I try to be holistic in my approach to wealth building. So, ASSI is not about investing in the stock market per se, it is about personal finance in general. One topic that comes up pretty often is "retirement".
All of us want a comfortable retirement. Who wants to be old and destitute?
Unfortunately, many people don't plan for retirement and I do know a few myself. I also know a few who over-plan for retirement. Actually, I could be one such over-planner and I have been trying to moderate myself.
Hey, if a worrier like AK thinks you are over-planning, then, you are probably over-planning.
Anyway, an important part of retirement planning for Singaporeans is understanding how the CPF works and how we could be maxing out the benefits. These are benefits we could and should enjoy as Singaporeans.
The CPF is one of the very little welfare Singaporeans can get from our non pro welfare country. So, if you are still clamouring for some welfarism, hey, get moving.
I blog about the CPF often and I notice that the subject generates a lot more interest than when I blog about investing. I guess it is something that more people can understand and are able to participate in with less fear.
So, I am inspired to come up with another "e-book" which is really a collection of some popular blog posts on the CPF for ease of reference and sharing.
This is probably something I should have done sooner:
The original mission of the CPF is to help members fund our retirement. However, many have said that the CPF is not enough to retire on. Sharper ones will ask if they have done anything beyond complaining? Yes, it is true that the CPF is not enough to retire on but we can certainly make it a larger amount to retire on.
See: How to upsize $100K to $225K in 20 years?
The government has implemented some changes to the CPF system to help give a boost to retirement funding for CPF members. Count our blessings. Every little bit helps.
See: 2016 changes to the CPF and SRS.
Bearing in mind the original mission of the CPF, remember that if we should use more of our CPF funds to pay for our home, we would have less money in our CPF. It is not magic. It is math. Yes, there is such a thing as over-consuming when it comes to housing.
See: Buy the biggest and most expensive home we can afford.
Hate the idea of having to pay accrued interest for money we took from our CPF accounts for housing? We might want to think about voluntarily refunding money we borrowed from our own CPF accounts to pay for our homes. Why pay interest to ourselves when we can have the government pay us instead? Duh.
See: How to stop the interest we owe ourselves from growing?
All of us are worried about costs. Rising cost of healthcare is probably one at the top of the list. We need to have insurance. This is the only way to get a handle on the issue. However, what about the cost of insurance? Ah, but this is more manageable because we can budget for this. Hey, did I tell you it is possible to get free health insurance in Singapore. Don't believe me?
See: How to get free medical insurance in our old age?
I have shared my CPF OA, SA and MA numbers in a shock and awe tactic but remember Rome was not built in a day. It has been a 20 years journey for me.
See: AK is showing off his CPF numbers.
Of course, all of us have different circumstances in life. However, if we share the same philosophy and goals, we will all move in the same direction. The magnitude of success is not as important. Everyone who has taken affirmative action is a success story. Start and stay at it.
See: Two friends and their CPF savings.
The CPF Minimum Sum or what is called the Full Retirement Sum now is not impossible to reach. The constantly increasing level is not impossible to keep up with. In fact, we might not even have to do anything to keep up with the increases.
See: If I had done this, I would have hit the MS too!
If we want a basic level of certainty in retirement funding, we would probably do well to consider getting an annuity. You know what? The CPF Life which starts paying us monthly for life from age 65 is the best annuity there is.
See: An annuity: Would you rather have it or not?
Lastly, for the investors amongst us, if we believe that we should hold some investment grade bonds in our portfolio for diversification, then, the CPF is the most attractive AAA rated sovereign bond there is and with very attractive coupons to boot. Of course, it could be considered a long term or short term bond, depending on our age. A risk free and volatility free investment? You want?
See: AK is buying a AAA rated bond.
It is not magic. It is just math.
If AK can do it, so can you.
(There are hundreds of blog posts on the CPF here in ASSI. So, it is probably a good idea to treat this "e-book" as just an introduction to the topic. Use the "Search ASSI" function at the top of the blog to read more.)
UPDATE: 14 August 2016
Since I treat my CPF savings as a risk free and volatility free component (i.e. AAA rated sovereign bond) of my investment portfolio, I am unlikely to take part in the proposed Lifetime Retirement Investment Scheme (LRIS). Of course, money in the CPF-OA doubles up as a war chest which could be deployed in the event of a stock market crash for possibly better returns than what the LRIS could deliver.
My CPF-SA outperformed in 2015!