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The Dirty CPF-HDB Scheme To Trick Singaporeans?

Friday, April 4, 2014

I would like to share a few comments from a reader on my FB wall when we discussed a very hot article that has been circulating lately. 

Title of the article: "Truth Exposed: The Dirty CPF-HDB Scheme To Trick Singaporeans."

Wah! With a title like this, sure to become viral and it did.

So, what are the reader's comments?

"Well and we have a lot of Singaporeans complaining that they earn too little to make a living... 

"So many are being fanned by this CPF topic and arguing about it everywhere. I would choose to drive a taxi or do some carpentry work instead of arguing over those facts.

"Additional 30 to 50 dollar per day over 1 or 2 years will be a big deal to me..."


"A lot of Singaporean are just too spoilt and are unable to see a picture even 5 minutes before them. Lazy and shallow minded, overly comfortable.

"I won't be surprise they and their children remain in the current society status 50 years from now. Children's success are often parent's upbringing and child's willingness for achievement.

"With such mentality, I believe they would and personally feel they should just remain where they are or go lower."

Too harsh but, from my observations, there could be some truth in the comments.

As for what I think about the article, I don't think that it is saying anything new.

The "what" is the same.

It is the "how" that is different.

A new angle on some familiar material.

Make the PAP government look bad and it will excite a whole lot of fellow Singaporeans and probably quite a few foreigners as well.

I made a few comments in FB regarding this and I want to share a couple of them here with readers who don't follow me on FB:

"The CPF provides a minimum safety net for Singaporeans who stay employed for much of their adult lives. 

"The money is primarily meant for retirement use.

"We are allowed to use it for some other purposes including housing in the meantime but please remem
ber that the money is primarily meant for retirement use.

"So, if we take out all the money for whatever reasons, we have to bear in mind the opportunity cost involved although some people might not look at it this way."


"In an environment of very low interest rates in Singapore, the current CPF rates are acceptable. 

"However, if interest rates were to be as high as those in Indonesia or Malaysia, then, it would be totally unacceptable.

"This is the reason for the CPF to be pegged to long term SGS rates. It addresses the issue."

There are always two sides to a coin. 

We can either choose to use the system to help us achieve our goals or vilify it and imagine that it is beating us. 

Read the related posts below (and the very good comments that follow) if you are interested in the other side of the coin.

Related posts:
1. Young working Singaporeans, you are OK!
2. Build a bigger retirement fund with CPF-SA.
3. How to get free medical insurance in Singapore?


AK71 said...

A question that comes to mind is whether we can trust everyone to be financially prudent? If everyone is financially prudent, then, of course, we won't need a caretaker for our money.

A simple question: Would we rather have or not have the CPF?

Without the CPF, I wouldn't have as much money as I have now. Of course, we could start debating whether money in the CPF is real money and whether it is actually there.

We will see the money if we live long enough and the money will never be enough. We can try to speed up the process towards meeting the minimum sum and this I have shared in my blog before. For many of us who have choices, what we choose to do will determine the outcome. I do understand that there are those who do not have a choice and these are the people who need a helping hand

Steven said...

Hi AK,

Agree with your thoughts on this. Its either you keep complaining and not do anything. Or you understand the demerits/merits of the system, analyze it and turn it into something useful for you.

Calm yourself down and use that precious time to do something worthwhile to improve your life and future.

In any case, life is too short to keep harping on negative thoughts. Understand what it is and move on. Never go into a limbo...

Best Regards,

AK71 said...

"Mr Ngerng wants to have the right to decide whether to return the savings withdrawn for housing upon sale of the property because you should decide how much to “put into the bank”. He also takes issue with the need to return CPF savings inclusive of accrued interest because he sees this as interest that Singaporeans are paying to the Government for the use of their own money.

"There are several problems with his arguments. First, the CPF is not a bank account. The purpose of the CPF is to provide a mechanism through which Singaporeans can save up for their retirement needs. Funds left in the CPF account earn specified rates of return. Some funds can also be withdrawn for investment in property or in other investment assets under the CPFIS scheme. The returns made on investments using CPF funds should contribute to the pool of savings being set aside for retirement. This includes the returns made on investments in property."

Read: Five Stars and a Moon.

Steven said...

