For a little background, this is a series of blog posts I have been writing since 2015 :
- CPF Money That Keeps Growing And Growing (2015)
- CPF Money That Keeps Growing (2017)
- CPF Money That Keeps Growing (2018)
- CPF Money That Keeps Growing (2019)
To get a few things out of the way –
First, this blog post isn’t a pissing contest. Like what I wrote for 2018, if you want see big numbers, AK/ASSI’s blog is this way. Perhaps you can beat him.
Second, I have the advantage of a (short) history to reflect upon. Brian (Forever Financial Freedom) has an interesting take on the phenomenon we’re seeing of people sharing CPF numbers. The gist (which I agree with) was that it is meaningless without context, such as age and housing situation. But then again, I think it is fine if people simply want to track progress. Post away, I say! Sometimes, people just enjoy seeing what others are doing.
In previous years, I supposed it was a scattered approach whereby I had dropped bit and pieces of information throughout my blog posts across the years. Maybe it’ll be fun to do a structured approach this year.
1. Back In 2007 ..
In my earlier post (The Lost Trio), I posted a chart of my monthly income growth over the years, and cautioned that this doesn’t paint the full picture because it doesn’t show the full picture. If the chart doesn’t make sense, go read the post! Having said that, it might be helpful for you to make some correlations along the way.
Let’s start in 2007, you know, for completeness sake. It was smack in the middle of the financial crisis …
I had first started writing at Blogspot around Christmas 2012 before I moved over to my self-hosted blog. Luckily, I had managed to keep and retain my data over the years. Oh yes, in case you didn’t notice, I used to have a penchant for wealth-destructive actions.
2. Basic Healthcare Sum
The easy bit. CPF-MA didn’t have much ground to cover in 2019 and very quickly reached the updated Basic Healthcare Sum amount of $57,200 for 2019.
FYI – BHS for 2020 is $60,000.
3. Full Retirement Sum
CPF-OA and CPF-SA had to work much harder this year. They have a lot of ground to cover and .. tadah!
The charts start from 2008. Why? Because I graduated in 2007, and there you have it. The full picture 🙂
2019 was truly a milestone year. It is crazy, you know? When I wrote my first CPF Update back in April 2015, I was using very modest projections (it was a very memorable period of my life) and estimated that it would take me fifteen (!) years (2030) to reach Full Retirement Sum. Guess I blasted my own expectations out of the water huh, and did it in four years instead 😀
It took me right to the end, on the last day of 2019, when CPF interest is credited before I can finally say – yep, I hit FRS with $208 to spare. Achieved a net increase of $36,458, without a cent of CPF top-up.
OK, this is when you reference the income growth chart above and make your own assumptions.
That dip you see in 2011? It was because I paid for my BTO apartment, wiped out my CPF-OA and took out a max. duration HDB loan deliberately (because it was the better option). Other than that, just a boring/steady uptrend as far as I can tell.
4. CPF Interest Earned
Interest — $7,501 — definitely played a huge part in helping me to reach my goals.
If you think about it, the increase in FRS (from $176,000 to S$181,000) and BHS (from $57,200 to $60,000) for 2020 is a grand total of $7,800. This is very close to the amount of interest I earned in 2019 and exactly what I’ve previously talked about – achieving self-fulfilling BHS and FRS.
Just by having the money in CPF, the interest earned alone will help to keep up with the pace of annual increase and we no longer have to keep chasing like hamsters in our wheels. It is time to take a breather.
5. The Most Important Thing
Time and again, I found myself going back to what Christopher Tan from Providend has said about retirement and its simplest form – it is so so so important that I’m writing it here (see transcript below) once more.
I know many eyeballs typically land on CPF posts so I’d take the chance to share this snippet, and it is at the very core of how I can actually hit CPF FRS after 12 years of work at the age of 37.
Retirement plans seems like a big and complex subject.
If I can reduce it to the irreducible minimum, it means this – that when you retire, you must have three things.
a) You must have a fully paid house.
b) You must have a good medical expense insurance.
c) And of course, you must have a lifelong stream of income.
At its most basic level, you must have these three things. And the good news is, our CPF takes care of all these three things, right?
Because your CPF gives you the Medisave account that allows you and help you to buy your medical expense insurance.
Your CPF, when you are retired, will give you that annuity for life – stream of income.
Your CPF, if you don’t have enough cash, helps you buy the house.
And so, if you are a young working adult and you have got conflicting needs and priorities – need to buy a property, need to get married etc and if you really want to throw away retirement planning out the window and your motivation is not there, then I only ask you to do one thing.
Keep your loans for the house low. Just do that one thing. Your retirement planning is taken care of.
Yeah? Because once you keep your housing loan low, don’t overextend yourself – don’t buy .. Don’t get indebted with a one million dollar loan just when you start life – I see that condo and want to buy that condo, you know .. and all that.
Just start small, just by buying, say for example, a 4-room HDB BTO, you take a low loan, your CPF is protected and on its own, the system on its own takes care of your retirement and by the time you’re 35 or 40 years old and you say, I really need to sit down and look at my retirement, you’ll be so glad that you didn’t take up such a big loan because your CPF is actually quite healthy.
A large part of your retirement is actually done. So, just do this one thing for retirement planning – keep your housing loan low, and your retirement planning has started.
I mean, of course everything I did and the decisions I made were already in the past, but they happened to be exactly what Christopher has said in the video, and I am that one guy out there in the world who is a living and breathing example.
In case you’re wondering, I’m paying $340 per month from my CPF-OA for my HDB loan (zero cash). Regardless of high income, low income or puny income because chasing dreams (haha) – it doesn’t matter as long as we keep ourselves working and contributing over time, our CPF will be in the pink of health.
Did I know everything from day one? No, I didn’t. What I knew was I had to be prudent (affordable HDB), keep my options open (tried for second BTO but failed) and stay nimble ($100k CPF-OA) enough to exploit opportunities (CPF-IS, Oct 2018 policy change [see below], etc).
6. It Isn’t Always About The Numbers
As the blog post title implied, the achievement lasted a grand total of 8 days haha! And yes, this is one of the happier moments and a very meaningful thing I have done 😀
I had mentioned before what I was going to do. I went ahead and did it, on 8th Jan 2020.
That is a Retirement Sum Top-up (RST) $40,000 transaction in the reverse direction : from my CPF-OA account into my mum’s CPF-RA account. The transaction cleared quickly and took only two working days.
We then logged into her CPF account and applied for CPF LIFE. Make good use of technology – there was no need to go to the CPF office.
One year ago, I started looking into how I can help my parents with retirement. In my situation, I could do what I did, because I had sufficient funds in my CPF-OA and had fulfilled all the criteria (effective October 2018).
And so, my mum can now withdraw money from CPF-LIFE (which is technically my CPF-OA money) as cash every month.
a) If you are a proponent of CPF-OA to CPF-SA transfer, I’m afraid you will have less flexibility to pursue this option.
b) If you are servicing a “golden-handcuff” housing loan, I’m afraid you will have less flexibility to pursue this option.
When we make a decision in life and choose to do something, there is always an opportunity cost involved. Then again, it may have zero impact because it is not applicable to your situation.
There you have it. My CPF update. Which is now FRS minus $40,000 🙂 Happy me, happy mum.
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