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Voluntary contribution to CPF MA in 2020.

Tuesday, November 19, 2019

This blog is more of a personal reminder to do a voluntary contribution to my CPF MA in early January 2020.

Remember that interest earned this year in our MA will go to our SA if our MA is at maximum (i.e. 2019's Basic Healthcare Sum or BHS which is $57,200).

If our SA is at maximum or is in excess of the FRS, the interest earned this year in our MA will go to our OA.

So, at the start of 2020, we can do a voluntary contribution to our MA to hit 2020's BHS which is $60,000.

How much to contribute exactly?

2020's BHS $60,000 
2019's BHS $57,200 
= $2,800 

For those who are gainfully employed and paying income tax, remember that voluntary contributions to our MA will enjoy tax relief as well.

For me, being retired, I will not get any tax relief but I will enjoy more interest income like anyone else from my MA with this move.

How much interest will $2,800 earn in a year?

At 4%, that is $112 a year.

I like this.

Be inspired by Mr. Clarence Heng's life experience and his CPF story.

Of course, for most of us, money is a limited resource.

We can choose to save more or spend more.

I choose to save more and, in this case, to have free H&S insurance too.

Watch the video and learn more about Medishield Life which provides us with basic healthcare insurance for life.

Underestimating the power of compound interest is one of the biggest mistakes anyone can make.

Of course, if you are very rich and not like the most of us, please ignore this blog.

So, how does the power of compound interest grow our savings?

AK is lazy to explain lah.

Watch the video.

Make full use of our CPF membership and we are taking a big step towards a financially secure retirement.

Believe it!

If AK can do it, so can you!

Believe in yourself!

Believe that you can do it too!

Related posts:
1. Voluntary contribution to CPF MA in 2019.
2. How to do online contribution to CPF?
3. How to get free medical insurance in SG?

Is there a maximum amount I can save in my Medisave Account?

"You can save up to the prevailing Basic Healthcare Sum (BHS) in your MediSave Account if you have not turned age 65.

"The BHS from 1 January 2020 is $60,000 for all CPF members aged 65 years old and below in 2020.

"The BHS applicable to you will be adjusted yearly to account for increasing life expectancy and healthcare costs until the year you turn age 65.

"For instance, if you are aged 65 in 2020, the BHS that is applicable to you will be $60,000 for the rest of your life."

CPF Board.


Yu said...

looks like ak shifu got bored with neverwinter xD
so productive in self talk :D

AK71 said...

Hi Yu,

Better enjoy this spurt of prolific writing while it lasts. ;)

Will be drying up very soon. ;p

peanuts622 said...

Dear AK
May I clarify your liner 'I choose to save more and, in this case, to have free H&S insurance too' pls? Correct me if I am wrong - How would it be free when one has to cash top up for the rider portion in the H&S insurance?

AK71 said...

Hi peanuts622,

The rider is optional, of course.

We have a choice not to have it. ;)

Even so, the interest earned by my CPF MA exceeds the premium of my H&S insurance by quite a bit.

The excess is more than enough to cover the cost of the optional rider.

So, for me, even the optional rider is free. ;)

It is how we account for it. :)

keng said...

Hi AK,

If I have reached $57,200 BHS for 2019, what happens to the interest earned for 2019? Does it go to my SA or stays in MA?

AK71 said...

Hi keng,


I think my laziness is contagious.

The answer is in this blog and right in the early paragraphs too.

Go read again. ;p

konmmo said...

Hi AK its good that you've been taking breaks off gaming. Its good to have a balance and good for us readers too!

Thanks to your occasional posts on CPF (and through clicking on past blog links), I started VC to my SA a few years back. I'm relatively late to the game, but better late than never.

And every time you blog on CPF I still seem to learn something new.

"If our SA is at maximum or is in excess of the FRS, the interest earned this year in our MA will go to our OA."

So once we hit FRS in SA, there is no other way to increase our SA balance apart from the yearly compounding interest?

keng said...

Oops, I wonder how I missed that :P
Thank you.

AK71 said...

Hi konmmo,

I don't like to think that anyone starting a few years later is late, just starting later. ;p

The SA will continue to grow even after it has hit the FRS through interest earned, of course.

However, the SA can also grow through mandatory contributions (through employment) or voluntary contributions (like what I do now).

You might want to read this blog too:
CPF-SA is not a free lunch but it is not a myth.

