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1M50 CPF millionaire in 2021!

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$1.5m in CPF savings by doing nothing henceforth.

Friday, February 1, 2019

Reader says...
"I know you think of CPF as bonds in your portfolio and you want to grow it to reduce portfolio risk and volatility but what if you are unable to do it one day? 

"Do you have back up plan?"

AK says...
"Although I feel that I should be able to continue to do Voluntary Contributions to my CPF account yearly to reach the Annual Contribution Limit, there could be a year or two or a few when I might not be able to do so.

"After all, we cannot know what might happen in future and there could be times when my passive income takes a hit or when my expenses spike for whatever reason.

"It is a situation that I would have to accept but it is not a situation that I would need a back up plan for.

"I will blog about this and you can have a read."

Why did I say it would not be a situation I would need a back up plan for?

Well, assuming that I am unable to make Voluntary Contributions to my CPF account henceforth, how much do you think I would have in my CPF account by the time I hit age 65?

Remember my CPF accounts by end of 2018?




To arrive at an estimate, I shall ignore the effect of the extra 1% interest on first $60K of our CPF savings as well as the additional 1% interest on the first $30K once we reach 55 years of age etc. 

So, I would approximately have the following in my CPF by age 65 if I were to stop Voluntary Contributions from this year on:




Remember, this is surely inaccurate and only serves to give me a rough estimate.

So, total CPF savings by age 65:

$ 1,465,883.

Or almost $1.5 million and this is all by doing nothing from now on.

This is the beauty of compound interest and having a relatively large base makes it even more beautiful.

Compound interest.

He who understands it, earns it.

He who doesn't, pays it.

It might seem magical but it is really just math.

My CPF savings is my back up plan for in case things should go terribly wrong with my investments.

It has probably reached a critical mass where it can take care of itself to do the job I expect it to do.

Unable to do voluntary contributions to my CPF account henceforth?

I don't think it is a situation I would need a back up plan for.

Related post:
AK responds to HWZ on CPF savings.


laurence said...

AK's magic works wonders like nothing else can.
More effective and efficient than Cinderella's fairy Godmother.

AK71 said...

Hi Laurence,

That is because it is really not magic.

It is just simple math. ;)

AK71 said...

Loo Cheng Chuan says...
It would be fun for me to compete with you!
1.5M65 alone.
I got to work harder now.....πŸ’ͺ🏼

AK says...
Work harder like you or do nothing like me, if we make it, we are all winners. :D
Gambatte! :D

AK71 said...

Jack James says...
The key differences are .....
Doing nothing but get S$1.5 mil at age 65 versus continue to work to get S$1.5 mil at age 65 in CPF.
I still think you owe us the secret . πŸ˜ƒπŸ˜ƒ

AK says...
Er... weather very nice today hor?

WTK said...

Hi AK,

I totally agree with you.

The power of compounding is marvellous and unique. It does not require us to do anything as the compounding effect settles by itself.

I do likewise the same calculation as well. I will end up with about $900K at the age of 65 taking into consideration of the yearly credited interest. This is without the monthly contribution from the employer and remuneration which is not longer applicable to me since October 2018.

The only circumstance which prevent automatic interest crediting will be in the event if the Government decide to reduce the CPF interest rate. This is always possible and though the chance of it happening is low. However. it may also happen. This is the dynamic of the world in which anything can happen. Nothing is guaranteened. The only constant is change.


Sanye ◎ δΈ‰ι‘΅ said...

Hi AK71,

Happy CNY.

Great achievement with your CPF savings. I definitely can't achieve 1.5 mil in CPF by 65, as I have only a few years to reach 65.

Like you said, this is not a competition. If we do something and achieve our financial goal towards retirement, we are all winners.

Gambatte! :D

AK71 said...

Hi Ben,

Always have more than less savings and, come what may, we are likely to do better. :)

AK71 said...

Hi Sanye,

Definitely, all of us have different circumstances.

It is never my way or the highway.

Happy CNY. :)

SP Tan said...

hi.. I think there is a mistake in your calculation. MA account will never go above BHS which is 66K in 2022 and 68.5K in 2023.. and it will not go above prevailing BHS once you reached 65yo.

the additional interest earned end of the year for MA will flow to OA if you have already hit BHS and if SA hit FRS.

AK71 said...

Hi SP Tan,

Yes, you are right and I am aware of it.

I mentioned it in another blog of mine but it is too complicated for me to be 100% accurate.

Or I am too lazy to be 100% accurate. ;p

So, just getting an approximate picture is good enough for me. :)

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