By now you should already know what CPF is all about. But the truth is, you still find yourself grappling with certain common misconceptions. Let’s take this chance to clear the air!
Belief #1: “My CPF will be locked up if I don’t withdraw what I can when I reach age 55!”
Fact: Upon setting aside your Full Retirement Sum or Basic Retirement Sum with property, you can opt to withdraw your savings from your Ordinary Account, Special Account and/or Retirement Account.
Here’s the thing: Rather than retreiving the sum at one shot, you can choose to make withdrawals in smaller amounts. This way, your CPF savings can continue to benefit from the interest rate. Fret not; you still enjoy the option to withdraw your savings in times of need. If you leave it untouched and even decide top-up your RA, you can enjoy higher monthly payouts from age 65.
Belief #2: “My monthly CPF LIFE payouts will be enough to fund my lifestyle after I retire at 65.”
Also known as the CPF Lifelong Income For the Elderly (CPF LIFE) Scheme, this government scheme is designed to give you lifelong monthly payouts from the age of 65.
According to the latest figures, the highest amount of CPF LIFE payout is $2,080 to $2,230 a month* for the Standard plan. Now take that and benchmark it against your predicted retirement expenditure – if you are living comfortably on $3,200 per month now, this payout may fall short and you may have to relook at your retirement expectations. Not forgetting to factor in inflation and unexpected healthcare expenses, as these costs will add on to your retirement income needs.
If your objective is to live the retirement lifestyle that you have always dreamt of, your next step is to ensure that your investment strategy aligns to your golden goal. Knowing when and how to invest your CPF can be helpful to boost your nest egg – I will be happy to share more through a detailed discussion!