Hi AK,

Can we trust everyone to be financially prudent? This trust thing is subjective...

If you ask me, i prefer freedom to choose. Don't need someone to tell me what to do with my money when i know so much blood and sweat goes into it.

But i guess, as most people know, CPF is not solely a retirement device, it also serves a multitude of purposes. These purposes affect the stability of Singapore, as such, imo, freedom is definitely out of the question... lol...

So much for trusting everyone to be financially prudent...

Best Regards,

AK71 said...

Hi Steven,

Indeed so. I believe there are more good points to be raised about the CPF than bad. In life, there are very few things which are 100% good.

So, try to focus on what is good and capitalise on it. :)

AK71 said...

Hi Steven,

Well, you know, I don't really trust myself to make the correct decisions in investment all the time. So, to me, if I can have a guaranteed ROI of 2.5% to 5% per annum for a sum of money locked away over the long term, capital protected, it is good to have as a fall back resource. ;p

Anonymous said...

CPF benefit different people differently. I believed it has many more good points than bad, and alternative systems might lead to other trade-off.

For the lower- income, they might not see the benefit of CPF, govt is aware of the parodox and hence is trying to subsidize the buying of HDB through CPF top-up instead of cash.

We will always have people that want freedom over everything, and others who blame others for everything. Just look at investing, instead of thinking that we miss some details, we didn't have the right temperaments, we blame brokers, managements, independent directors, SGX, then MAS.

Guess its human nature, as I also KBKP once in a while. ;p pardon my language

AK71 said...

Hi Mike,

There is more than one road to Rome. :)

There are so many available tools out there for us to use on our road to financial freedom. We have to choose the tools which work best for us. Need self knowledge for this to work too.

Simple really. Not easy, perhaps, but simple.

ted said...

Some POV from younger generation:
Main thing my peers are worrying about is that the CPF used to pay for the HDB housing loan ends up having very low CPF savings after working 30years. I guess the question then is redirected to does allowing the use of CPF to pay for HDB loan provided 'too much' liquidity and hence was _one_ factor(?) in the soaring HDB prices in past few years, as opposed to NOT having the option to pay with CPF at all. Essentially I think I'm making the HDB is too expensive argument, haha. Since it's siphoning much of the retirement money away.

Using a naive example [ONLY cash to pay for HDB scenario]:
Person with 3 yrs experience earning 3.6k / mth.
After CPF (consider only for retirement, cannot use for HDB), take home is about 2.8k.

Using 300k as HDB price (let's ignore interest for now), and a married couple each month contribute 1.5k (3k total) to repay for HDB.
300/3/12mths = 8.33 years to pay off.
Add interest let's round it to 10years (agaration) to pay off.

The crux is that they will only have 1.3k (2.6k total) of left over money for EVERYTHING else. Very frugal, but probably survivable, most people will revolt though. :) But not every couple's gonna be both uni grads and earning that kinda income. And then baby comes in, 2.6k really enough?

Everything in CPF is left untouched, and untouchable until you hit DDA and can only slowly take out a few hundred each month (no minimum guaranteed), breaking-even only if you live long enough. If sick, how?

I guess some smart-alec will answer with the existing system, just use CPF to pay for the house and the cash save for retirement? It's kinda back to square one, since the ORIGINAL point of pain/trouble is that the HDB price is so high, making the CPF play 'compulsory'.

P.S: I think I dragged too much things into it, but it's hard to talk about things fairly/holistically if we just scope down and compare only one or two variables. I'm betting on your wisdom to answer in a succint and englightened manner :D

And I implore whoever is answering, please answer in a kind manner to a younger person to help. Not the way some authorities like to turn around the question and/or answer in a way that makes people angry. Thank you.

FoodieFC said...

Hi AK,

My 2 cents of thoughts, if I understand correct (before I read that article).

For the rich / middle income the CPF is a good tool. But for the lower income, those who struggle to pay their daily expenses (food, rent) this is a lousy tool for them.

This group see an amount of money inside and can't withdraw it, not even for survival. Even if they are fortune (e.g. own a 5 room flat). If they sold downgrade to a 3 room flat, they would have made a profit and this goes back into CPF. They can't even downgrade to use the profit for survival.

The middle income (my generation) will fall into this when we grow old at the current rate the min sum is increasing. =(

Cory said...

