Single and Not Yet 35? Here Are 5 Ways To Use Your CPF Savings

This was originally posted on Planner Bee.

Adulting is tricky. It can feel even more challenging when you’re single and below 35 years old, and yearning to own your own home in Singapore. We feel you, but here’s a silver lining: you have a longer time horizon to grow your CPF savings.

At the same time, contrary to the common misconceptions about how CPF is “untouchable”, there are actually a few different ways you can utilise your CPF savings for your benefit at various stages of life.

1. Invest for Future Growth

Singles below 35 can take advantage of the CPF Investment Scheme (CPFIS) to grow their CPF savings beyond the ordinary interest rates. Rather than receiving a modest 2.5% annual interest on your savings, consider leveraging the CPFIS for potentially higher returns.

CPFIS allows you to invest your CPF Ordinary Account (OA) and Special Account (SA) funds in a range of financial instruments such as stocks, bonds, and unit trusts.

Once you’ve allocated S$20,000 in your OA and S$40,000 in your SA, the remainder can be utilised for investments. Specifically, you can invest up to 35% of your investable OA savings in funds and stocks, and an additional 10% in gold and related products. While there’s no upper limit on the investment amount from your investable SA savings, it’s essential to maintain a minimum balance of S$40,000.

2. Further Your Studies with CPF Education Scheme

Thinking of upskilling in today’s competitive landscape? Did you know that the CPF offers an Education Loan Scheme?

To leverage the CPF Education Scheme, eligible individuals in Singapore can start by selecting an approved course and confirming its eligibility under CPF guidelines. Obtain the CPF Education Scheme application form, accurately fill in the required details, and submit it along with supporting documents, including proof of enrollment and course information.

Upon approval, CPF funds from your OA will be disbursed to cover tuition fees and other eligible expenses. It’s crucial to monitor your CPF account regularly and be aware of any repayment obligations, if applicable, after completing the course.

Staying informed about CPF Education Scheme policies ensures a smooth process, contributing to your personal and professional development.

3. Offset Taxes

Reduce your personal income tax simply by contributing to your CPF SA or Retirement Account (RA). These voluntary contributions, known as Retirement Sum Topping-Up (RSTU), qualify for tax relief. The maximum amount eligible for tax relief is subject to your annual contribution limits. By strategically making CPF top-ups, you can reduce your taxable income, leading to lower tax liabilities.

A personal top-up allows you to enjoy tax relief of up to S$8,000, and an extra S$8,000 in tax relief is applicable when you opt for a cash top-up for your loved ones. This approach not only aids in tax planning but also contributes to building a robust retirement fund.

4. Play Your Part in Showing Filial Piety

Consider making voluntary contributions to your parents’ CPF accounts as a meaningful gesture towards securing their retirement years. Proactively contributing to their CPF is a show of gratitude for their lifelong support, as well as a way of enhancing their financial well-being in their retirement.

To transfer funds to your parents or even grandparents, begin by allocating the Full Retirement Sum (FRS) for your own monthly payouts. You can use this calculator to help you work out your retirement sum.

5. Pay for Insurance Premiums

CPF funds can also be utilised to pay for some insurance premiums to protect your family and yourself.

An example of such a policy is the Dependants’ Protection Scheme (DPS), a term life insurance designed to offer protection in the face of untimely death, terminal illness, or total permanent disability for CPF members and their families. With a coverage of S$70,000 until the age of 65, you can use funds from either your OA or SA to settle the DPS premiums, which helps provide a financial safety net during challenging circumstances.

In addition to your OA savings, another essential CPF account that plays a crucial role in both your working and retirement years is MediSave. As we go through life’s various stages, ensuring access to necessary healthcare treatments becomes increasingly important.

MediSave Account (MA) savings are versatile, allowing payment for eligible outpatient treatments, specific hospital procedures, and various medical-related expenses like childbirth. Additionally, Singaporeans aged 30 and above with severe disabilities can withdraw up to S$200 monthly through MediSave Care. Moreover, utilising MA savings is an option for covering premiums for insurance plans such as MediShield Life, CareShield Life, or private Integrated Shield Plans, offering comprehensive healthcare coverage.

Navigating Your Financial Future is a Continuous Voyage

While singles may be disappointed that the age limit of 35 for housing eligibility in Singapore doesn’t seem to be changing anytime soon, your CPF savings remain a versatile financial tool that can be strategically used to achieve various goals.

Whether it’s for future homeownership, investments, education, health, or building an emergency fund, understanding how to leverage CPF wisely is a good skill to have. By making informed decisions and exploring the available CPF schemes, you can pave your way for a financially secure and prosperous future.

Read more: CPF Hacks To Become a Millennial Half-Millionaire