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CPF can be our best friend in our golden years. (CPF is a bond, an annuity and a savings account.)

Tuesday, December 17, 2019

In a blog published in February 2019, I said that even if I were to stop doing voluntary contributions to my CPF account then, I would have approximately $1.5 million in CPF savings when I hit 65 years of age.

If you are a new reader or if you don't remember, read the following blog.

$1.5m in CPF savings by doing nothing henceforth.

Why did Albert Einstein call the power of compound interest the "8th wonder of the world?"

You tell me.

In a more recent blog, I revealed that I was doubling the amount of financial support for my parents.

I also said that I would like to continue making voluntary contributions to my CPF account, maxing out the annual contribution limit, till at least age 55, barring unforeseen circumstances.

Crossing fingers as that means another seven years of maximum voluntary contributions.

I said I might want to enjoy life a bit more and stop doing voluntary contributions to my CPF account after I have accomplished that.

Regular readers know that I have been trying to be more easy going when it comes to spending money on myself.

This is a big behavioral shift for me and something I have had some success in but, to be honest, it is something I am still working on.

How much passive income is enough?

Well, nothing is set in stone, of course.

After I turn 55, there is still the possibility that I would continue to make voluntary contributions to my CPF account yearly as long as I am able to, everything else remaining equal!


What has happened to AK?

Mental condition got worse!

Well, some readers might remember this blog from mid 2017.

CPF members above 55 should use it as a savings account!

See why I should continue to make voluntary contributions to my CPF account after I turn 55 as long as I am able to?

So, does this mean I will go nuts saving money in my old age?

Well, notice that I said I "should" and not I "must" continue to make voluntary contributions?

Also, these voluntary contributions might or might not be up to the annual contribution limit.

I did not say I would not be making withdrawals from my CPF account then either.

Post age 55, I am going to cut myself some slack.

Post age 55, I would play by ear instead of making yearly voluntary contribution to my CPF account a strict requirement.

Ah, AK's mental condition is not as bad as some might fear it seems.


Of course, I don't know if my mental condition would worsen as I age.


Anyway, if interest rates remain what they are now, after age 55, it is probably a good thing to remind myself to think of the CPF as a savings account with higher interest rate.

The CPF is not just an investment grade bond and an annuity.

What, you don't know that is how the CPF provides us with some financial security?

This guy has $800K in CPF savings.

People tell me I am worrying too much and I have an inkling that they are right.

This is especially when I have a relatively big safety net in the form of CPF savings.

We should take full advantage of our CPF membership.

That is the smart thing to do.

Yes, we want to retire smart.

Remember this blog?

Don't do silly things and we can retire smart too.

CPF can be our best friend in our golden years if we nurture the friendship.

Now, that is the honest truth.

Believe in yourself.

Believe that you can do it too.

Believe that it is so and you will have the strength of a thousand men!

If AK can do it, so can you!

Recently published:
Voluntary contribution to CPF MA in 2020.

You might be interested in this:

Insure against longevity risk but not like this.


Unknown said...

Dear Ak,
I am considering CPF life by transferring some monies from my OA for my mother who is a housewife all her iife. Do you think this is a better plan apart from topping up 7000 to her RA. She is 71 this year.
Thanks for your advice.

AK71 said...

Hi Sarah,

You might want to read this blog:
CPF LIFE payout estimator and questions.

I do not think your mother qualifies for CPF LIFE now if she isn't on board yet.

She should have started receiving a monthly payment from her CPF account when she turned 70 last year.

Of course, don't take my word for it.

Remember, I cannot and do not give advice. ;)

It is best that you ask CPFB to be sure. :)

AK71 said...

Some readers might also be interested in this blog:
Downsizing flat and upsizing parents' retirement adequacy.

Siew Mun said...

Turning 55 in 9 months time, I plan to reach ERS by topping up $90.5k cash. I will also make a VC to max out the prevailing ceiling of $37,740 annually as long as possible since mandatory contribution is reduced to 26%. Indeed, CPF will become a 1-in-3 private banking facility comprises of annuity, bond and savings bank totally passive income for a simpleton like me. I will not disrupt the power of compounding. By 65, I reckon, I have in excess of $1.7m.

Ben said...

Dear AK,

While CPF may be a good form of investment, one should always never forget to have a well diversified portfolio with proper allocation between stocks and bonds based on age.

Putting too much money into CPF can be as harmful as not putting anything into CPF as well.

Finding the right balance is key.

AK71 said...

Hi Siew Mun,

That sounds like a prudent plan to me.

Also, I like your description of CPF as a "1-in-3 private banking facility". :D

For sure, he who understands it, earns it. ;)

AK71 said...

Hi Ben,

I wouldn't call CPF an investment per se.

It is just like I wouldn't call bonds investments.

They are just interest earning savings, in my eyes.

As for having a well diversified portfolio, it is definitely conventional wisdom but AK isn't always conventional. ;p

Just be a better saver and forget about investing for some.

Making maximum voluntary contributions to my CPF account works for me as I want to maintain a meaningful percentage of bonds in my investment portfolio.

This is more so as I grow older.

Not everyone has a financial profile like mine, of course.

It is never my way or the highway. :)

Unknown said...

