Lump sum CPF withdrawal suggestion by NTUC is myopic.

I am very disturbed by NTUC's suggestion to let CPF members "withdraw a lump sum - of at least 20 per cent of the balances - from their retirement accounts, even if they do not meet the Minimum Sum." Reference: Today Online.

In an open letter to PM Lee on 11 June 2014, I made 3 points. One of these was to allow members with genuine needs to "micro-tap" their CPF savings (presumably from age 55 to 64). A lump sum withdrawal of at least 20% is not micro at all and I am very worried that the suggestion says "at least 20%" which means that the percentage could be higher.

Although certainly not always the case, I am sure that many CPF members who are not able to meet the minimum sum at age 55 are not financially savvy. I am not sure that letting them withdraw a bigger lump sum (even with financial counselling) is the way to do it. Once the money is gone, it is gone.

A much smaller sum that is left in the CPF-RA as a result would mean a much smaller monthly income from CPF Life from age 65. How does this help the affected members' retirement adequacy?

So, I am against this suggestion by NTUC although I would like to see more compassion and understanding in the system.

What would I suggest then?

Like I suggested before, a micro tapping of CPF-RA savings from age 55 could be considered. The actual mechanics would, of course, need more thought.

Perhaps, a withdrawal rate of 2% per annum from age 55 to 64 could be allowed. If a member did not take advantage of this allowance in the first 5 years, he would be allowed to micro-tap up to 12% of his CPF-RA savings in the 6th year if there is a need to. Of course, in the first 5 years, the money that was not withdrawn would have earned some interest (compounding at 4% a year).

This would give money in the CPF-RA a better chance (i.e. more time) to accumulate so that there would be more money to be given out on a monthly basis from CPF Life from age 65.

Although we want to be understanding and compassionate, we should not give in so much as to compromise on a CPF member's retirement funding adequacy.

Related post:
An(other) open letter to the Prime Minister.

Be richer, save money by having yummy and frugal dinners.

Decided to have an early dinner today!

Yes, rice! Healthier than bread, I am sure.

Once the pot came to a boil, I turned off the heat.

20 minutes later, the porridge was ready!

While waiting for the porridge to cook, I had a fruit.
I bought 10 of these for $3.65.

Surprise! Some of you keep saying I don't take enough vegetables.
I hear you loud and clear. I got some vegetables. Washed!

Added some salt to boiling water and gave the greens a hot bath.

Really like the bright green color.
I added some pork floss to make the dish more interesting.

Yummy dinner. Quite cheap too, I am willing to bet.

Related posts:

1. A simple meal.

2. Have an extra $1,200 a year.

3. Be $48,000 to $60,000 richer in 10 years.