January 22, 2021

Categories: Investment

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Arecent OCBC survey revealed that 75% of Singaporeans risk running short on retirement funds. This could be attributed to the hefty financial commitments they face right now; having to pay for monthly expenses with not much left to stash away for old age.

But did you know that you have been saving up for your retirement since the day you began working?

You would probably be more familiar with the term CPF – which is the well-known acronym for Central Provident Fund – a government scheme that requires working Singaporeans and permanent residents to save 20% of their salary to address retirement, healthcare and housing needs.

Through CPF, you can earn risk-free interest!

If you are below 55 years old, you earn an interest of 2.5% per annum for savings in the Ordinary Account (OA), and 4% per annum for savings in the Special Account (SA) and Medisave Account (MA). An extra 1% interest is paid on the first S$60,000 of your combined balance (capped at S$20,000 for OA).

Through CPF, you can start preparing for retirement!

When you turn 55, the savings from your SA and OA will be transferred to your Retirement Account (RA) to form your Full Retirement Sum (FRS). What remains in your SA and OA can be withdrawn anytime from age 55.

Hence, the more you have in your CPF accounts, the more income you will have when you retire. Therefore, it certainly makes sense to grow these savings through:

  • Cash top-ups under the Retirement Sum Topping-up Scheme (RSTU).
  • Transferring funds from your OA to your SA.
  • Investing a portion of your CPF funds.

I will be delving into other aspects of how you can incorporate CPF as part of your retirement strategy in my following articles.

Do stay tuned for more or reach out to me to have a personal discussion today!

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