Why Top Up my CPF Medisave Account?

This is going to be short blog in reply to a reader's question. 

It is a question I get asked somewhat often. 

Sharing the reply as a blog is probably a good idea as it would give me a blog to point to in future.


So, the reader wants to know why Top Up my Medisave Account (MA) when the money cannot be withdrawn? 

The reader is probably referring to the Basic Healthcare Sum (BHS) which has to be maintained in the MA once we turn 65. 

Otherwise, of course, the BHS can be drawn upon for specific purposes. 

For me, the objective of the MA is to have funds for medical expenses in case of hard times. 

To be honest, I hope I don't ever have to do a withdrawal. 

If I must draw upon the money in my MA, it means that I am very sick and experiencing financial hardship.


Anyway, the next thing I am going to say is something I have blogged about before. 

Having a maxed out MA also means that I get free medical insurance.

Want to know how? 

See: 

How to get free medical insurance in Singapore? 

Since the reader's focus seems to be on CPF funds withdrawal at age 55, it should be interesting to note that any excess interest income generated by our MA will flow into our Special Account (SA) or into our Ordinary Account (OA) if our SA has hit the Full Retirement Sum (FRS.) 

For me, it flows into my OA. 

See:

 


Since the MA has the same interest rate of 4% as the SA, this mechanism makes it attractive as an additional income generator since money in the OA and SA can be withdrawn once we have set aside the FRS in our Retirement Account (RA) at age 55. 

Some readers might also be interested in this blog: 

Free medical insurance in our old age. 

If we can afford to do so, I believe that maxing out our MA is a good idea.

Max it out and let compound interest do its magic.

As usual, this is just me talking to myself, of course. 

Recently published: 

1. Almost $1.1m in CPF savings! 

2. 2022 Top Up and Voluntary Contribution done. 

3. Should I enroll in Careshield LIFE? 

4. 4Q 2021 passive income.

Almost $1.1M in CPF savings!

One year ago, at a bit more than 49 years old, my CPF savings hit $1 million or a bit more.

It was a really good way to start the year in 2021.

This year is even better.

My CPF savings made a total of $31,207.95 in interest income in 2021.

Of course, recently, I made a Top Up to my MA as well as Voluntary Contributions to my OA and SA.

See:
2022 CPF Top Up and Voluntary Contribution done!

Now, if we put everything together, I have almost $1.1M in CPF savings! 

So nice to start 2022 with an absolutely auspicious bang!

See:

I am staying the course and will continue to grow my CPF savings with some much appreciated help from the government.

As I am a retiree, I will have to grow my CPF savings voluntarily which is more demanding compared to people who are still in the workforce.

However, it is definitely worthwhile.

The volatility free and risk free nature of CPF coupled with attractive "coupons" makes it the ideal investment grade bond for me.

See:
Retire with an investment grade bond and an annuity.

The strategy really isn't difficult to understand.

However, I do understand that depending on our circumstances, we might not need to or be able to execute the strategy.

Of course, some might not even want to.

It doesn't really matter to me.

After all, ASSI is just a blog for me to talk to myself.

Eavesdrop if you like and if you like what you hear, good.

If the ideas work for you, even better.

Don't be like some people.

See:
Unhappy with CPF and angry with AK!

To everyone who is on the same rewarding CPF journey, congratulations!

Huat with CPF!

Really, time does fly.

Remember this blog from 2015?

AK is buying a 12 year tenor AAA bond.

Do the right thing.

Do it early.

Reminder:

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

Of course, AK is just talking to himself again.

If you are new to ASSI, you might want to read the following blogs:

1. This guy has $800K in his CPF!

2. Investors eat crusty bread with ink slowly for peace of mind.

3. 1M50 CPF millionaire.