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!

Hit the FRS in CPF-SA by age 32! Stunned like vegetable?

Reader, Spotlessmind, says...

Discovered your blog a couple of months ago and found it both inspiring and educational.

Having read varied opinions on the topic of CPF, I felt compelled to share my thoughts.





Since I started working after graduation, I have been transferring all my money in the OA account into my SA account on the advice of my mother, who despite having only pre-university education, knows the power of compounding interest.

Many of my friends (regardless of whether they are single/attached/married) worry that they will not be able to afford a flat in the future if the money in the OA is transferred to SA. 

There is always a big "what-if" hanging over their heads.





On the other hand, I thought that I would remain single forever and thus would not need to buy a flat.

I will cross the bridge when I get to it.

So, I simply kept transferring.

I met my significant other just before I turned 30.

At 32, CPF stopped allowing me to transfer anymore money from my OA to SA :).





I am lucky that my job pays reasonably well, so I have been able to accumulate a significant sum in my OA for flat.

I think many young people have always thought that money in OA = Flat.

Many fear that if they cannot afford a flat, they cannot get married and risk losing their significant other.

Others who are single want to have the option of being able to use the money in OA when they want to.





My approach is considered very risky by my friends.

In my 20s, I was laughed at for being silly.

It is bad enough that we cannot withdraw the money in OA, but at least we can use it to buy a flat.

Why so silly to lock it deeper into SA when we won't see it until we reach retirement and have a minimum sum?





None of my friends took up my suggestion.

I can understand the rationale of those who need to buy a flat.

But I cannot understand the rationale of the rest.

After all, if we are single, we can only buy a flat when we reach 35.

Or maybe some intend to purchase private property.





In short, while a certain degree of skepticism in life is healthy, too much of it is a hindrance to progress.

We waste time when we hesitate, and as you have mentioned it, compound interest is magic that takes time.

I cannot agree more with you.





AK says...
If readers thought that my story is amazing, yours should rock them off their seats!

I am in awe!

...




Hit the FRS in the SA by age 32?

Stunned like vegetable?

It is possible and without using any out of pocket money either.

I am not saying that we should all do this.

After all, not everyone has the ability to do this.

Even for those who have the ability to do so, they should always carefully consider their own circumstances and priorities first.

Remember, the CPF is but one piece of the jigsaw puzzle called "retirement adequacy".









Related post:
Sensible to do OA to SA transfer?

Lost life savings and now in debt. (Investor or speculator?)

When are we investors and when are we speculators?

When we buy into something that has intrinsic value which generates revenue and ideally provides us with an income, we are investors.

When we buy into something that is the complete opposite but we feel that we could sell it for a higher price in future, we are speculators.





People often get into serious trouble when they think they are investors when they are really speculators.

Speculating is not for everyone.

People of more modest means would do better if they stay away from speculating and just stick to investing.










The value of all outstanding cryptocurrencies has fallen by about $600 billion, or 75 percent, since the peak in January.

The damage is likely to be particularly bad in places like South Korea and Japan, where there was minimal cryptocurrency activity before last year, and where ordinary investors with little expertise jumped in with abandon.

Kim Hyon-jeong, a 45-year-old teacher and mother, put in about $90,000 last fall.

She drew on savings, an insurance policy and a $25,000 loan.

She is down about 90 percent.

“I thought my family and I could escape hardship and live more comfortably, but it turned out to be the other way around.”





Twitter is also filled with complaints: “It’s really hard to stomach losing all my hard earned money. Just broke down and cried.”

On Reddit, a user posted a picture of the $100,000 loan that he had taken out in December to buy cryptocurrencies — and that he will now be paying back out of his salary for the next three years.

“I’ve made a mistake, and now I’m going to have to unfortunately pay the cost for the next few years.”

Source: New York Times.






Remember, no one cares more about our money than we do.

Before parting with our money, question if it is an invitation to invest or an invitation to speculate.

Oh, I don't even borrow money to invest with.

Borrow money to speculate with?

That is how some people "ki chia" lor.

Related post:
My final word on Bitcoin and friends.
"When people tell me that they invest in Bitcoin, I get the impression that they are either confused or they are out to confuse other people."

Give me the freedom to enjoy life!

Reader says...

Excluding cases where they need to work to have the $ to pay bills, be it for self, family or descendants.

Most of the people I know in their 50-70’s would prefer working than the so-called relax life.

A granny lament she would rather work than “enjoy life” at home.






2 other aunties I know of took up a 4-5 hour/day job after retiring.

Their jobs are not the physically demanding kind. It’s mostly light duties in a comfortable pace environment.

Not everyone views work the same way, like a chore.






AK says...

Of course, not everyone is lazy like AK. ;p

I am not suggesting nor would I ever suggest that everyone be like me.

What would happen to Singapore then? :o






"If AK can do it, so can you!"

It isn't a war cry for people to achieve financial freedom and become a full time gamer like me.