Your comment on safety net is right. Singaporean keeps complaining there is no safety net. Here's one. A decent growing one. Don't cheer yet. We need more nets. :P

AK71 said...

Hi Ted,

I will offer 2 points first:

1. There are BTO flats which are under $200K in price, the BTO 3 room flats in CCK, for example, are from $146K and this is excluding grants. Do we need a big flat or want a big flat? See: BTO 3 room flat

2. After 3 years, income becomes 3.6K. After that, income doesn't stay stagnant, right? ;)

Hey, don't be too pessimistic. Life in Singapore is not too bad but we have to manage our expectations and be realistic.

It is only when we become a bit unrealistic and try to do too much with too little and in too little time that we get nightmares. :)

AK71 said...

Yikes, broken link.
Redo. See:
BTO 3 room flat

AK71 said...

Hi FoodieFC,

The irony is that the CPF is to help the lower income group more than the higher income group. There is plenty of evidence of this. For example, there is an annual CPF contribution cap.

The rich are not allowed, therefore, to put in as much money as they could into their CPF accounts to enjoy the risk free rates. This is also a point against the CPF detractors who say that the CPF is a Ponzi scheme. Ponzi schemes would not limit contributions by "investors". ;p

The additional 1% interest paid for the first $20K in the OA and the first $40K in the SA is another evidence that the CPF is to help the lower income group.

However, very often, the people who the CPF is best for don't realise that this is the case. It is similar to the case for insurance. It is actually the lower income group that need insurance more than the higher income group. It is crucial for them to be adequately insured but because it is not mandatory, they usually aren't.

So, the fact that the CPF is mandatory provides them with a safety net. However, they complain about it. It is pretty ironical. :(

AK71 said...

Hi Cory,

Yes, the CPF is a minimal safety net. Tony Tan introduced the SRS which is a second safety net which I have encouraged everyone to consider having. :)

"Spend less than you make; always be saving something. Put it into a tax-deferred account. Over time, it will begin to amount to something. This is such a no-brainer."

Guess who said this? ;)

Anonymous said...

Hi Ted and AK,

I married 1 year into the workforce and 1 year after marriage, we have our first child. My first pay is 2.9k, thereafter 3.6 just Ted I the third year.

My share of hDB with my wife is 85-15. Because I want her to be secure if she need to stop work to care for baby.

The initial years are stressful and insecure, many months we were having left hand in right hand out days, and my CPF and almost all savings were wiped out due to marriage and kids expenses. Like u, I think I will never see my minimum sum
Of 120k (then) by 55.

But this is 10 year into my work year, my RA (oA+ sa) is already almost 100 k. I still have 20 years to go before I hit 55.

We forget a few good things about CPF:

1) employer contribute too
2) your bonuses contribute to CPF
3) I transfer OA money to SA during the initial few years.

I dun consider myself a saver, as my wife comes from a rich family and I dun want her to feel shortchanged. Have me my way, my life will be a lot more frugal.

What I am trying to say here is: CPF is just a tool, the property prices does not wipe your CPF, assume both of you need Instatement of 1600 from CPF for 25 years, you can still well afford to go for 400-500k HDB, which is 4-room price for most places and some 5 room price for others.

There is no need for cash, and u can do what u want for your take home back. For those earning lesser, maybe a 3 room flat is a good starter, even with kid. 5 yrs later u can upgrade to a 5 - room.

I drive, dine oute with family on weekends, travel every 1-2 years, and I managed to but policies for my kid, wife, have endowment plans for myself, set aside money for rainy days(not big) and have some little money for investment.

If u live more frugally than me, most of people can do much better than me. But I am content with what I have, my pay does increase as I climb the Coporate ladder, making it easier to save as years go by...

So it's not horrible here in Singapore. Be happy, money is just one part of the equation, enjoy your work and family.

Unless u are struggling with less than 2k, I would then say CPF is quite limited in its use, but then you would be eligible for more grants.

Celebrate abundance.!

ted said...

I get your stance and point. My POV.

1. I looked at the link, don't there's enough units to go around if more people are 'realistic', there's only so many low level 3rm units to sell 'from' 146k.

