Can You Live On Just CPF Retirement Sum Scheme In Singapore?

Singapore's Minimum Sum Scheme (MSS) is now renamed to Retirement Sum Scheme (RSS). As of 2017, the Full Retirement Sum (FRS) to be set aside in your Retirement Account (Comprising of the monies in your OA, SA & some property pledging) when you turn 55 is $166,000. This amount is projected to increase by around 3% to $181,000 by 2020. No updates on the amount after that year.

So what happens after setting aside your money for the Retirement Account (RA) at age 55? Well, for some lucky few, you will be getting a lump sum in excess of the RSS ($166,000 as at 2017), whilst for others, all you can get is S$5000, because your retirement sum (RS) amount has not been reached. Something to note is that you can only pledge* half your house for the full retirement sum (eg. if the FRS is $166,000, you can only pledge $83,000); the remainder must come from your SA and OA (from what we understand, they will "wipe out" the SA first to form your RA, before using your OA). As to how the pledging of property works, you can refer to this author's write up.

The money in your RA will then be paid out to you in monthly instalments through CPF Life (please see CPF website for details on matters concerning CPF Life), when you reach your retirement age of 65. (see the table below). For the records, if one does not fulfill the RS at age 55, it just means that the monthly payouts on reaching 65** will be lesser. We're no experts on CPF matters, but you can actually search on the internet or the CPF site to find useful tools like this payout projector when you reach the retirement age of 65. The table below shows you the approximate payouts :

^*Payout figures are estimates, based on the CPF LIFE Standard Plan and computed as of 2017

CPF Life Standard provides a higher monthly payout than LIFE Basic Plan, but leaves a lower bequest for your beneficiaries.
CPF Life Basic provides a lower monthly payout than LIFE Standard Plan, but leaves a higher bequest for your beneficiaries.

So now that you know approximately how much you are going to get from your CPF monies on retirement, do you think it is enough to live out your retirement on that monthly amount and have you made plans to increase this amount according to your current lifestyle?

Even if you claim to be cutting down on your expenses upon retirement; with inflation factored in, is your CPF Retirement Sum sufficient for you? Can you continue to live on the Minimum Sum Scheme or Retirement Sum Scheme?

Another alternative is by doing small top ups through retirement plans from Tokio Marine to complement your CPF Life payouts and be financially ready when you enter into the Silver Generation! Remember the earlier you start, the less your monthly commitment for your policy and the more your payouts.

Contact us if you want to find out more about Tokio Marine Life Singapore's Retirement policies!

*Pledging of property does not mean the value of your home, but the amount which you have already PAID for your home and your promise to return this loan from CPF plus interest upon selling of your property back into the RA.

**As at time of this writing, retirement age or the age of monthly payout of CPF Life instalments is still at age 65. (going up to age 67 very soon)

Legend:
OA : Ordinary Account
SA : Special Account
RA : Retirement Account
RS : Retirement Sum
RSS : Retirement Sum Scheme
MSS : Minimum Sum Scheme

FRS : Full Retirement Sum
BRS : Basic Retirement Sum