FRS in CPF-SA at age 30? Sharing in detail.

For the benefit of younger readers, the reader who hit the FRS in his CPF-SA at age 30 has decided to share his thoughts in great detail.

Reader says...

This is not about me per se. It is also about helping the next young person who is thinking of topping up his CPF. 🙂

Everyone has different backgrounds, incomes, obligations but sharing some reasons for me to hit the FRS early and to fully maximise our CPF systems.



1) The yearly increase in FRS should be covered by the interest of 4% each year.

This means you are likely to meet the FRS when you hit the retirement age.

I estimate the FRS to be approx $346,815 in 25 years assuming 3% increases but my SA would be a lot higher since it is compounded at 4% and my contributions to SA from work is not added in yet as well as the flow over of interest from MA.








2) Hitting the FRS at 30 means that I can allow for the FRS to compound for at least 25 years till the milestone age of 55.

25 years isn’t a very long time away in my opinion but the compounding can be substantial.

It would be about 2.67x the current amount and likely I would be able to withdraw if I need or aim to hit the ERS.








3) If CPF LIFE is still around by my retirement, it will likely be able to provide me with a decent cash flow when I am not working.

In fact, I don’t look to retire early.

I look to still be gainfully employed till as old as I want to.

The key is to allow me to have a choice in doing what I want at that time and this changes with age!









Some tips of what I used to hit the FRS:

1) Do OA-SA transfers when below 30. I fully transferred my OA to SA at one point in time.

2) Do CPF SA top ups yearly since I started work (taking advantage of $7k tax relief at the same time) and in some years I topped up beyond the $7k if I received good bonuses.

3) VC to your OA/SA/MA and thereafter transferring the OA amount to SA.

4) Used my CPF OA to buy stocks before HDB wiped out the full sum for deposit and thereafter sold the stock and transferred it back to my CPF OA, follow by step 1 again.

5) Using full cash to finance your property and leave the CPF accounts untouched.







I also do not advocate paying off HDB early because I treat them as good debt.

The compounded interest in my CPF (at 2.5%/4%) is substantially higher than the interest saved (2.6%) over 30 years.

This point is difficult for most to see because they compare 2.6% minus 2.5% and they think they are saving on the interest.








Separately, I am obligated to get HPS when taking HDB loan so if I pass on, at least the insurer helps me to pay more.

Ultimately you need to manage your property purchase which I feel is the main expense of a typical Singaporean apart from food and there is honestly no need for a car (I have 2 kids).

My BTO cost less than my 3x annual income. (Live within means like what our PM says)








My background:
Went to Poly, NS, 2 years of Private University after that.

Have 2 young kids and my wife stays home to look after them.

I am just a normal salaried worker with starting salary was $3k like most fresh grads but my annual compensation is a low 6 figures now after 6 years. Good luck!








Related post:
1. FRS in CPF-SA at age 30? Yes!
2. How to grow our CPF savings?
3. 4 ways to boost our CPF savings.

FRS in CPF-SA at age 30? Yes, with ability and will!

Reader says...
It’s been a while since I dropped you a note.

The impact you have on my financial planning and share investments have been instrumental.

I managed to hit my FRS before I turn 31 this Oct!

In searching for financial guides, it always lead me back to your website.

Please don’t ever remove it even if you stop writing!

Enjoy your retirement! 🌈




AK says...
I am very happy to read this. 😀

This cornerstone in retirement funding will be a significant one for you because you have reinforced it so early in life. 🙂

Stories like yours make me feel that sharing my CPF story and even numbers in recent years has been worthwhile. 🙂






Reader says...
Yes it helps for sure!

Thank u so much!

Keep doing what you are doing.

I am sure many have benefited a whole lot.




This young reader together with a few others who have written to me have achieved something that I did not at their age.

Although I suspect their monthly salaries are higher than mine was which allowed them to hit the FRS at a younger age than I did, without the will, having the ability is useless.

Their determination to make the CPF work for them is equally if not more important.

Don't earn as much money as them?

Don't be discouraged.

Even if our earning capacity is lower, just by giving our CPF-SA a push now and then, we would be making the government work harder to help us meet the FRS.







I can safely say that I was not a high flyer as a working adult.

If I did not do OA to SA transfer when I was in my 20s, my CPF-SA would probably still be some way from the FRS today.

Because I gave my SA savings a leg up early on, compound interest had more time to work its magic.

If we do whatever we can, it is better than not doing anything at all.






Most messages I have received from readers in response to my blogs on the CPF have been very positive.

I am glad that sharing my own CPF experience has been enlightening and inspiring.

I am even happier when that inspiration translates into informed action for many readers.

For more on what I have to say on this matter, please read the related post at the end of this blog.





From my Facebook wall later the same day:

Jack James said...

Hitting FRS before age 30 is a high achiever . 😱😱😱😱

Assuming you studied JC, 4 years of university, 2 years of NS, by the time you work for 7 years, you can hit FRS, that’s like age 30 to be exact!

Assumptions:

(1) Fresh graduate start up pay S$6,000 (max CPF contribution).

(2) You didn’t use a single cents in OA/SA for HDB or stocks.

(3) Assuming company gives you at least 2 months of bonus consistently.

(4) The quick figures above do not include the fat up to 5% interest in SA and 3.5% in OA and their compounded interest effect, that’s why the 7th year can hit FRS.

(5) Other ways to accelerate to FRS:

(A) SA S$7K TOP UP since year 1.
(B) Do VC contribution each year to the max.
(C) Company gives you tons of bonus like 8 months.

Then you can beat the 7 years timeline.

Good luck! Cheong ar!!

If AK can do it, so can you?

NO!

If AK can do it, you can do better!







Related post:
Hit the FRS in CPF-SA by age 31!