If a uni-grad couple has to settle for such a small housing, I'm just sad at the state of the 'progress' and whatever was promised by the past leaders. Those people with less qualifications how? Study more? Cop-out answer, as there will always be people below. Study so much to end up slave away for 30yrs for pitiful 4rm?

Yes, the only positive action is to face up to reality and do something about it, but I find this line of argument kinda slippery sometimes. When surrounded by gangbangers, just take off ur pants?

2. "After 3 years, income becomes 3.6K. After that, income doesn't stay stagnant, right? ;)"

Real wage increases versus housing prices increase. 'Nuff said.

I think where I'm coming from is NOT just solving the 'problem' for myself and more about progress for every citizen. (more like just halting the backwards progress...)

"Hey, don't be too pessimistic. Life in Singapore is not too bad but we have to manage our expectations and be realistic."
I agree with you, only because I am fortunate to be born in my current family/circumstances/temperament.
I don't like the way the country is going and feel powerless to affect any change beyond my own.
Most advice I've heard from mentors seems to only focus on solving the problem for self by "making more money". What happened to moving forward together as a country?

"It is only when we become a bit unrealistic and try to do too much with too little and in too little time that we get nightmares. :)"
I think that is good advice for the incumbunt governement ;p

ted said...

Really appreciate your reply.

The beauty of the (frog boiling) 'scheme' is that it is in fact do-able and survivable. That's why there are no riots (by citizens). Haha.

Even my parents despite buying high for new flat and selling low when selling old flat due to market crash back late 90s' also somehow made it to today.
The end-game is very different though, they are retired and there's still a substantial HDB loan outstanding. Retirement on CPF cfm not enough to last. We are talking about previous generation hor, the golden era ones. Now imagine for our generation?

10 years ago, HDB prices are VERY different, you started with 2.9k, means you are middle-upper income at least ba. Don't think you have much to worry :) Is just about your expectations and being realistic. hahaha. SOrry to use this words on you.

One question, you know your CPF will be CPF life right? What's your plan for income stream post 65? I'm not going to even count CPF Life into my plans...

Optimism is good, but sometimes can be blindspot.

P.S: what's the benefit of transfering OA to SA during the initial years?

AK71 said...

Hi Ted,

I sense your anxiety and your angst. However, I cannot also help but feel that there is a bit too much pessimism. :)

I don't know if you are a regular reader of my blog but, if you are, you will be familiar with my blogs on how to make the CPF work for us and how we could possibly retire as millionaires. It is all possible. :)

A guest blogger, Solace, said that he bought a flat which is, today, equivalent to 5 years' combined income for him and his wife. I don't think that is so bad, is it?

Being a young person means you have a valuable resource on your side, time.

Time will help you to build your wealth if you are financially prudent and know the difference between value and price. :)

Anonymous said...

Hi Ted,

I am glad u are thinking of the CPF system and not just as a self help tool. We need people with passion and do not like status quo. The. We could find possible better ways to do things.

CPF is flawless? Far from it? Better alternative with less trade-off. That is for u to find out and push.

As I mentioned earlier, I took 85% of the loan, wiping ALL my CPF oA contribution of 861 dollars then. My wife contribute only 120 dollars. If u are your wife both contribute 800, 1600 dollars would get the equivalent of a 5 room flat resale at the same price now. I know, then your wife will
Have less. Less, yes, but doable

I know about life plan. Assume 10 years I am 80k, when u hit 55, I should have 240k. After settling for the life plan to draw down at age 65, I should have about 80-90k cash which I could take. I will most prob leave it there though. CPF cannot take care of my old age, that's why I have 2 bigger policies for that, which should net another 150k. It's a miserable amount, the other shortfall, I hope to achieve through my investing. I also intent to work as long as I am able.

Now, lets talk about countrymen progression. No one country can claim zero proverty on earth. If u know, please name me one.

We need a fair shot at progression, an is Singapore doing well. There are plenty areas of improvement but I dun think we are doing too badly. We should be looking at various facets o nation building, Including taxation, economic growth, civil group movement, education etc.

It should be look at in totality, and looking at just CPF and claiming national progress seem to me more like a complaint than a genuine concern to fellow Singaporeans. In the end, it is economic growth that determine we get the pay, and is our demographic than determined the sustainability of CPF scheme, which also include migration policies choices.

SA give higher interest, and for the first 60k of SA and OA combined interest is 5%. Very cool to me.

