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If we have a plan on achieving adequate retirement funding but have trouble executing the plan, we should be worried. If we do not have a plan on how to achieve retirement adequacy, we should be very worried.
This was a conversation with a reader on FB:
J A
Hi AK, was talking to my friend about the pros of cpf, but they were saying we will not be able to fully withdraw the amount, and if we pass on before we totally withdraw all out, it will be pass to the child and it goes on.. what do u think about it?
Assi AK
Why would we want to make a full withdrawal?
The minimum sum goes into an annuity that pays us a monthly allowance for life from age 65.
If your friends do not believe in buying an annuity to fund their retirement, then, I can understand.
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| A clever fellow in Hong Lim Park. |
They are worrying they will not be able to withdraw the full sum.
They should be worried that they might not have adequate retirement funding from age 65.
They are worried about the wrong thing.
They are worried about the wrong thing.
Knowing that I will have a meaningful monthly income for life from age 65 gives me some degree of assurance when it comes to the topic of retirement adequacy.
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| Source: CPF Board. |
J A
So how do they calculate the monthly income age, from 65 till ?
Assi AK
Assi AK
There is also a very good guest blog on the CPF Life here: http://singaporeanstocksinvestor.blogspot.sg/2015/05/tea-with-ey-is-our-cpf-life-payout.html
I started typing numbers and I deleted. He can go and do his own calculations to see for himself why CPF Life makes sense. Don't be lazy. LOL.
As he seems to be fixated with getting back all his savings in his CPF account, I will simply show him how most of the money in my CPF-SA is from the government. At age 55, whatever I have in my CPF that is above the minimum sum, I can withdraw.
The minimum sum which is really money from the government will go into CPF Life to fund my retirement for life from age 65.
See:
http://singaporeanstocksinvestor.blogspot.sg/2015/01/a-lot-of-money-in-my-cpf-sa-is-from.html
As he seems to be fixated with getting back all his savings in his CPF account, I will simply show him how most of the money in my CPF-SA is from the government. At age 55, whatever I have in my CPF that is above the minimum sum, I can withdraw.
The minimum sum which is really money from the government will go into CPF Life to fund my retirement for life from age 65.
See:
http://singaporeanstocksinvestor.blogspot.sg/2015/01/a-lot-of-money-in-my-cpf-sa-is-from.html
Ask him what would he do if he were allowed a 100% withdrawal? What would he do to ensure that the money will be able to fund his retirement for the rest of his life?
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