future as a reminder to myself.

Related post:
CPF can be our best friend in our golden years.

Recently published:
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Siew Mun said...

You can withdraw the excess of FRS in the following priority:
1. Accrued interest of SA
2. Accrued interest of OA
3. Contribution to SA for the year
4. Contribution to OA for the year
6. Remaining monies in SA
7. Remaining monies in OA
Consider to withdraw the accrued interests around 2nd week of December keeping the rest to keep generating interest.

AK71 said...

Hi Siew Mun,

Thank you very much for sharing in such great detail. :D

Very helpful to eligible readers who are thinking of tapping their CPF savings. :)

Henry said...

I have doubt that this CPFSA hack will work without any risk. Think govt so stupid? :)
Leaving it intact means guaranteed 4% up to to 5%. Buying short term bond means a loss of easily 2.5% interest during the interim. Buying a financial product insurance related and cash out after 1 year usually means a huge loss. Anyone try can share exact method if he/she has tried.

AK71 said...

Hi Henry,

Definitely, there is a chance that things could change in the future.

Honestly, I don't believe that it is intended for the CPF system to work like this but, for now, the hack works.

In this blog, I have provided a link to an article in The Straits Times which gave an account of how exactly the hack worked for the writer.

You might want to read that.

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