Most people with income around 3k when they start work should do ok and well enough if they continue to learn and work hard.

As for the poorer Singaporeans earning less than 2K, there are already grants, could it be more generous. Sure, but how much for the rich to be tax for such grants to be sustainable? How much growth?

It will be easier for me to empathized people in this group and the frustration they feel. But CPF is not the problem here, employment and meaningful one is. The coffee lady that get paid 30 dollars cash is worse off than those on CPF, because there is no employer contribution and will be left off from workfare.

Anonymous said...

I see CPF system as more to protect myself from the bad decisions of others.

I believe most of us, if we frequently check out this blog, are excellent long term planners of how to fund our retirement. Thus, CPF is a suboptimal deal for us.

However, many other Singaporeans may not be as far-sighted and hence may either spend their CPF money on wrong decisions.

Once that happen, it will be politically difficult for the Govt, PAP or otherwise, to let them pay the consequences of the wrong decisions.

This means taxes would have to be raised on all of us to finance the retirement of these people.

Thus, by insisting on minimum sum or even accrued interest when you use CPF to buy property, it protects taxpayers from bad decisions made by others.

Solace said...

Hi Ted and AK,

I share your concerns about the high cost of living, increasing costs of HDB throughout the years.

These are very real problems that young generations faced coming out to the work force.In addition, guys also have National Service obligation to fulfil. No Wonder, there are groups that are pessimistic about the future. That too is understandable.

I started out in the work force as a diploma holder. Earning pretty low at that time. Decided to take up a part time degree to further myself. To make matter worse, I still have Reservist call up during the time close to my exams. Coping work, studies and exam was definitely not easy during that period of time.

When it comes to buying house with my fiancée, it was daunting too. I rejected the option of buying resale flats because the COV that time was too high. In the end, decided that buying a BTO flat would be the most prudent. I also calculated that 5 years combined income for me and my wife would be a safe figure to purchase a flat. Spend quite some time applying for BTO, eventually managed to get one that fits our criteria.

I also like to share with you a quote by Epictetus, an ancient Greek Philosopher that has served me well.

"Does this appearance (of events) concern the things that are within my own control or those that are not? If it concerns anything outside your control, train yourself not to worry about it."

"Have the Courage to change the things you can, the serenity to accept the things you cannot change and the wisdom to know the differences"

CPF, High Costs of living, increasing HDB price, National Service, are examples of things we cannot change. I have learnt to accept them and work around it.

Personal finance, investment knowledge, living a modest life, attitudes, job knowledge and skills are the things that are within my control.

I concentrate and work hard on matters that I can control and accepts situation that I cannot change.

i do still complains sometimes, everybody does.

I hope this will help you to find a solution to your situation.

ted said...

Sigh, I guess I do come off as rather pessimistic in outlook the way I presented myself. I would actually attribute it to my throrough future planning minded-ness. In investment analogy, kinda like Margin of Safety and lots of backup plans for potential problems, it's just how my mind works.

My mode of communication is not about winning arguments but to illicit new ideas/knowledge from others to gain better understanding. But I guess from just text it may seem argumentative? I do get set off when replies are kinda broad stroke/platitudes and ignore the nuanced details others might be affected by.

I'm not that pessismistic really, and actually financially healthy and frugal. I don't follow your blog very closely but do read many articles from it.

I like the way you replied you in first line to me, shows the kind of restraint a wiser/elder person has but still firmly bring the message across. :)

By engaging in this dialogue, at least it triggered me to look more closely into CPF and possibly improve how I make use of it. (As opposed to mentally seething, choose to ignore elements of truth and not actioning to seek clarifications)


Solace said...

Hi AK and Ted,

To add on, there is really nothing wrong with getting a 3 rooms BTO Flat.

1. It Costs Cheaper. I know that's obvious
2. You pay lesser service and conservancy charges (S&CC) compare to 4 rooms or 5 rooms
3. You receive more GST, water/electricity Rebates and more angbao from government. They go according to flat size .

The Saving you can use it to grow more money from your investment when you are still young.

When you finally "have arrived" (Borrowed from AK FB posts), you can always upgrade to a bigger flat or better still condo (Like AK) when you can afford it comfortably.

AK71 said...

