This is to help get some idea on the amount that a person could draw out in lump sum
Keep in CPF account less Retirement Amount (RA) compares to drawing out and just leaving in the bank with lower interest rate.
No other alternative for better ROI will be mention in this article.
In this post, we will ignore the Medisave Account (MA) account in the total computation or overflow in interest.
The total amount a person can withdraw at age 55 does not include MA
but Ordinary Account (OA) + Special Account (SA) less Retirement Account (RA).
Taking myself as an example,
Account Balances (as at 10 Aug 2018)
Ordinary Account (OA) $62,588.07
Special Account (SA) $180,739.00
and knowing that
CPF interest rate is
1. calculated monthly
2. credited Anually
3. compounded Anually
4. interest earned eat into the CPF Annual Limit (AL) for that year.
(AL include the employment contribution you get monthly)
We can use a compounding calculator to project how much we will have by age 55.
We will ignore the Future Full Retirement Sum for now for simplicity since everyone might reach age 55 in different years.
For my case,
1. If I never increase in income,
2. Interest rate remain the same,
3. Annual Limit (AL) remain the same which is $37,740/-,
4. Ignoring MA interest overflow, if any.
by age 55 my total OA+SA (without hitting AL) = $714 382
by age 55 my total OA+SA (with AL utilised) = $1 249 242
One thing to note is, AL usually means you contribute to yourself without tax rebate incentives.
How do I calculate on my own?
We can start by
a. logging into your own CPF account for the current balance.
b. Add on the remaining to end of December using the monthly contribution from your Statement Record.
Now comes the decision to Simplify or Conditioning the Result.
To Simplify the Result,
we can calculate by per annum instead of per month contribution in each account.
eg $100 contribution x12month= $1200 for OA,
i) Use a compounding calculator if you do not have an excel formula sheet.
ii) Compound to "n" years from your current age to age 55
iii) $20k from OA at 3.5% with 0 addition per annum in a compounding table or calculator
iv) $40k from SA at 5% with 0 addition per annum in another compounding table or calculator
v) balance OA + "annual" addition from pt (b) at 2.5% in another compounding table or calculator
vi) balance SA + "annual" addition from pt (b) at 4% in another compounding table or calculator
You will need 4 tables or Calculator to Adds Up the Final Value.
This is the link for the compounding calculator so you can do it on the Smart Phone anytime.
The projection with AL will require a break down of the AL amount $37,740/-, therefore you need the allocation calculator.
After the above, just focus on changing the figures for point (v) and point (vi).
The calculation will not be accurate because the future is unpredictable but is good to get an idea of the end sum for pre - retirement planning.
The money in your CPF is safe from creditor and/or bankruptcy situation.
Hope this article will motivate those who have plans to use CPF Funds for Retirement if Possible.
Another Good Deed Done!