Dear Siew Mun,
I also hope to follow your footsteps in 7 Year's time. But if we have excess in OA, is it better to top up using Cash for ERS? Thanks

Unknown said...

Dear Siew Mun, I also hope to do that in another 7 year's time. Is it better to use Cash to top up rather than OA for ERS? Thanks, I have already achieved FRS already. Thanks

Eric Wu said...

Hi AK,
I am 37 this year and I have been following your blog since 2017.
I agree with your approach on CPF and currently 127 800+ in my OA , 193 400+ in my SA, max out my MA and topping up my SRS with 15 300 for tax rebate.
My wife is also doing the same thing.

In addition, every month we invest $6000 into unit trust and myself on some blue chips. As we started our investment journey pretty late, we hope to be able to retire early before 52 years old.

Thank you for selflessly sharing your thoughts.
Much appreciated.


AK71 said...


You have cracked the CPF code which is definitely going to help you achieve a financially more secure retirement. :D

Comments like yours make me think that talking to myself in ASSI is something worth doing. ;p

Wishing you the very best as you journey towards an early retirement! :)

AK71 said...

Some readers might be interested in this blog:
Retirement adequacy for late bloomers 101.

WTK said...


Regular monthly investment will go to great extent towards building a sizeable investment portfolio which will generate dividend on a continuous basis. This is supported by CPF in which one can consider making the voluntary contribution which may be more applicable for those who do not have the mandatory contribution from the employer and having the ability to do so. I believe that this will allow one to have the peace of mind on the finance along the way.


AK71 said...

Hi Ben,

I agree with you.

We have to bear in mind, always, that most investments have price volatility and even risk.

Not everyone is able to or willing to deal with this.

Simply being better savers for many people cannot go wrong and the CPF is the best tool available.

Too many have lost money investing their CPF money in the past.

They would have been better off leaving their CPF money untouched to earn interest, compounding year after year.

Of course, the CPF is a cornerstone in my retirement funding strategy and not the entire foundation. :)

AK71 said...

New readers might be interested in this blog:
Building a cornerstone in retirement funding with CPF.

Siew Mun said...

I step over 1 cm bar max that out before stretching to climb over higher ones. :-p

AK71 said...

Hi Siew Mun,

I agree with you totally.

Always go for low hanging fruits first. ;p

New readers might be interested in this blog:
How to turn $60K into $332K?

Unknown said...

Thanks AK for your advice. I called CPF and sorted out for my mother. I decided to transfer my excess OA to her so she can join CPF Life at 71. I am a believer in CPF Life like you also.

Newjoiner said...

Hey AK,

Am wondering if i can check on this.

If i have the option of returning my CPF back to my OA (for the housing Loan), since the interest rates are low now instead of returning it to the bank, and assuming the interest rates from the bank goes to above 2.5% in 3 years time. If i have the option to refinance the, is there a limit as to how much i can use my CPF OA to pay the bank? Assuming i have 150K in my OA, can i clear all of it if the interest rates rises then?

Curious Reader

AK71 said...

Hi Newjoiner,

It is something you can consider, for sure.

I blogged about this before too.

See "Chapter 4" in the following blog:
Building a cornerstone in retirement funding with CPF.

You might want to check the comments section too.

As you have more than one question and I don't have all the answers, it is better for you to give CPFB a call to get answers from them directly especially when each member's case is unique. :)

Cory said...

Hi AK, I read that we can use OA and SA as saving accounts after 55. When we withdraw from it, how the process works ? Can we decide just withdraw from OA since SA has higher interests ?


AK71 said...

Hi Cory,

This is something I have blogged about before too:

1. CPF members above 55 should use it as a savings account.

2. Use CPF account as a savings account.

If we want to withdraw the principal from our CPF account from age 55, we will be made to withdraw from the CPF-SA before the CPF-OA.

We can also choose to withdraw the interest earned yearly and leave the principal in the SA and OA untouched.

Vic Street said...

Hello AK, i got to know you through the fifth person's podcast. I am very intrigued by your sharing.

I have some questions and hope you can help me by answering them. I am a full time tutor age 30 earning approximately 4.5k-5k a month. i currently have no money in my CPF. I recently got a BTO in Tengah with my girlfriend for around 500k. I currently has investments of around 80k-90k in the US stock market.

Do you think i should contributing to my CPF or i should continue investing in the stock market?

Thank you very much.

AK71 said...

Hi Will,

Welcome to ASSI. :D

Unfortunately, I am not allowed to give any financial advice to anyone.

All I can do is to talk to myself about my philosophy and experience when it comes to money matters.

I believe in having a holistic approach and not all or nothing.

I believe in maintaining my CPF savings and investing in stocks at the same time.

The pyramid which I shared in the podcast is one way to visualize this approach.

My CPF savings is a cash component but it is also an income component as it generates interest income.

It is also insurance in case my investments should go very wrong, and in some years my CPF SA did better than the stock market.

Also, if we should become unemployed for any reason, the money in the CPF OA could be drawn upon to pay for our mortgage, if any.

I have been through hard times before and I value having peace of mind. :)

How to have peace of mind as an investor?

AK71 said...

Hi Will,

I forgot to mention CPF MA earlier.

How to get free medical insurance in Singapore?

Gambatte! :D

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