How much should I top up to reach CPF Enhanced Retirement Sum? - Seedly

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Anonymous

# How much should I top up to reach CPF Enhanced Retirement Sum?

I am 56 and currently have \$175,000 in my RA. If I wish to make use of compound interest over the next 9 years to reach the Enhanced Retirement Sum, how much should I top up into RA now?

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Hi anon,

This year's ERS is \$264K, so to have that amount in 9 years, you'll need to top up approximately \$10.5K to your RA this year and let compounding do the rest.

Do note that the ERS goes up next year to \$271.5K and if you want that amount in 9 years, then you'll have to top up another \$15K.

Herein lies the problem, we do not know the ERS amount in 9 years from now as figures have only been announced till 2020. You are allowed to top up to the year's prevailing ERS each year as the quantum for the top-up does not include the interest earned. If your goal is actually to maintain yourself at ERS or even more, consider doing top-ups yearly where possible to allow for interest to boost your balances further.

1 comment

👍 8
Xiansheng Yang

22 Oct 2019

Thank you
Jacqueline Yan
Level 5. Genius
Updated on 22 Oct 2019

Hi, anon! Based on the 3% yearly increment on the retirement sums the past few years, the projected Enhanced Retirement Sum, when you reach age 65 in 2028, will be \$343,928. Since I'm not sure of your current cash flow, there are a few scenarios for your contributions:

1) Lump-sum of \$70k and let compound interest handle the rest!

2) \$20k per year over the next 4 years

3) \$15k per year over the next 5 years

The above was a basic excel sheet that I created previously to calculate how much we'll need to earn to hit FRS, but it does not include the extra 1% interest on the first 60k, and the extra 1% interest for members above age 55. Which means the amount you'll need is a little lesser!

1 comment

👍 2
Xiansheng Yang

22 Oct 2019

Thank you for the effort on the Excel sheet to project the ERS for me, appreciated