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Options with CPF Life and SRS in retirement.

Thursday, August 10, 2017

Reader:
Just wondering if you have given any thoughts on when you will start your CPF LIFE payout? Do you mind blogging about it?

I have been building up my SRS savings. By the time I hit the Official Retirement age of 62 (for now), if I start withdrawing my SRS at 62 to 72, the annual sum will be equivalent to CPF LIFE.




Now the question is, should I start my CPF LIFE payout at 65 or delay till 70 to gain more interest and thus a slightly higher monthly payout?

According to the picture you posted on 17th July 2017, at FRS: age 65 = $1,380 mthly. At age 70 = $1,840.

What will you do? A bird in hand is better than a slightly bigger bird in the bush?



AK:
With CPF Life, it depends on whether I need the money. At 65, if I need the money, then, I will start drawing from the annuity. 

If I don't need the money, I will leave it to grow, earning a risk free and, hopefully, meaningful interest rate by then.



















With SRS money, once I start the withdrawal process, I would have to empty the account within 10 years unless I use the money to buy an annuity. I have some investments in my SRS account and I would probably have to liquidate these. 

So, I would probably consider withdrawing money from my SRS account in a bull market sometime after I turn 62.

So, depending on the situation when the time comes, I could tap either the SRS or CPF Life first or not at all.
---------




Liu Jiayi says:
From Jul 2015, SRS members will be able to apply to their SRS operators to withdraw an SRS investment by transferring the investment out of their SRS accounts (e.g. into their personal Central Depository (CDP) account), without having to liquidate their SRS investments.

(Please see comments section below for the full comment.)

Related posts:
1. CPF Life Payout Estimator.
2. CPF Mobile Service Centre.

3. Lifelong income with SRS.

10 comments:

AK71 said...

Liu Jiayi says:

From MOF website:

From Jul 2015, SRS members will be able to apply to their SRS operators to withdraw an SRS investment by transferring the investment out of their SRS accounts (e.g. into their personal Central Depository (CDP) account), without having to liquidate their SRS investments.

This is only applicable for the following types of withdrawals, which qualify for the 50% tax concession:

a. withdrawal on or after the statutory retirement age prevailing at the time of an SRS member’s first contribution (prescribed retirement age);

b. withdrawal on medical grounds;

c. withdrawal in full by a foreigner, subject to conditions; and

d. actual withdrawal made by an SRS member or his legal personal representative (if he is deceased) from his SRS account, after the SRS investment that is to be withdrawn had earlier been deemed withdrawn upon death or after the expiry of the 10-year withdrawal period.

Laurence said...

My view about money has always been that money is worthless till we spend it by exchanging it for something else that we want. But to be able to spend money, we need to be still alive and kicking. We would have failed ourselves if we live just to witness our wealth grow by the day till one day we are gone and can no longer spend any of it.

It's best to achieve a balance between having enough for our old age while savouring the wonderful things and experiences that the world offers while we live.

I've witnessed many people around me who are too engrossed with growing/preserving their wealth to the point of sacrificing the meaning of living. They penny-pinch till the day they die and other people happily spend the legacy they leave behind.

AK71 said...

Hi Laurence,

It all depends on what makes us happy. Some people could be in love with money and they are just happy to see their wealth grow everyday and not spend it. They could be quite happy to leave all their wealth to others the day they die. ;)

MSAPersonalFinance said...

Hi AK71,

After setting aside BRS, can I withdraw the interest earned from SA yearly as my pocket money?

AK71 said...

Hi MSA,

At 55, if you decide to pledge your home and put aside only the BRS in your CPF-RA (note that the money comes from your CPF-SA as transfer from OA to RA will only be made if the SA has insufficient funds), you can withdraw whatever is left in your CPF-OA and CPF-SA, not only the interest. ;)

MSAPersonalFinance said...

Hi AK71,

If I am under 55 and my "SA" + "OA transferred to SA" hits FRS, can I still top up $7K to my SA annually to get tax rebate?

At the same time, if my MA hits BHS, can I still top up $7K to my MA annually to get tax rebate?

Thanks in advance.

AK71 said...

Hi MSA,

Once your CPF-SA hits the prevailing FRS at any age, you are not allowed to top up your SA nor do OA to SA transfers.

Once your CPF-MA hits the ceiling (BHS), no voluntary contribution to your MA is allowed but you might be interested in this blog:
Online contirbution to CPF-MA and $88 ang bao.

foolish chameleon said...

is 70 the max age to leave the money there?
can continue to leave it there, and then bequeath everything ?

AK71 said...

Hi fc,

We can choose our CPF Life payout start age to be any age between 65 to 70 years old.

If we did not make a choice, the payout will start automatically under the CPF Life Standard plan at age 70.

AK71 said...

zaxfam said...
When I was at 55 my RA account was 124k (FRS). I will be 65 in 3yrs time.
I have the option to opt in or out of CPF life.
Which is the better option? Anyone can help. Thank You

AK said...
If you believe in having an annuity that provides a monthly income for life, then, go with CPF Life. If you do not believe in this, then, avoid. Quite simple. ;)

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