I stumbled across Investment Moats website last week about CPF Life. Curious, I went to the CPF life calculator website to check out what it really means to a 55 year old retiree with a minimum sum of SGD 155,000 in his/her retirement account. I was surprised that with just SGD 155,000, you will be entitled to get SGD 1,096 to SGD 1,215 per month from 65 years old onwards until you die !!! Wow, this is great !
Why is this great ? Assuming you were able to withdraw this full SGD 155,000 at 55 years old. At SGD 1K per month, this sum of money can only last you 13 years if you don’t invest the money (i.e. 68 years old). With CPF life, SGD 155,000 guarantees you a payout of SGD 1K per month until you die (According to world bank, the average life expectancy of a Singaporean is 81.89 years old in 2011) ! Isn’t that awesome !
Imagine an aging couple, both having fulfilled the minimum sum of SGD 155,000 and their HDB fully paid up. They would have a combined income of SGD 2K. Quite a decent income to retire simply. At least you do not need to resort to selling tissue papers on the street just to put bread on the table. This scheme really takes the pressure and load off the kids of aging parents. By contributing an additional allowance of a couple of hundreds or a thousand to their aging parents, their parents would be able to live a very decent and happy retirement life, even taking short trips here and there. I wished I had found this out earlier, then instead of giving allowances to my parents, I should have allocated some of these allowances as top up to their CPF account ! Not sure whether it’s too late to start now.
What about you ? Does your wife, husband and parent’s CPF fulfills the minimum sum of SGD 155,000 ? If not, encourage them to find means to top it up by getting out in the workforce. The best gift a parent could give to your kids is to ensure that you have a well planned retirement.
Source : CPF
Check out My Retirement Planning Series :