facebooki have been trying to wrap my head around getting that 1 million in CPF. Its easy to say it can be done. But what if... You belong to low income? Disposable income only $200.00? - Seedly

Loh Tat Tian

Founder at PolicyWoke (We Buy Insurance Policies)

18 Apr 2019

SeedlyAMA

i have been trying to wrap my head around getting that 1 million in CPF. Its easy to say it can be done. But what if... You belong to low income? Disposable income only $200.00?

Coz simple calculation on disposable income could show that its near to impossible to get 1 million without having a high disposable income... To hit 1 million at age 45, rate of increase at 4% p.a on lumpsum,
by 25 you would need $500,000.00 for it to double to a million.
If there is a shortfall, (meaning 25 you only manage to save $30,000), you have to chase the next amount which is by 35, to have about roughly $720,000.00.

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Loo Cheng Chuan

03 Nov 2018

Founder at 1M65 Movement

First of all, let me give a high level of how 1M65 works. For a couple, from late 20s or early 30s, save as much as you could into your CPF special account (SA). For my Wife and I, we worked Super hard, and were Super thrifty in our younger days. We dumped all our Ordinary Accounts (OA) savings and even our year end cash bonus into our SA and let the power of compounding of 4-5% snowball.
The maths is that if a couple could save S$130k each into their SA Account, it would compound to over S$1M when they retire at 65years old. This does not include the additional SA contribution from your work till retirement, it is possible to hit S$1M much earlier, like in our case, at 45 years old.

The strategy has less to do with how rich you are (CPF SA has limits so the rich can’t really take advantage of it), rather it is more achievable if you start early, exercise thrift and be gusty in doing the transfers.

Specifically to answer your question, yes good income does help, as you would have more in your CPF. It is usually less a question of disposable income but more your CPF contribution And to do it as young as you could.

If you are in your 40s, yes it would be much tougher, but then the benchmark might not be 65, but maybe 70 or older. Or work Harder and save more to have more income to put into your SA. 1M65 is doable but it is not a walk in the park.

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