Hi Kelvin,

That is a very refreshing perspective. I like that. :)

Yes, the PAP government has always been about helping Singaporeans to help themselves but, in recent years, they have been a bit more giving which is not a bad thing as long as help is given to those who are more deserving. :)

However, I certainly do not wish to see Singapore go the way of a welfare state. -.-"

AK71 said...

Hi Solace,

Thank you so much for sharing your experience and philosophy. I like the bit about Epictetus very much. I didn't hear of him before. :)

I hope your comments will be a source of comfort and inspiration to Ted.

If Solace can do it! So can we! ;p

AK71 said...

Hi Ted,

I always welcome meaningful discussions and also criticism as long as it is done in a civil manner. So, I didn't have any trouble with your comments although I thought there was excessive pessimism. ;)

Thanks for making the effort to comment again and to clarify why you commented in the way you did earlier.

I am very much like you. I think a lot and I pre-empt problems a lot. I have accused of thinking too much and being a wet blanket. So, I empathise with you.

Well, what to do? This is where I am like Mike and Solace. I just did the best that I possibly could in areas which I had control over. I used the system to help me beat the system.

Some might say that I was extreme in what I did but I was much younger then, had more energy and lacked patience. Well, things didn't turn out too badly for me, thankfully. :)

I am glad to hear that your are financially healthy and lead a frugal lifestyle. You, therefore, have the foundation and the right attitude that will contribute to keeping you on course towards financial freedom.

I sincerely look forward to hearing from you again. :)

Solace said...

Hi Ak,

Knowing a thing or two about ancient philosophy can be useful at times.

For me, these ancient wisdom can provide inspiration and solutions at difficult or challenging times.

Ancient philosophers from Confucius, Mencius, Seneca and Epictetus all provides good teachings that we can think about in modern times.

All a sudden, i feel so old. Lol

I learn them not by choice really. My parents brought story books related to them when i was in sec sch. I used to quote them in essays and comprehension hoping to impress my language teachers HAHAHA

Oh ya, a summary wiki on Epictetus.

AK71 said...

Hi Solace,

You are right. There is much wisdom that we can draw upon.

Some light reading for me on a Sunday. Thank you so much for sharing. :)

EY said...

Hi AK,
Just about 2 weeks ago, while driving past the BTO flats under construction across my place, my 14-year old son asked me how much it cost to buy an HDB 3 room flat and if BTO flats are the cheapest among the new HDB flats available. That put a smile on my face.

We have been having frequent conversations about housing choices and we had discussed what justifies the difference between an 800 sq ft HDB flat that cost $200k and a condo 2-bedder that cost $1mil. Interestingly, while he appreciates the concept of value for money, he told me he will buy a condo after he makes enough money from investments and selling his HDB flat. The reason for buying a condo? He said it would be safer for his children. $800K is a lot of money to pay for that perceived safety, I said. :)

Anyway, when people talk about the Singaporean dream, I wonder if they really understand what’s behind that rhetoric of ‘upgrading’. Buy into that mindlessly, we would live the life in ‘Inception’. Soon we lose touch of reality chasing dream after dream. When we wake up some day, we are old and broke.
It does irk me a great deal when people keep lamenting on the ‘restrictions’ that stop them from being prosperous rather than finding ways to make things work for themselves. It is these same people who want to free rein in everything that clog up the system when things go awry and have others pay the price of their mistakes, be it family or society.

I absolutely agree with you, Mike and Solace that the CPF system can’t be optimal for everyone and no systems can be. What’s important is that we must be clear what social objectives the system is set up to meet and how we can make it work for us.

My suggestion to those who think they won’t meet the minimum sum in CPF to fund their retirement – buy the cheapest property available to use as little CPF as possible so that you only use one person’s CPF to service the loan. Go for longer loan tenure if necessary. The other person whose CPF is freed up, use the OA balance to invest in blue chips that pay dividends. When the dividends come in, transfer to the SA account. When there is substantial capital appreciation, divest some of the stocks and use it to pay down the housing loan and transfer some to the SA account. Check out the unit trusts that we can use the SA account to buy. Keep track of the consistently high performing ones and wait for a fire sale to deploy some of the SA funds to get higher returns.

