facebookI have met my FRS at 50 years old. 3.5 years from today will reach 55. Should I draw down to BRS or remain in the SA to meet ERS? Looking at current CPF regulations and changes in future. - Seedly

Advertisement

Anonymous

28 May 2024

βˆ™

Retirement

I have met my FRS at 50 years old. 3.5 years from today will reach 55. Should I draw down to BRS or remain in the SA to meet ERS? Looking at current CPF regulations and changes in future.

Discussion (12)

What are your thoughts?

Learn how to style your text

Tan Choong Hwee

15 Jul 2024

Solutions Specialist at Providend

Congrats on meeting FRS at 50, and just the interest alone would bring you to meet your cohort FRS at 55.

​

You can't withdraw cash from SA right now, but you have the opportunity to withdraw non-top-up money in RA by property pledge when RA is formed with FRS at 55. Another opportunity is to withdraw 20% of non-top-up money in RA at 65.

Diversification is key. Every individual situation is different hence, it's best to engage a certified financial adviser when comes to crucial subject matters such as retirement planning.

Albert Tan

02 Jul 2024

Financial Literacy & Solutions at MoneyOwl

Remember, there's another window to withdraw up to 20% of RA from 65. https://www.cpf.gov.sg/service/article/how-is-t...

​

You're likely to be still working and earning an income at 55. I would only withdraw to BRS if I have no other sources of funds.

​

Assuming you have about $200k in SA now, 13 more years of 4% interest compounded is another $130k+ (assuming no further CPF contributions, and disregarding the 5% extra interest on first $40k of SA balance). Put in another perspective, if you are confident of accumulating more than this amount outside of CPF with your other investments, or if you're faced with the potential of a shortened lifespan, then perhaps the withdrawal would make sense.

​

Your money your choice.

Current CPF Retirement Sum:

  • The FRS is the minimum amount you need to have in your CPF accounts to receive the maximum monthly payouts from the CPF Life scheme.
  • The BRS is a lower amount that still allows you to receive payouts, but at a reduced rate.
  • The ERS is a higher amount that provides higher monthly payouts from CPF Life.
    ​

Whether you should draw down to BRS or remain in SA to hit ERS depends on a few factors:

  • Your risk tolerance and preferences (e.g., higher payouts vs. lower payouts): If you draw out the money, you will gain the flexibility of managing the money yourself. This means you can put the money into (a) a high interest savings account, without any guarantee the interest rates will remain high forever, unlike with CPF. (b) invest in funds or properties, which comes with its other risks. (c) less risky options like SSB, which might not be more lucrative than CPF interest rates
  • Any other sources of retirement income you may have: If CPF is you only source of retirement income, it will be better to keep the money in SA to benefit from the higher projected monthly payouts you would receive from CPF Life, based on hitting ERS compared to FRS or BRS

Use the money wisely, whatever the amount that you decide to withdraw...

Write your thoughts

Advertisement