From the day you start working, you are contributing to your CPF accounts. This marks the beginning of your journey towards savings for your retirement.
Your 55th birthday marks a significant milestone in your journey with CPF. What does this mean for you? Here are three questions to ask yourself before you turn 55 so that you are better prepared for your golden years.
1. Do you have sufficient CPF savings for ongoing payments?
Your CPF contribution and allocation rates are adjusted at various ages to reflect your changing needs.
After age 55, both employee and employer contribution rates will decrease and the allocation rates will adjust accordingly so you can save more for your healthcare and retirement needs.
Understand your CPF contribution and allocation rates better: https://www.areyouready.sg/YourInfoHub/Pages/News-How-your-CPF-contributions-and-allocation-rates-change-as-you-grow-older.aspx
2. Do you foresee having housing payments beyond age 55?
If you foresee that you will have to pay for your housing loan beyond age 55, you can reserve a portion of your Ordinary Account (OA) savings to continue paying for it.
Remember to reserve savings in your OA before you turn 55 to ensure that it is not transferred to your newly created Retirement Account (RA) at age 55. Take note that if you do so, you will set aside less in your RA and as a result, your monthly payouts will be lower.
Find out how you can reserve your OA savings for housing payments: po.st/ReserveOAforHousing
3. What is your desired retirement lifestyle and amount of monthly payouts?
As you near retirement, you should think about your desired retirement lifestyle and how much payouts you would like to receive. By planning ahead, you can start to set aside sufficient savings to help you reach your retirement goals.
If you are turning 55 in 2019, the retirement sum you set aside at 55 and corresponding CPF LIFE monthly payouts you will receive from 65 is as follows:
|Retirement Sum||Basic Retirement Sum
|Full Retirement Sum
|Enhanced Retirement Sum
|CPF LIFE monthly payout||$730 – $790||$1,350 – $1,450||$1,960 – $2,110|
By setting aside a larger retirement sum, you will receive higher monthly payouts.
You can also choose to defer your payouts to any age between 65 and 70 if you wish to receive higher monthly payouts. For each year deferred, your payouts can increase by up to 7%!