Gambatte! :)

AK71 said...

Hi keng,

You are welcome. ;)

I hope you are not lazy like me.

Maybe, you just have a lazy eye. ;p

SnOOpy168 said...

paisei. didn't realise that this was started.

My strategy as a low income person, who have reached BHS & almost-FRS

1. Top up $2800 to max out the BHS on 1st week of Jan 2020. Earn 4% to the max asap.

2. Assuming that i still have the $4200 cash on hand , from the usual $7k top up fund, I will make a contribution to all 3 account.

This way, i get to grow the SA which is earning 4%, as I would like to reach ERS as soon as possible....

Again, i have to thank Sifu AK for the past decades of talking to himself. At least we eavesdropped and benefited, just matter of those around us will listen and take action.

AK71 said...

Hi SnOOpy168,

Bring me to water and I drink.

I am a grateful horse. ;p

I don't know if you missed this blog too:
A river called CPF and the stubborn horses.

SnOOpy168 said...

Just saw the dividends from First REIT.

More than sufficient to top up to maximize the 2020 BHS requirement.

Aim to start my 55th birthday with >ERS for the RA.

Will update the spreadsheet after the FY2019 interest are credited in 1st week of Jan 2020.

BTW, Happy Birthday AK. :-)

AK71 said...

Hi SnOOpy168,

Gong xi, gong xi. :D

Also, kamsiah you plenty plenty. :)

SnOOpy168 said...


Ditto Ditto.
Humbly grateful .

The other post where the few are talking $m in CPF...

It will be an uphill for me to go past into 7 figures $ territory. Not many years left before 55 .

Grateful that t i have
a fully paid roof over my head,
no OA housing debts
and the dividends that are heavily reinvested.

AK71 said...

Hi SnOOpy168,

A million dollars in CPF savings is not a must have for everyone.

It probably isn't a must have for someone with a very simple lifestyle.

It probably isn't a must have for someone with adequate passive income.

So, how much the CPF figures in our retirement funding adequacy will vary from person to person.

Yes, you are right.

Always be grateful for what we have. :)

WTK said...

Hi AK 71,

I will make a contribution to make it the maximum ceiling allowable on 1 Jan 2020. Being unemployed since May 2019 means I will be able to make the full allowable contribution amount of $37,740 for the year of 2020. This is with the assumption that I remain unemployed for 2020. I do not know whether I will be back to full-time employment though I still prefer the life of leisurely circumstance as it stands. This is despite having some urge to return to full-time employment due to some form of boredom (which I feel at time). Meanwhile, I make the maximum contribution allowable in the Medisave account on 1 Jan 2020.

Let's see how it goes. The constant is change and I will decide on the time of making the balance contribution of about $35K when the time comes and based on the existing employment status.

Time will tell.


AK71 said...

Hi Ben,

Sounds like a plan to me. ;)

As for early retirement, to avoid feeling bored, it is important to have a plan. ;p

I am never bored. :)

Never bored! Thoughts on preparing for early retirement.

"I think it is important not to be married to our jobs and I have seen many people who do not have a life outside their working life.

"The danger for these people is having a feeling of emptiness if they no longer have their jobs."

foolish chameleon said...

is the interest earned from 2019 , count as accumulation to the MA BHS 60k?
assuming the 2019 BHS not yet attained.
so 60k - 2019 MA balance - 2019 MA interest earned = max contribution for 2020 BHS

AK71 said...

Hi foolish chameleon,

Refer to the first few paragraphs of this blog.

So, at the start of the 2020, the max we can have in our CPF-MA is 2019's BHS which was $57,200.

If we have less than $57,200 in our CPF-MA at the start of 2020, yes, we would be able to do a voluntary contribution of more than $2,800 to our CPF-MA right away.

Chop chop! ;)

foolish chameleon said...

thanks AK.
coz i was abit confused. not sure which account, SA or MA, doesnt take into account the interest accumulation. only the capital ?
or, did i remember wrongly

AK71 said...

Hi foolish chameleon,

Our MA cannot have more than the 2019 BHS at the start of 2020.

Anything above the 2019 BHS will be transferred to the SA or the OA (if the SA is at or has exceeded the prevailing FRS).

The story for the CPF-SA is different.

Read this blog for a refresher:
CPF-SA is not a free lunch but it is not a myth.

Hope you are not confused anymore. ;)

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