CPF Regrossed Balances benchmark & CPF Balance Projection (Achieved 1M41 & Target 4M65)

I just realized there is a CPF Annual Report that we can benchmark with.

You may click the shortcut link CPFB | CPF Annual Report .

Hence, I decided to benchmark where we stand among the national data.

Below is the distribution of all CPF members by Regrossed Balances and age group as at 31 December 2019.

CPF Annual Report 2020 will be released very soon.

With the figures tabulated, you can benchmark where you stand today. It is quite interesting.

** CPF Regrossed Balances include amounts withdrawn under Investment, Education, Residential Properties, Non-Residential Properties and Public Housing Schemes as at end of period.

We have achieved 1M41 & targeted 4M65. 

(4M65 includes the RA balance starts with FRS sum of S$282,000 when we are at age 55.)

You can reach 1M even faster if you are not using CPF OA for housing loan.

There is also a 1M65 movement by Mr. Loo to advocate reaching a million dollar as a couple by 65 years old. Of course, he refers to real CPF balance, not CPF Regrossed Balances. 

If you have invested a big bulk of CPF OA in S&P 500 through Endowus, those monies are not counted as real CPF balance (because that will be CPF regrossed balance) but you can get much more returns at the end of the day once you sold the S&P 500 fund if the fund is doing well. Vice versa.

Next is to project the CPF balances (with good estimation) at the age of 55. 

This is an important stage as we shall do CPF SA shielding few days before age 55.

Everyone shall simulate and project his/her own CPF balances with few assumptions mentioned below:

- Considering only total 13 months contribution (that's to include the usual 13th month)

- If you have 1 month bonus or more, the figures will be more!

- The interest simulation only take 2.5% in OA, 4% in SA, the figures shall be more because the first S$60,000 in (OA+SA) will enjoy additional 1% interest.

Last but not least, CPF is just one, just "ONE" pillar of retirement income, just one BASIC only.

For a nice and sound retirement, you still have :

(1) HDB rental income

(2) Private properties (be it Singapore, Malaysia, Australia, UK, etc.).

(3) SRS 

(4) Stocks, US/HK/MY/SG stocks, etc.

(5) Endowus (your S&P500 index , etc. All kind of RoboAdvisor)

(6) Fix deposits, T-bills, bonds, saving bonds.

(7) Endowment, ILP funds, your beloved Cathie Woods ARK fund, ETF , etc. 

(8) You can even surrender your Whole Life Insurance at later age of 65, 70 if you wish to have surrender payout instead of leaving the legacy (death benefits) to your children.

(9) Cash in UOB One, OCBC 360 account, etc.

(10) Crypto like bitcoin, dogecoin !

Wish everyone has a fruitful retirement life!

Voluntary Contribution (VC) to CPF MediSave Account (revision 02)

Revision 02 (last paragraph): updated on April 19, 2021

Everyone talks about S$37,740 (Annual Limit).

I finally took the action to max out the voluntary contribution (VC) to MediSave account (MA), with the primary reason as tax relief. It is good to top up by using PayNow because it is done immediately!

I should have done it on January 2, 2021 to enjoy even greater amount of tax relief. I will remember doing that every year in January.

MSL : MediShield
PMI  : Private Medical Insurance
CSL : Careshield Life

All right , this post is for those want to maximize the tax relief if they : 
(1) have not reached the S$80,000 tax relief
(2) have reached FRS of S$186,000 (for year 2021) in CPF SA
(3) have top up S$15,300 in SRS
(3) have not reached the CPF AL of S$37,740

Why should you do MA top up in January ?

Real example:

(a) Year 2020 :
- BHS in year 2019 was S$57,200 & year 2020 was S$60,000 .

To maximize tax relief:
(1) I should top up MA on Jan 2 , 2020 for S$2,800.
(2) On March 3 , 2020 , I should top up MA for S$610 (after MSL & PMI deduction).
(3) On Dec 16, 2020 , I should top up MA for S$295 (after CSL deduction).

 Total additional tax relief in year 2020 could be : S$2,800 + S$610 + S$295 = S$3,705.

 

(b) Year 2021:
- BHS 2020 is S$63,000.

To maximize tax relief :
(1) I should top up on Jan 2, 2021 for S$3,000.
(2) Top up S$1,125 on March 16, 2021 (after MSL & PMI deduction).
(3) Top up S$295 on Dec 16, 2021 (after CSL deduction).

Total additional tax relief for year 2021 could be : S$3,000 + S$1,125+ S$295 = S$4,420.

In summary, there are 3 rounds of opportunities to top up in CPF MA, namely:

(1) First week of January after the BHS limit is increased.
(2) After your H&S insurance deduction (for me the deduction is in March annually).
(3) After your CareShield life deduction in December.

You enjoy greater tax savings and at the same time you also prepare more for the future retirement income with compound 4% interest in CPF MA account. Kill two birds with one stone!

Check your CPF Annual Limit balance with the method below.
(1) Log in to your CPF account
(2) Go to my CPF online services
(3) Click on My Requests
(4) Choose Building Up My/ My Recipient's CPF savings
(5) Click on Using Cash > Contribute to my CPF Accounts via PayNow QR or eNETS
(6) Continue the page until you see and click on Check Allowable Contribution.

Revision 02: updated on April 19, 2021

============================

CPF Annual Limit : S$37,740.

(S$102,000 x 37% = S$37,740).

However, the total CPF Relief (maximum) allowed is S$20,400 only (per employment).

S$102,000 x 20% = S$20,400.

I just realized for some years, I have hit the CPF relief of S$20,400, hitting the CPF annual limit of S$37,740 too. Hence, doing the above mentioned voluntary contribution (VC) to MA is possible but you won't enjoy the tax relief. The VC amount that beyond S$37,740 cap will be returned back to you by the end of the year without interest. Just treat it as a good problem.

After all, one shall check in December instead to see if you have hit the CPF annual limit.

From the example above, you will know for those monthly salaries of S$6,000 or more, the Ordinary Wage (OW) will hit the OW ceiling of S$72,000.

(S$6,000 x 12 months = S$72,000).

That left with only S$30,000 for the Additional Wage (AW) ceiling. 

( S$102,000 - S$72,000 = S$30,000 ).

Do take note, the additional wage (AW) includes your:

(1) AWS (13th month) 

(2) Bonuses

(3) En-cash Annual Leave

(4) Etc.

It is possible to burst the CPF Relief (maximum) of S$20,400 if you change the job within a year.