Jul 14, 2014

Cory Diary : CPF Minimum Sum 155K

The minimum sum has been increasing for years. Based on my earlier rough estimation is certainly moving faster than the inflation. My logic is that there is an initial growth phase to close the gap as the current minimum sum lags significantly behind the minimum needs for basic retirement. Once this is met or politically so, i would expects the the growth to follow inflation trend.

Singapore is one of the lowest tax countries in the world. This do not happen by chance but by the expectation that retirement is mainly self-funded, and CPF is a commitment to the society that we meet our minimum obligation.

Considering the retirement needs in future dollars, releasing CPF money will not going to help much to our financial wealth being. This is not hard to deduce considering a million dollar without investment will easily be expended in 15 years in earlier article. Even with 2.5%-4% returns, the minimum sum will not be enough to meet my personal retirement needs. If we understand the concept, will people still care about not meeting the minimum sum less the purpose is to withdraw them asap, and this can be worrying.

The logic is simple after i did my own lifestyle count. By the time I retire, my  investable should be at least 10x of the minimum sum of today money. If i am not achieving that yet, is time i find a way to earn more and be Accountable for my own financial well being before is too late.

I start to draw out all my investments. And soon realised that CPF money sits very well as the guaranteed portion of my portfolio that provides stable and min. baseline returns. Withdrawing CPF is certainly not an answer to it. Is our money safe ? Last i check our government prints their own money so this should not be an issue. Is better to be locked away till 65 from anyone or even myself. The monthly withdrawal feature provides an additional layer of protection for my golden years. Once we put further thoughts into it, CPF is actually a safety net insurance scheme at national level.

13th July'14