There are many ways to Rome. Those who can’t afford a flight would necessary need to put in a lot of extra effort in connecting different modes of transport. Start by learning what are the maps needed and how to read them right. When we have 30 years or more to get to Rome (assuming we start work at 25), no excuse for not being able to reach there on time. :)

AK71 said...

Hi Endrene,

Thank you very much for the comment. If I were in my 20s, I would be very much encouraged by all that you have written. :D

Oh, tell your son that he might want to consider financial security for his children as well and not just physical security. So, buy condos which are freehold or are 999 years leasehold. ;p

ted said...

Seems like my participation flushed out many helpful good answers. :)

Since so many helpful elders, I will clarify and state that I am in fact single and most probably going to get 3rm resale flat when reach 35yo. By then should not be able to qualify for 2rm BTO due to 5k income ceiling, is a good problem to have I guess? :(

The examples I used were due to hearing my peers' feedbacks and also to illustrate how when there's 2 Uni educated players to combine power, it's still quite difficult to just afford basic entry-level public housing. CPF system by itself is fine, but when the prices have been bubbled so high (someone stopped building flats for ~10years) due to negligence... okay stop, not productive to ramble on this.

Single player is more than 2 times harder due to different rules in play
Any helpful suggestions for me? Thanks ;)

Anonymous said...

Wa Pian Ted,

Single Player super easy to save money la. Especially if you are going to hit above 5K when 35!

How much can you spend on yourself? 3K a month is like living as a king everyday, and you still save 2K!

Go Get a life.

Jokes aside. My volleyball glazing...

1) Property prices to continue to correct over the next 2 years, especially for those private developer with foreign ownership, that have unsold stocks due to recent poorer sales, after 2-3 years, they will need to cut price to clear stock to prevent penalty.

When private home price go south, HDB price will follow sooner or later.

Single player getting a 3-room flat is SUPER big! How much you need to eat, work, sleep? When you find a partner, then sell you 3-room to cash up the CPF account and go for another.

AK71 said...

Hi Mike,

Hahaha... I laughed when I read your comment but in a good way, of course. :D

I think you have shared some realism with Ted, not optimism but realism. I think he should find it comforting. Well, I did, although I don't like the idea of falling home prices as it could affect the price of my home. ;p

Till today, I am still single and although lacking a wife and two kids, I make up for it by having a car. Ouch. -.-"

PSTan said...

Seriously, it is not doom even if your pay is lower than $2k.

I know ppl with that kind of salary in the initial years of working, and when being frugal enough, would still able to save at least say 500 per month. Over the years, it is still possible to save up a substantial amount.

ted said...

Easier only because of choices made. Being single doesnt automatically make it easier. Two frugal souls still win the solo frugal soul.

Since we are in friendly jibes territory:
Uncle! you maths fail ah! 5k need minus CPF one hor, somemore is in cpf article comments... haha.
Assume 3.6k now, just agar match inflation in 6 years, salary btr be 3.6 x 1.035^6 = 4.4k, SAME purchasing power.
Optimistic not like that use one hor...

Yeah, 3rm too big, but 2rm too small, might want to play coop mode sometime in future you know?
First world problems, hehe.

AK, you are my role model, minus the car ;)

AK71 said...

Hi Ted,

Aiyoh, Mike is many years younger than me. Maybe, an older brother but uncle? LOL. OK, you didn't know. Now, you know. ;p

As for the car, yes, don't ever buy a car. Once you are used to having one, it is hard to give it up. -.-"

Anonymous said...

Hi AK,

I was wondering if we should blame ourselves for our predicament.

Why so, you ask?

Once upon a time the government wanted to encourage home ownership. That is when they decided to open up CPF for use in housing loans. The rest is history.

One of the reasons housing is so high is because... CPF can be used to pay for housing loans, whereas you have to fork out cold hard cash for rental. So WE have driven ourselves to the corner by emptying our CPF into housing.

If CPF is no longer allowed for housing, you can be sure

1) the price of the HDB flats would come down, as people can't afford to pay so much for the housing loan

2) CPF will really serve it's real, original purpose... saving up for retirement. Since CPF can't be used for housing, it will collect interest and grow at 2.5% / 4% (not to mention the first $X will earn extra 1%) and will in time will grow into a nice nest egg.

Since this is a scary proposition to everyone who prefers status quo...

The real question people should be asking is...

