Your Retirement Readiness Checklist (And How CPF Plays a Part!)

A checklist serves many purposes and the most useful one is to ensure consistency and completeness in carrying out a task. Using checklists can help us avoid mistakes, be more efficient, and reduce unnecessary stress. Checklists can also take daunting big projects and make them seem doable by breaking them into smaller, more manageable steps.

When the ultimate end-goal is “Retirement”, one can be sure that this will be a long and complex checklist that requires effort to maintain and sustain.

Ask yourself these questions and be honest in your answers:

• What is the standard of living you look forward to upon retirement?
• With this standard in mind; what expenses do you expect to see increase or decrease?
• Do you have a decumulation strategy to cash out your investments and other assets?
• Upon retirement, would you rather withdraw a fixed payout regularly or receive a lump sum right at the start?

Your Full Retirement Sum (FRS) is fixed when you turn age 55 and will not change. Hence, the amount you receive from your monthly payouts depends on how much you have already set aside as your retirement sum. The payout eligibility age is currently age 65 for those born in 1954 or later.

If you hope to receive higher monthly payouts, you may choose to top up your Retirement Account (RA) up to the Enhanced Retirement Sum of $271,500.

With this said, you can exercise the option of making lump sum withdrawals from your Ordinary or Special Accounts after setting aside your FRS. For those born in 1958 or after, you can also withdraw up to 20% from your RA savings at age 65.

The intention of regular payouts from your RA is to provide you with a steady stream of retirement income. However with external factors of inflation and soaring healthcare costs, what seems perfectly adequate right now could be sorely insufficient in the future.

In my following articles, I will share more about how to grow your nest egg by investing with your CPF.

Sources:

https://www.cpf.gov.sg/Assets/members/Documents/CPF_Retirement_Planning_Booklet.pdf
https://www.cpf.gov.sg/members/aboutus/about-us-info/cpf-clarifies/policy-faqs/why-am-i-not-allowed-to-withdraw-my-retirement-account-savings-as-a-lump-sum-instead-of-receiving-monthly-payouts-through-the-retirement-sum-scheme-or-cpf-life?category=CPF%20Retirement%20Monthly%20Payouts&folderid=19774&faqid=8619693