The biggest downside of not being gainfully employed is the lack of mandatory CPF contributions.
To ensure that my CPF savings will become a more significant bond component of my investment portfolio in my golden years, I have been making voluntary contributions.
Checking on my CPF account last night, I wondered how much would I have in my CPF-SA by the time I am 55?
55 years old. That is also when money from my CPF-SA will be moved into my newly created CPF-RA to fund the annuity called CPF Life.
My CPF-SA savings in January 2017:
$215,862
Assuming that CPF annual contribution limit (now $37,740) remains unchanged in the next 10 years and applying the following allocation rates:
Click to enlarge. Source: CPF Board. |
Ratio of contribution to the SA being 0.2162.
http://www.moneychimp.com/calculator/compound_interest_calculator.htm |
For the 5 years following that, about $11,699 each year goes to my CPF-SA.
Ratio of contribution to the SA being 0.3108.
http://www.moneychimp.com/calculator/compound_interest_calculator.htm |
Of course, all else being equal, the number is likely to be bigger 10 years later as the calculations do not take into consideration the additional 1% interest payable on the first $40,000 in the CPF-SA.
Although it is not $1 million, $441,344 is nothing to scoff at either.
This is why I have told some rather worried readers who are pretty risk averse and who are not investment savvy to seriously consider using the CPF-SA as their primary tool to achieve greater financial security in their old age.
As simple as ABC?
As simple as CPF.
Related posts:
1. AK showing off his CPF-SA.
2. Average HDB household and $1M.