Do they wish to pay for overpriced housing and have little or no CPF when they retire, forcing them to downgrade or sell their HDB to fund retirement, or have reasonably priced HDB (since CPF has been cut out and cannot fund the exuberance) and have a nice nest egg left at the end of their working life?

What do you think?


AK71 said...

Hi Tree,

You might remember how a young female candidate for the opposition made an impassioned query "Whose money is it anyway?" during a rally. I am sure she is not the only one who thinks like this about our national reserves.

Now, with the CPF, it is even more controversial with the Retirement Account and CPF Life. There are arguments both for and against these, naturally.

Everyone would like to have a nice living environment. Everyone wants a pleasant home. Given a choice, no one would want to live in cramp quarters. So, it is not surprising that people would use up their CPF money for housing. After all, it is money we would never get to see, some would argue.

For me, money in the CPF is a basic safety net for my old age. So, I treat it as such. I will not use it for housing unless I have no other choice and I had no other choice 10 years ago. Now, I pay for my property's monthly instalment using cash since the savings accounts pay a pittance in interest income.

I believe in being pragmatic in everything we do. This is no exception. :)

Gary said...

I didn't know that developers will get penalty if units are unsold. Interesting information...

AK71 said...

Hi Gary,

Yes, they will have to develop any residential sites they buy and sell all the units in the new project within five years. Otherwise, they will suffer a 10 per cent additional buyer’s stamp duty (ABSD). :)

AK71 said...

Reader says...
Somebody sent me this.. i see until head big big.
"The Dirty CPF HDB Scheme To Trick Singaporeans."

AK says...
I won't even bother watching it. :p
You should read my blog's version instead:

WTK said...

Hi AK,

My take is that it is up to each individual to decide whether to buy the HDB property as well as using CPF to pay for the instalments relating the HDB loan.

The Government does not force the individuals to buy the HDB or private property as well as whether to use the CPF to pay property related instalments. It is up to the individual's decision to do so.

The main purpose of CPF is to save for the retirement. I believe that the use of CPF to pay property related loan is not the intended purpose in the first place.

Having said this, I do not have high hope of relying on CPF for my retirement as the minimum sum have been raised on a yearly basis. As such, I am of view that it is more prudent to rely on own savings which are channelled to investment for retirement. If I manage to get the CPF payout after the current withdrawal age of 65 to 70, it will be a bonus for me. I foresee that the withdrawal age will be raised to the age of higher than 70. I won't be surprised if the age is higher than 100 in the foreseeable future. So it will be more sensible to rely solely on own saving for retirement.

My two cents worth of opinions.

To each of their own.


AK71 said...

Hi Ben,

Actually, the compulsory withdrawal age for CPF Life is 70 years of age now.

Members have the option of requesting for payouts to start at 65 years of age.

For sure, treating our CPF savings as only a cornerstone in retirement funding is being realistic.

I always say that we should be realistic and not be too optimistic nor pessimistic. :)

WTK said...

Hi AK,

My take is that the best approach is to assume that CPF is non-existent and not part of the retirement funding. Focus on the own investment portfolio as a basis for the retirement plan.

Frankly speaking, one is better treating the present moment as the retirement moment. It is pointless looking forward to the 50s onward as the time for enjoyment. Enjoy the present moment is the way to go in my prespective.


AK71 said...

Hi Ben,

It would be irrational to treat my CPF savings (which is quite substantial) as non-existent. ;p

For someone who has very little in his CPF account, maybe. :)

AK71 said...

See also:

Government is helping to fund my retirement.

AK71 said...

Jackson Yang says...
I enjoy my tax relief 1st with RSTU... that's an advantage that totally cannot ignore.

Savings on tax and let government work harder for my money is one stone kill 2 birds.

AK71 said...

Siew Mun says...
My CPF forms a large percentage of my overall wealth. I reckon I am going to hit $1m in 4 years time when I hit 57. I will continue to grow my CPF as long as possible.

WTK said...

Hi AK,

I refrain from commenting on such scheme. Everyone will have his/her view on such scheme. Ultimately, it is up to one to decide whether they want to take up such scheme. I believe that this will be on majority basis.

To each of his/her own.


AK71 said...


I was a bit more adventurous in my early days as a blogger.

I have become more timid these days. ;p

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