Another clueless person spouting nonsense above.
People have a love-hate relationship with
CPF. We have read that many people are accusing the
CPF for "shifting the goal post" and preventing them from withdrawing their money at age 55. And on the other hand, we also have people trying to deposit more money into their
CPF accounts for the risk free interests that
CPF provides, but are unable to do so.
The
CPF was set up primarily to ensure people have some money in their retirement both for normal expenses (through the OA, SA and RA) and medical expenses (through the MA). The SA money for a typical worker will be moved to the RA when he reaches 55. Those who can save more in their SA or those who continue working after 55 will continue to have the SA.
Each year, the
CPF limits the amount that a person can contribute to his
CPF accounts. The maximum amount for 2017 is $37,740. As you can see, the
CPF Board is not a bank. People cannot just deposit any amount they like to their
CPF.
Because of this contribution limit each year, and because the
CPF will distribute the contribution each month/year to the 3 accounts (OA, SA & MA), there is only so much a person can grow his
CPF to, at any point in time.
There is thus a maximum amount that a person can have in his
CPF accounts at different points of his life. Thats why when a relatively young person (the 43 yo fake) claims he earns $34k of interests a year from
CPF, alarm bells should be set off. To earn $34k of interest from
CPF, you would need a minimum of
SA - $150k (interest earned = $6k @ 4%)
MA - $52k (interest earned = $2.08k @ 4%)
OA - $1.036m (interest earned = $25.92k @ 2.5%)
A person contributing the max of $37,740 each year for 20 years assuming the 43 yo starts work at 23, his total contributions will only amount to $754,800! This is way below the $1.036m needed to generate the $25.92k of interest, not taking into account that some of the amount contributed will actually be divided into the MA and SA.
Ok. I will stop here for now. I will continue in next post how a person can indeed grow his
CPF amounts to more than a million dollars, not at a young age but in his mid 50s.