It is simply an encouragement for people to achieve financial freedom because being financially free gives us options.






Simply put,

We want to work because we want to and not because we have to.

Financial freedom affords us this enviable position in life.









If we are working because we need the money, how like that?

If we are working because we want the money, why like that?

If we are working because we simply enjoy working, why not like that?

Give me the freedom to enjoy life!









Related post:
Average income workers can be rich too!

CPF-SA is not a free lunch but it is not a myth.

Reader says...

As you were showing your SA amount i was wondering how come it can b higher than the FRS?

I tot SA amount should be capped at FRS.

How did u accumulate $200K+ in your SA?






AK says...

Once our CPF-SA has hit the FRS, no Top Up is allowed.

No OA to SA transfer is allowed either.

However, mandatory contribution and voluntary contribution are still allowed up to the annual contribution cap (i.e. contribution that goes into all 3 accounts) every year.

CPF-SA will also continue to grow from interest earned year after year even after it hits the FRS.






The former Minimum Sum (MS) and, now, the Full Retirement Sum (FRS) are not monsters we should fear.

The FRS has to increase year after year as cost of living increases year after year.

If we push more money into the SA earlier on in life and continue to be gainfully (and legally) employed till we are 55, even after we stop contributing to our CPF, the interest earned in the SA will likely keep pace with the increase in FRS year after year.








Could the interest earned, in fact, be higher than the increase in FRS?

Definitely, it could or, at least, that has been my experience.

The CPF-SA can actually continue to grow without additional effort on our part!

So, is the CPF-SA like the mythical perpetual motion machine?

No.

The perpetual motion machine is a myth.

The CPF-SA is not.






You cannot get something for nothing.

There is no free lunch in this world.

If someone is getting something for free, someone else is paying for it.

The CPF is about helping members to help themselves.

Put nothing in and we get nothing in return.

Put something in and we get something in return.






Feel as if you cannot beat the system?

You are only beaten if you think you are beaten.

Bad AK! Bad AK!

Remember.

If AK can have more than the FRS in his CPF-SA, so can you!






Relates posts:
1. AK showing off his CPF-SA again?
2. 4 ways to boost our CPF savings.

Jin jelly or jin buay song my CPF? Hosay liao!

Reader says...

My colleague this week say CPF can only take out $ at 67.

I say 65 start CPF life payout.

55 can take out too if hit FRS.

He say can hit FRS meh?

I say don hit take can take out $5k.

He more agitated. 😂

Looks like he believe he cannot hit FRS.

Imagine I tell him in 2 months time I gg hit FRS. Lol






AK says...

Some people jin jelly.

Now, this one jin buay song.

How liddat?

On its own, it might be insufficient but the CPF can help us on our journey towards financial freedom.

Believe me or not?





Assuming that I stop contributing to my CPF account from 2019, I should have more than $1.2 million in my CPF at age 65.

Yes, more than $1.2 million if I stop contributing.

It is not a typo.

How does that make you feel?

Jin jelly or jin buay song?

Or did you just say hosay liao?







Related posts:
1. AK makes people jin jelly.

2. You can hit the MS (FRS) too!
3. $1 million in CPF by age 65.

Lose weight fast and stay slim! (From low carb to moderate carb.)

My lunch on 13 Oct 18.

Ingredients:
1. Popcorn chicken.
("FarmPride" brand 
by SATS, of course.)
2. Chopped spinach.
3. Egg.
4. Extra virgin coconut oil 
(1 tbs).

Microwave for 4 minutes at 800 watts.





Then, add and mix well:
5. Extra virgin olive oil
(2 tbs).
6. Black pepper.
7. Turmeric powder.

----------
I am back from a short holiday and, as expected it was so difficult to eat right.

It was terrible and it was good at the same time, if you know what I mean.

Now that I am back home, it is back to eating right.

Beautiful sunset.

It has been a while since I blogged about food.

As promised before I went on holiday, here is a blog on food.

Regular readers know that I went on a low carbohydrate, high fat diet many moons ago.

I shared it almost a year ago as the secret to my successful weight loss.

See:
Gain will outweigh the loss.







I had to present my passport on two occasions during my vacation.

When I presented my passport the first time, I was asked,

"Did you go on a diet?"

When I came back, I had to present my passport again.

After looking at my passport photo and at me a few times,

"You are much thinner!"








Over many months, from 78 kgs, I am now 64 kgs in weight.

Losing weight is 80% diet and 20% physical activity. 

I became a firm believer after I saw the results.

After reaching my ideal weight, I am no longer on a low carb diet but a moderate carb diet and for quite a while by now.





I have always liked bread but was avoiding it.

No longer.

Having read up on diets and nutrition, I am familiar with the arguments against eating bread but I did miss eating bread.

A moderate intake should be fine lah.

It is just like char kway teow and chye tao kway.

Right or not?

You disagree?

You are probably not a Singaporean.






Anyway, I like French toast but I decided to try doing something different.

