MoneySENSE Worksheet on Managing Your Retirement Funds

MANAGING YOUR CPF SAVINGS

When you reach 55, you have to decide how you wish to manage your CPF savings.

Withdrawal of CPF

You can decide whether to withdraw your CPF savings at age 55.

You have two options:

Options

Things to Consider

Withdraw a lump sum/partial savings from your Ordinary Account (OA) and Special Account (SA) after setting aside the full Minimum Sum in your Retirement Account.

What do you intend to do with the funds upon withdrawal?

Note that the Retirement Account is for your old age needs. If you decide to withdraw your CPF savings, make sure that you manage the CPF money withdrawn carefully as it is your old-age savings which will see you through the next 20 years or more.

Postpone your withdrawal until a later date

Are you financially independent or still working?

If yes, option 2 is generally preferred as this means you can continue to build a larger nest egg. At the same time, your OA savings can continue to earn the interest of 2.5% per annum.

Management of CPF Minimum Sum

The CPF Minimum Sum Scheme provides you with a monthly income to support a basic standard of living during retirement. The minimum sum is presently $99,600 (as at 1 July 2007). It will be raised gradually until it reaches $120,000 (in 2003 dollars) in 2013, and will be adjusted yearly for inflation.

You can decide how you want to manage your CPF Minimum Sum. You have two options:

Options

Things to Consider

Leave your CPF Minimum Sum in your Retirement Account to earn the prevailing interest rate

The minimum guaranteed interest rate on Your Retirement Account is 4% in 2008 and 2009. You will receive a monthly payout from Your Minimum Sum from age 62 for about 20 years.

A member who can meet the prevailing Minimum Sum of $99,600 fully in CPF savings can expect to receive $790 per month.

Do note that the Minimum Sum Draw Down Age will be raised progressively from 62 to 63 years in 2012, 64 in 2015, and 65 in 2018.

If you have enough savings set aside for your retirement, try to voluntarily defer the withdrawal of your Minimum Sum so that it can continue to earn the prevailing interest in your Retirement Account.

Do you want the certainty of a regular income for a limited period or for life?

If you prefer a limited period, evaluate how much and how long your CPF Minimum Sum payout will last. Consider also what sources of income you would have after these monthly income payments stop.

If you want to have the certainty of receiving a regular income for life, consider using your CPF Minimum Sum to buy a life annuity. If you wish to have more income, you can consider buying additional life annuities with your savings. This way, you can be relieved of the anxiety of whether your retirement savings will be adequate to see you through your golden years.

Use your CPF Minimum Sum to buy a life annuity from a participating insurance company.

A life annuity is an insurance product which guarantees payment of a fixed amount monthly for as long as the policyholder lives.

For more information on CPF matters, please refer to the CPF website (www.cpf.gov.sg). A list of participating insurance companies can also be found on the CPF website.

Next: Consider Housing Matters

Back: Introduction

Last modified on 31/12/2007

Privacy Statement | Terms of Use | Rate This Site