Will my CPF ever be enough when I reach 55?

2014

2015

Inspired by AK, I've decided to take a look at my CPF's interest for 2015 compared to 2014.

Key to note:

• I did not use any CPF sums for investments.
• I am using my CPF to finance my (co-owned, parent's) house currently.
• I transferred a small sum from OA to SA during 2015

Interest for OA and MA increased moderately year on year, but SA's interest exploded by 60%.

With $23k in my SA now, and a constant contribution from now until age 55 (assuming no pay increase or special bonus),

My SA will hit $205k when I am 55 years old.

If I compound the BRS at $80,500 at 3% increase annually, it'll be $165k when I'm 55.

If I compound the FRS at $161,000 at 3% increase annually, it'll be $330k when I'm 55.

Just my SA alone will allow me to achieve the BRS (not including my OA amounts).

And I'm expecting to withdraw at least $40k when I reach 55 years old. Wooaaahh.

So, what about the average Singaporeans? 

If you are a graduate (age 24) earning $3.2k, and buy a house after getting married (zero OA left), can you hit the BRS? Assume there's 1 month bonus and no pay increase.

At age 55, your SA will have $154k versus BRS of $165k.

Remember, this is assuming there is zero pay increase from 24 years old until 55 years old, and that you only get 1 month bonus until 55 years old.

I've also excluded the extra 1% interest in the SA amount for the first $60k. That and the effect of compounding should easily allow you to exceed the BRS at age 55.

I've also assumed you've stretched yourself and max out your OA for housing purposes.

It's not that bad after all

There're so many people misguided and think that CPF is a ponzi scheme. That CPF has a goal post that is ever moving away from commoners like us and we'll never see our money even when we die.

But think about it, is it that hard to achieve that sum? Perhaps so. But is the sum too excessive? If you think setting aside $161k now is too much, then perhaps you'll have to adjust your lifestyle to make sure you can live comfortably with a monthly payout less than $1,200.

Is $1,200 a month enough for you and your retirement needs? If not, then why are we saying that the sums are too high.

It's really not magic. It's math, and there's no running away from it.

If we don't constantly increase our retirement monies now, then be prepared to be gobbled up by inflation and regret when it's too late.