How much are you earning per annum?

Originally Posted by Unregistered

This is ours.

Condo mortgage & maintenance $350 pm (no mortgage as condo is fully paid up)
Car loan $0 pm (car fully paid up)
Car petrol $400 pm
Other car related expenses $600 pm
Food, groceries, restaurants, utilities $1500 pm
Parents allowance $1400 pm
Insurance $2000 pm
Children (2 teenagers) related expenses $500 pm
Misc (taxes, holidays, clothings, entertainment, donations, etc) $3000 pm
Total expenses $9,750 pm ($117k pa)

Total income (pro rated) $13,750 pm ($165k pa)
Total savings $4,000 pm ($48k pa)
Total net worth (home equity+cash+shares+cpf) $1.8m

Our age: Both 50.

We do not keep detailed records of our spending. However, we are making $20k pm before bonuses. We are both 28.

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!

Originally Posted by lazyplane

I like to analyse CPF. So i am happy to hear there is someone like me.

Some points

1. Topping up RA to ERS is only for those above 55.
So since you mentioned that you have done so for both you and wife, i take it both of you are above 55.

2. If so, the min sum is fixed. So you wont be impacted by any changes by govt to min sum.

3. You mentioned you have OA and SA @1.5 m combined. Since both of you have reached 55, you only have RA + OA now right. Taking into account your RA is now at ERS levels for both of you as a couple, i think you mean your remaining RA + OA has 1 million.

4. Will you be taking ERS ? If so , then basically, as a couple, you will get 3.4 - 4k per month from 65 .

5. Plus your CPF 1 million and assuming 30 years for both of you, you will get around 3.5 k to spend. I didnt even bother to cal the interest of this $1m.

All in all, you mean 7 k per month for you as a couple during retirement not enough ?

And i am sure you have additional cash hoard.. so really why worry ?

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.

Originally Posted by Unregistered

This is ours.

Condo mortgage & maintenance $350 pm (no mortgage as condo is fully paid up)
Car loan $0 pm (car fully paid up)
Car petrol $400 pm
Other car related expenses $600 pm
Food, groceries, restaurants, utilities $1500 pm
Parents allowance $1400 pm
Insurance $2000 pm
Children (2 teenagers) related expenses $500 pm
Misc (taxes, holidays, clothings, entertainment, donations, etc) $3000 pm
Total expenses $9,750 pm ($117k pa)

Total income (pro rated) $13,750 pm ($165k pa)
Total savings $4,000 pm ($48k pa)
Total net worth (home equity+cash+shares+cpf) $1.8m

Our age: Both 50.

Originally Posted by Unregistered

We do not keep detailed records of our spending. However, we are making $20k pm before bonuses. We are both 28.

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.

cool story bro....keep it up. You can try spending your money by going for a scriptwriting class too...

[lazyplane]

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...

Originally Posted by Unregistered

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!

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.

Originally Posted by lazyplane

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...

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?

Originally Posted by Unregistered

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.

Originally Posted by Unregistered

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.

You mentioned earlier that your expected annual payout from CPF is about 70k. Your current expenses are however about $100k. Does it mean that you intend to cut down on your expenses slowly? I'm also planning for retirement. And I sometimes wonder whether I should save and invest enough to sustain my current lifestyle before I retire or whether I should cut down on my expenses and retire earlier. Would welcome others' perspectives.

[lazyplane]

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 !

Originally Posted by Unregistered

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.

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.

Originally Posted by Unregistered

You mentioned earlier that your expected annual payout from CPF is about 70k. Your current expenses are however about $100k. Does it mean that you intend to cut down on your expenses slowly? I'm also planning for retirement. And I sometimes wonder whether I should save and invest enough to sustain my current lifestyle before I retire or whether I should cut down on my expenses and retire earlier. Would welcome others' perspectives.