I scrambled an egg in extra virgin cocounut oil before dunking a slice of Gardenia bread in it.

Must be Gardenia bread, of course.

Powdered with black pepper and a sprinkling of garlic salt.

1 minute in the microwave at 800W and voila!

A 20 (maybe 30) cents breakfast. 

Oh, so good! 

Yum, yum!





Related post:
5 minutes and less than a dollar!

Retirement adequacy for late bloomers 101.

I have said many times before that we should start saving money and investing for income as soon as possible.

If time is on our side, the journey to financial freedom is likely to be less demanding.

This led me to say that everyone should start young.

The younger we start saving and investing for our retirement, the easier it is going to be.





Imagine a 25 year old investing S$650 a month.

Let us say his investments give a 5% dividend yield.

Let us say he re-invests the dividends.

How much would he have by age 65?

A cool $1,000,000!





The problem with this narrative is that older readers who have yet to start their journey or have recently started on their journey sometimes get discouraged or even depressed after reading this.

Of course, what I always tell them is that they are just starting later.

Not late but later.





It simply means that they have to work harder.

It is likely to be harder because most older readers have rather hefty financial commitments which include money guzzling pets known as "children".

Ouch!

Alamak!

Who threw a shoe (or two) at me? Who? Who?

All else being equal, having less mileage left in life, they are also unable to take hard knocks financially (although some of them think they can) but that is another topic and if you are interested, you would want to read my latest "e-book".

See:
Survivability and opportunity in times of distress.

There is no point in regretting.

There is no point in feeling depressed.

Set a goal, a realistic goal and, then, it is just a matter of putting one foot in front of the other.

Remember, the journey to financial freedom is not a race.

See:
Journey to financial freedom is not a race!





"What if I never become financially free?"

I have always been encouraging but, for some people starting later, it is a possible scenario despite their best efforts.

To these people, I will say that even if you do not become financially free, if you do the right things, you will become financially more secure!

Cutting out unnecessary expenses (by keeping needs simple and wants few) and having some passive income will make anyone financially more resilient.

It is quite simple.

However, I still believe that, in Singapore, unless we are severely disadvantaged, all of us can become financially free.






If you are a young person, you have time on your side.

Don't squander it.

If you are an older person and have yet to start on the journey, don't lose heart.

In my reply to someone in his late 50s who has just joined us on H.M.S. Financial Freedom, I said:

1. Recognise that I cannot be too adventurous with my money because I can ill afford massive or total loss of capital.

2. Max out CPF-RA to benefit from a risk free 4% to 6% per annum return and this will provide a guaranteed monthly income in future (earliest from age 65).





3. If I have money to spare, get some investment grade bonds which includes Singapore Savings Bonds.

4. If I still have money to spare, get some relatively stable investments in stocks (like ST Engineering) and REITs (with stronger balance sheets) for higher returns but this should be a smaller percentage of total portfolio.





5. Adjust my lifestyle according to how much I expect to have coming in at retirement instead of working towards something that will pay for my current lifestyle in retirement.

6. Even after adjustments, if there is a big mismatch between expected inflow and expected outflow, postpone retirement by a few years to strengthen personal balance sheet and cash flow.





7. If I have the option and if I really need the cash, rent out spare rooms at home, if any.

You can still be financially free even if you start very late in life.

Yes, bloom later but bloom, you shall.

If AK says so, it must be so!





Related post:
Improving retirement adequacy for my dad.

Stop telling people I am a retiree? NEVERWINTER banzai!

Regular readers know that I spend quite a bit of time online gaming.

It is something I enjoy and the fact that it is free to play (F2P) makes it even more attractive for me.

I also enjoy meeting people from all over the world in the game.

Neverwinter has a gaming population that is almost 3 times the size of Singapore's population!

Therefore, the virtual economy is big and very vibrant as we can buy and sell stuff found in our adventures.

Although we can trade with NPCs (i.e. non-player characters), the more interesting and lucrative trades are with other players.

After more than a year gaming, I have had quite a few chats with fellow gamers and I am sharing one here.






Gamer #1:
What do you do in RL?

AK:
I am a retiree.

Gamer #2:
Oh, so are we!

Gamer #1:
Enjoying some good quality time with the grand kids?

AK:
Uh....

Gamer #2:
They grow up so fast!

Gamer #1:
Don't they now?







Do most people assume that retirees are in their 60s or older and probably have grandchildren?

To be fair, I think it is probably not an unreasonable assumption

I now wonder if I should stop telling people I am a retiree?





I mean I was telling people I was unemployed before but I was advised not to do that.

See:
You are not successful unless...

Well, to be more accurate, I am classified by our government as economically inactive and not unemployed.

The Japanese might call me an Otaku or shut-in or N.E.E.T. (i.e. not in employment, education nor training).

The Chinese will call me 宅男.

I have decided.

I will tell people that I am a full time gamer!

Neverwinter banzai!






Related posts:
1. Wealthy nation cannot retire?
2. AK should be ashamed!