facebookWould it be wise to top up my mum's CPF RA to allow her to receive a decent annuity from CPF Life until she passes on? - Seedly

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Anonymous

08 Jun 2021

Saving Hacks

Would it be wise to top up my mum's CPF RA to allow her to receive a decent annuity from CPF Life until she passes on?

My Mum, a housewife, is 62 years old and has $10000 in her CPF RA currently. Would it be wise to top up her CPF RA to allow her to receive a decent annuity from CPF Life until she passes on? How much should I top up to achieve this "decent" annuity? Are there other comparable or better products in the market we could consider?

Discussion (3)

What are your thoughts?

Hariz Arthur Maloy

Hariz Arthur Maloy

17 May 2020

Level 15·Independent Financial Advisor at Promiseland Independent

Hi Anon, to be placed on CPF Life, your mom would require a minimum of 60k in RA before 80, if not she'll be on the older RSS scheme.

So a 50k top up is an option to immediately earn 4% and then get about 4300/yr in CPF Life payouts from 65 on standard plan, or if she has a spouse, can consider doing a RA to RA transfer.

View 1 replies

Loh Tat Tian

Loh Tat Tian

19 May 2020

Level 11·Founder at PolicyWoke (We Buy Insurance Policies)

It depends on your family cashflow.

For general idea, CPF earns from 4% up to 6% interest (6% on the first 30k combined and 5% on the next 30k combined). So the best is top max out the extra interest first.

If your cashflow is really tight, suggest to top up $3,000 per year (since your mum will be able to take out $250 a month = $3,000) so that there is some earning of interest in there. Risk free 6% interest on $1,375.00 is interesting imho (about $82.50) of interest

Whether to choose CPF Life or not, i think its not for anyone to recommend until we know much more about the family finances and how to structure.

If we have to put a mathematical calculations, RSS will be better until age 90, where CPF LIFE will be better after age 90.

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