Ever since the CPFB introduced a colorful pie chart of our CPF savings a few years ago, I would look forward to mine every year like a teena...
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C: Orh. that why i would like to ask for your advise what is the best to invest. Sorry i didt read alot on ur blog because im busy with hospital and home and work
The CPF is a risk free and volatility free retirement funding tool that Singaporeans should learn to take advantage of.
However, depending on what we want it to do for us, the way we use it would be different.
Reader says...
Hi AK! Can I ask u for some advice.. or rather ask u to talk to urself! My wife and I r both self employed, and I want to boost our CPF SA account, but I'm not sure whether we should boost just one or both accounts. My SA has Xk and i'm XX, she has Xk and XX, and I'm thinking if we both contribute to her account, its quicker to reach the minimum sum and exceed that, so we can draw out a lot in excess of the MS when she reaches 55.
Whereas if we contribute to both i have to work harder to reach the MS and we may just slightly exceed the MS when we reach 55 in our respective accounts, and can't withdraw as much. I'm contributing 2k a month, and she 800 a month to our SA atm. If you are faced with this, what is the more sensible choice?
I sidestepped the question about whether it is better to contribute to only one account or work harder to contribute to both accounts. I think the reader has the answer somewhere in his head. It really is a matter to be decided by him and his wife.
I don't want them to scold me for some reason when they hit 55.
However, I had this to say: AK says... I think you might also want to consider maxing out the annual contribution limit for the CPF.
The limit this year is $31,450 (mandatory and voluntary contributions combined).
{CPF annual limit in 2018 is $37,740.}
The money voluntarily contributed gets apportioned into your OA, SA and MA.
You could then do an OA to SA transfer as long as your SA has not hit the ceiling (which is the prevailing MS). Note that there is no income tax relief for OA to SA transfer unlike MS Top Up to the SA (for the first $7K per year).
CPF savings has a bond like feature which allows us a larger lump sum withdrawal (i.e. anything above the prevailing MS) at age 55 but it is also an annuity component (i.e. CPF Life) that pays us a monthly income for life in our golden years.
Note: Whether we are able to withdraw Top Ups and the accrued interest would depend on the age at which the Top Ups are done.
"Top-up monies are set aside specifically for retirement needs and will be used to increase the recipient’s payout level and/or payout duration. "Hence it cannot be used for other purposessuch as education, investment, insurance premium payments, housing, pledging and/or exemption.
"If you had received top-ups before age 55, the top-ups and accrued interest in your Special Account (SA) will be transferred to your Retirement Account (RA) when you turn 55.
"Any excess, above the Full Retirement Sum applicable to you, can be withdrawn when you apply for withdrawal at age 55."
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