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FRS by 35 and $1 million in CPF account.

Thursday, May 24, 2018

Reader says...
I have been an avid reader of your blog and inspired by your way of handling the cpf monies.

I have followed certain methods and have done my own research on the cpf system.





I am 33 yr old now and have drafted a goal of hitting the current frs on my special account by 35.

There is a shortfall of 50k to frs and it shld be done in the next 2 years.

I have max out my ma.





I live a simple life and dun demand for luxuries.

And if i can be gainfully employed till age 55. I hope to also hit above 1mio for my cpf acct.






My concerns are as i am somewhere further away from retirement age, my risk of cpf policy changes are higher compare to urs.



AK says...
Welcome to my blog. :)

If there should be changes to the CPF system and there have been changes over the years, if they are reasonable, I welcome them.

We have to believe that the government have the interests of Singaporeans at heart and that they are competent.

If we don't believe this, then, shun the CPF.





As for your plan to take full advantage of your CPF membership, it sounds like a good one.

Keep at it and you would have a cornerstone in retirement funding in your golden years. :)





However, remember that the Top Up to your SA (allowed till age 55 and as long as it is lower than the prevailing FRS) will enjoy income tax relief only for the first $7K per calendar year.

As it sounds like you are topping up more than $7K per year in the next 2 years to hit the prevailing FRS, you want to be aware of this especially if income tax relief is important to you (i.e. you are in a high tax bracket).

Gambatte!





Related posts:
1. $1 million in CPF by age 65?
2. A cornerstone in retirement funding.

11 comments:

AK71 said...

Siew Mun says:

I guess the topping up of SA which exceeds the $7k income tax relief is to enjoy the 4%. Please dont forget to top up MA too for FYA 2018 you enjoy tax relief too if you have not reach the MA limit.

https://www.iras.gov.sg/IRASHome/Businesses/Self-Employed/Working-out-your-taxes/Deductions-to-Save-Tax/Compulsory-and-Voluntary-Medisave-Contributions/

AK71 said...

Sau Yee Fong says...
As with any investments (including CPF), there is a risk. With CPF, the risk is policy change. The point is diversification. Make CPF payout a source of retirement funding, not THE source of retirement funding.


AK says...
CPF should be a cornerstone in retirement funding and not the whole foundation. :p
On its own, the CPF is probably insufficient to fund a comfortable retirement for most of us.

veronika said...

Human nature is such that, when we adopt a
living style such as being frugal, watch the expenses,
forgo the luxuries, we also form a lifestyle habit.

Over decades, that lifestyle becomes part of our personality.
Not always bad, not always good. It depends.

Understanding "retirement" means many things to different people.
Personally, what it means to me is that I dont have to satisfy other
people's priorities in achieving their goals.

One example:
Being an employee, having to adhere to the employer's methodology, manner to
achieve certain objectives.
Someone in the hierarchy will impose their will.
Retirement is to escape from such behaviours.

It also means to be very independent financially. Not beholden to a salary dictated
by another person, who arbitrarily sets a 'market' price. And also use it as a threat.
These were some 'push' motivators that drove me to retire.


In a well prepared retirement, one should be less conscious about being frugal,
not to look at every price tag and debate over 'needs & wants'. Otherwise, it may not
be as enjoyable a retirement at all. Its the last few phases of human life. Live and enjoy what life has to offer without fear of economic collapse.

This is the ultimate purpose for retirement:

To spend time & money on self without threats of doom


AK has shared the mechanics of how to build enough funds for retirement.
I admire his generosity in sharing his thoughts, beliefs and methods.

Best wishes to you AK !

AK71 said...

Hi Veronika,

Always a pleasure to read your comments.

Thoughtful and balanced, as usual.

For sure, since I can afford to do it, I am learning to pamper myself more and to be more easy going with money in my retirement. ;)

foolish chameleon said...

AK, if a person has SA at FRS, MA at BHS.
whats the strategy to make cpf work harder? =)
can a person continue to add to the SA? (assuming < 55 yrs old)

AK71 said...

Hi fc,

Even if you SA has hit the FRS, it will still grow from mandatory contributions (from earned income) and voluntary contributions (if any and subject to the CPF Annual Limit) and also interest earned on your SA savings.

See:
http://singaporeanstocksinvestor.blogspot.com/2017/04/know-how-to-grow-our-cpf-savings.html

foolish chameleon said...

Ak, what if the person is a freelancer?, e.g. Tuition teacher. No mandatory contributions.

AK71 said...

Hi fc,

Employer must pay employee.

If you are both the boss and worker, ownself pay ownself lor. ;p

foolish chameleon said...

hahah, ak.. funny la.. .
i prefer cpf to pay me, than i pay ownself leh..
so what other way to make cpf work harder for me?

AK71 said...

Hi fc,

Well, it is the truth. ;p

The CPF is there to help us to help ourselves.

If we don't pay to our CPF account first, it won't pay us. ;)

I treat the money in my CPF account as being in a high yield risk free bond.

Unless Mr. Market goes into a depression like during the Global Financial Crisis, it is unlikely that I would use my CPF savings for investment.

AK71 said...

See:

http://singaporeanstocksinvestor.blogspot.com/2017/01/simple-investment-wisdom-keeps-us-afloat.html

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