To SA or not to SA, that is the question?

I would agree with Wilson's answer and I would give the same answer.

I would prioritize my retirement first, so my children would not be a sandwich generation. Nowadays, cooperations value skillsets over qualifications and I personally feel the more we provide for our children, the less "hungry" they are. It's good to plan for them but we should plan for ourselves first.

Kudos to taking the initiative to future planning!

Simplifying my answer into two parts to help address your dilemma

1) if your OA balance is more than 20k (to earn the extra 1% interest), then focus on transferring the interest earned on OA balance earned for the year, at end of January.

2) learn investing and use some of your CPF OA to do some safe investments. Transfer the dividends generated from the investments to SA.

Given that the contributions and interest from MA will flow to OA (after the MA hits BHS cap, and SA reaches FRS cap), your OA balance will actually grow pretty fast after you hit both caps.

Given the lack of details, I think these two principles, help provide a guiding point which helps to ensure the OA balance is healthy and tries to help you fulfill both goals.

If you are up for longer explanation for the rationale, then here goes:

A) The simple method of only transferring the interest earned will self-adjust based on how much you contribute to cpf and how much you deplete it for home payments. This should keep your OA amounts healthy for emergencies (eg sustaining mortgage payments during retrenchment, touch wood), and sufficient to grow for the education costs within your means.

B) The investing approach advice comes from my real life approach. My current CPF investments are Mapletree Commercial, Parkway Life and VICOM, and the expected dividend yield for 2020 is about 4.7%, which is almost twice of the CPF OA interest rate. I think if you make use of the balances to focus on a sustainable dividend approach, and sensible investing, it will only benefit you in time. Once you hit the FRS balance, you can think of withdrawing these investments at 55 and transferring to your CDP for a small fee, and these dividends become your future pocket money that provides for your retirement on top of the CPF life payout.

C) Personally I would have first wanted to tell you to take advantage of the tax relief on RSTU, but I thought that from you asking specifically on cpf transfer might mean that you are tight on cash in some way. If you aren't, please do consider taking advantage of the RSTU.

D) Sometimes I find focusing on reaching a specific amount can be stressful as you start thinking about how to optimize, whether you lose out by doing this or not. Instead, I would recommend you to start thinking of cycles like

• making use of the MA contributions and interest (to SA / OA) once it exceeds BHS
• only transferring the interest and dividends

Personally I have a lot of cycles (one other is using the dividends from SRS for RSPs). The benefit of thinking in cycles it that they will eventually grow larger, and even be self sustaining when bad things happen that may force you to cut your cashflow to that activity. This gives me a lot of peace as they can be rather resilient, and its only a matter of whether the cycle is going fast or slow, as long as they keep turning, I think I am good.

hope it helps.