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In 30 years we expect to be making $40k pm. Retirement is the least of our worries. We are only worried we don't know what to spend our money on. We are taking until end of the month to decide on the downpayment for our second condo. |
I don't know whether I should be offended or not by your post as I can detect some innuendo but I rather interpret that you are really seeking answers. Because from the tone of your post, I am reminded of someone in my workplace who was cocky and have this air of "I know it all" when in fact he actually doesn't.
Assuming you were seeking answers: 1. Yes, we are above 55. The RA is created exactly on your 55th birthday. 2. The minimum sum or the FRS (Full Retirement Sum) is fixed for each cohort turning 55. But you are allowed and encouraged to top up to the FRS of the cohort after you. So you can top up your RA from $155k ( the limit when we turned 55) to $161k this year. Next year we can top it up again to the new FRS limit. But for case, since we topped up our RA to ERS, we could possibly top up to the new ERS amount next year. 3. It is exactly as I stated. Our combined total of $1.5m does not include our ERS and MA. You will be pleasantly surprised when you turn 55 that your SA is well and alive! Existing side by side with your OA. Each month that you work and earn an income after 55, you will contribute a portion to your SA. 4. That year when we turned 55, there was no ERS. We only topped up the ERS when it was created this year. So conservatively I am assuming we would get a lower amount, around $1500 to $1600 per month each since our ERS would not enjoy the full 10 years of compounding interest. 5. $1.5m at 2.5% interest would yield around $37k pa. Again some of the $1.5m would be from our SA earning 4% interest pa. But for simplicity and erring on the conservative, I am using 2.5% to calculate the interest we could extract each year. Mind you, when you withdraw from CPF, you will be forced to deplete the SA first, so using 2.5% interest in the calculation is not far wrong. The cash hoard we are building up is to last us from now till we are 65 when we can then activate these two streams of income from our CPF! Quote:
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Impressive. You own your condo outright. Many your age are still paying their mortgage.
You are also a millionaire couple. You are a successful power couple. Quote:
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cool story bro....keep it up. You can try spending your money by going for a scriptwriting class too... |
Not meant to offend. If i did, would i have posted with my nick ?
So dont take wrongly. I am just verifying my knowledge as CPF is a very confusing thing. So many rules hence it take time to understand the full mechanism. One thing you mentioned, you mention that if i am above 55, you can still top up to new ERS every year. With inflation being lower than CPF interest rate I calculated that since i hit ERS now, the interest alone should bring you to the new ERS each year. Am i missing something here... Quote:
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They (CPF) treat RA quite differently in regards to the limit.
For eg. if you turn 55 this year (before Jul 2016), then the RA full retirement sum (FRS) is set at $161K. And if you want, you can top up to ERS at $241.5K In 2017, for the next cohort turning 55, the new FRS will be $166k and the new ERS will be $249K. So in 2017, those who are now 56, can top up to the new FRS/ERS limit of $166k/$249K. This is regardless of the interest earned in the RA. This is because the interest earned in the RA is already factored in when they compute the expected payout when you reach 65. In 2018, the next cohort turning 55 will see the FRS/ERS limits at $171K/$256.5K respectively. Again, the chap who is now 57 can still top up to the new FRS/ERS limits. Again, CPF do not consider the interest earned in your RA in the meantime. And so forth.. As you top up your RA, your expected payout upon reaching 65 increases. But what was equally important for us was how to sustain ourselves from now till we reach 65 which another 8.5 years to go. Our expenses is around $100k pa plus/minus $15k. That means we need minimally $850K to cover our expenses from now till we reach 65, a non-trivial sum. Quote:
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Why are you concerned about sustaining yourselves from now till 65? Are you both already retired? I thought you are still working and saving $300k pa? Are you the old engineer or someone else?
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This is really new to me and good news to me. I am seeking to max out my RA to ERS as well when i hit 55 as RA interest yield of 4% is super attractive in this environment.
Can i check : If RA interest is not considered, then does my "new" contribution automatically goes into my CPF life "plan" or i can withdraw ? Eg is the rules for withdrawal the standard rules ie i can withdraw the excess RA above the min sum if ever i decide ? If the latter, then i confirm will be maxing out the CPF bank ! On your point of requiring 850k before hitting 65 ... yep. i understand your point and that why SG all are working to 65... But if i am in your shoes now, i doubt i really "worry" cos i am sure you can manage this with your other non cpf related savings. You sound a person like you have did your sums ! Good luck ! And best wishes to retirement ! Quote:
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Good question. By the time we reach 65 years of age, we hope we have done all the traveling we want and be still fit and healthy, thus not requiring big medical expenses. Yes, we plan for a simpler lifestyle by then. A lifestyle that is supportable with $70k pa or less.
Just to clarify, the $72k we hope to get from our CPF at 65 would comprise $3k+ (combined from the Annuity Life payout and $3k+ (combined) interest from our OA+SA. When young and able, always aim to save more. It is always good to be prudent, spend less than your income. Quote:
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