Tea with Kai Xiang: Two friends and their CPF savings.

I always enjoy a good story and Kai Xiang wrote a pretty good one to share with me. 

He has graciously allowed me to share the story.






A and B are good friends. 

They went to NS at 19 yrs old after finishing their poly diplomas and started work as technicians at the age of 21 with a starting salary of $2,000 (median gross for poly graduates).

Both A and B have the following balance after their 2 year NS stint:

OA: $2,738

SA: $708

MA: $962

However, B realised that the SA offers an excellent 4% interest rate and decided to match his CPF SA contributions every month with cash from his disposable income and plan for his retirement.

A didn't bother because he feels retirement is too far away and he would rather have his money with him.

Both worked at the same factory and received a salary increment of 2.5% of their last drawn pay annually.










At the age of 31, both had CPF balances like this:

(A and B) OA: $75,320

MA: $29,064

(A)SA: $21,868

(B) SA :$41,983

At the age of 36, both A and Bs' MA have reached the cap of $48,500 and any further increases to MA over this amount would be transferred to their SA.





At that time, their CPF balances look like this:

(A and B) OA :$125,190

(A) SA: $41,331

(B) SA: $76,929

All the way until this point, B had religiously matched dollar for dollar his CPF contribution to his SA. 

B decided to continue contributing cash to his SA every month but fixed it at $200 monthly.

B hits the MS ceiling for his SA at age 43, where he is no longer allowed to contribute cash to his SA. 

A hits the same ceiling about 6 years later at 49.





When both men eventually reached the age of 55, their balances look like this:

(A and B) OA: $400,848

(A) SA: $307,601

(B) SA: $414,973

A was able to withdraw about $140k from his SA while B was able to withdraw $250k.





Hope you enjoyed the story too. 

If you did, you might want to share it with your friends and family. 

I hope they enjoy it too.





Related posts:
1. A lot of money in my CPF SA...
2. If I had done this, I would have hit MS.