How much is your annual passive income?

Originally Posted by Unregistered

Since age 29, we have been topping up our cpf OA SA with our full salary

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.

Currently getting close to 11k from two condo rentals & some blue chip stocks. 49 this year and hoping to retire by 52 once the last mortgage installment is pad off, but still haven't thought of what to do after retirement.

Originally Posted by Unregistered

Currently getting close to 11k from two condo rentals & some blue chip stocks. 49 this year and hoping to retire by 52 once the last mortgage installment is pad off, but still haven't thought of what to do after retirement.

well done! your 11k pm or 130k pa of passive income is well enough to cater for basic needs in singapore. you can in fact retire now.

Originally Posted by Unregistered

well done! your 11k pm or 130k pa of passive income is well enough to cater for basic needs in singapore. you can in fact retire now.

More or less so, but I'm currently trying to do basic prep work post retirement. Heard a lot of my friends early retirement then not much to do after the initial round of overseas holidays.

Originally Posted by Unregistered

everyone sounds so rich in this forum

Richness can be relative (comparative) or absolute.

Relative (comparative) richness
When my neighbour saw that my wife and I have a car each, they said we were rich, even though both our cars were the mass market Jap cars. In absolute wealth terms, my neighbour could be the richer one. Likewise, I told my other neighbour he was rich as his home was a double storey penthouse in our condo but in actual fact, I really dont know his net worth.

Then there is the networth comparison. You see a guy having a higher networth than you and you say he is rich. The correct term to use should be that he is richer - because there is a quantitative measure for richness. See below

Absolute measure by networth
> $1bn. : billionaire club
$500m to $1bn : Uber rich
$100m to $500m : super rich
$50m to $100m : very rich
$10m to $50m : rich
< $10m : general masses

To qualify to be called "rich", you need to have an individual networth of $10m and above. All the rest of us are the general masses. Each one is either richer or poorer than you but are not rich.

Many years ago (30 years), you can be called rich if you have $5m in networth but not now. Similarly in another 20 years, you may need to have $15m networth to join the "rich" league.

So everyone may appear richer than you, but they are certainly not rich - unless their networth hit $10m and above.

In this day and age I am surprise there are some degree educated PMEs out there who cannot even reach their first million net worth by 40. Some are even worse, relying on just downgrading from condo to HDB at 62-65 just to unlock that miserable 700k for retirement for both couple, i.e. 350k per pax is their main retirement fund. Crazy...

Originally Posted by Unregistered

In this day and age I am surprise there are some degree educated PMEs out there who cannot even reach their first million net worth by 40. Some are even worse, relying on just downgrading from condo to HDB at 62-65 just to unlock that miserable 700k for retirement for both couple, i.e. 350k per pax is their main retirement fund. Crazy...

For singles is very easy to achieve millionaire by 40 yo, but most people have other financial expense like parents, kids, housing, car etc. For most sg couple if can reach 4-5mil by retirement should be enough to get by, anything extra can consider bonus.

By the time we retire at 55, we have cash savings of $750k. We calculated that from 55 to 65 years old, our total retirement expenses will be $500k. This takes into account inflation.

At age 65 onwards we will receive $48k pa from our CPF Life and another $12k pa from stocks dividends. In total our passive income from 65 onwards is $60k pa.

We will be retiring in place in our paid up 3 bedroom condo (worth $1 million). We do not need to downgrade to retire. We are now 46 & 48 years old.

At age 55, this is our expected expenses per month

Food, groceries, utilities & condo fees $1500
Public transport (our condo is near an MRT station) $200
Medical insurance & fees $800
Entertainment & holidays $500
Miscellaneous $500
Total $3500 pm or $42k pa

[lazyplane]

Not to side with anyone, but it is possible to get $20 k CPF interest at age around 40s...

See this post :

AK showing off his CPF-OA and MA (2017). | A Singaporean Stocks Investor (ASSI)

Originally Posted by Unregistered

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.

Hello, $20k is a big world of difference from $34k. And dear AK71 is 46 yo not 43.

Why is $20k a big world of difference from $34k?

Assuming the fake 43yo has $215k in his SA, he will have the same interest from SA as AK71 at $8,800

His MA, lets say is $52k, will give him an interest of $2.08k

That means the rest of his interest has to come from his OA. ($34k - $8.8k - 2.08k = $$23.12k)

With the CPF interest for OA at 2.5%, this means he has to have $924k in his OA.

I already showed that a person contributing to max ($37,740) each year for 20 years will only have $750,800 - below the $924k needed to generate the $23.12k of interest.

Dont forget this $750,800 has to be distributed to the other accounts (SA and MA) as well.

AK71 figures are real. And if he continues to make maximum contribution of $37,740 each year till he is 55, he will likely achieve more a than $1million in his CPF.

AK has 9 more years to go. So he can contribute 9 x $37,740 = $339,660

Adding to his current amount of $457.4k (OA) + $215.8k (SA) + $52k (MA) will give him a total of $1.064m. With 9 years of interest at $20k per year = 9 x $20k = $180k

So at 55, AK should have $1,244m!

And AK's case validates my point that an individual can have more than $1m in his mid 50s.

My CPF amount, total of all accounts, is slightly higher than that. Even if we want to contribute more, CPF does not allow.

Originally Posted by lazyplane

Not to side with anyone, but it is possible to get $20 k CPF interest at age around 40s...

See this post :

[url=://singaporeanstocksinvestor.blogspot.sg/2017/01/ak-showing-off-his-cpf-oa-and-ma-2017.html]AK showing off his CPF-OA and MA (2017). | A Singaporean Stocks Investor (ASSI)[/