So my Dad-in law finally reaches the age to 55 this year. And he doesn’t seem too pleased with the amount that he got from the CPF board. 10% is not a lot of useful cash, not even for the fact that his CPF savings is a couple of grands short of the present Minimum Sum ($131,000).
My real Dad though is lucky to be born earlier. He took his 50% and ran away with it years ago. Gone were the days when reaching age 55 means you can withdraw 50% of your CPF savings. It has been gradually phased out since January 2009 (if the image doesn’t appear, click the square thingy):
For some reasons, the authority concludes that by doing so, it would help sustain ourselves longer. And with the initiative of CPF Life, one will never run out of funds for as long as he live ($570 to $700 per month - enuff or not?).
Well if you ask me, it’s like the CPF board telling us this: “We are going to make buying annuity scheme compulsory, and we got rid of the 50% withdrawal rule so that people would channel the funds back into our CPF Life annuity scheme, instead of those already available in most insurance companies”
What does that means to the rest of us who cannot meet the Minimum Sum?
- No more cash “windfall” happening at age 55
- You can forget about sponsoring your children’s overseas education/wedding with your CPF
- You can forget about using your CPF for capital to start a business
- You have to count on your children to carry out the things you wanna do when you retire
So what could my Dad-in-Law do? Well he could appeal to CPF for further withdrawal, with his fully-paid property as a collateral. A friend of his got his appeal accepted and got more cash out of it (with term & conditions of course).
3 years from now when my mom-in-law reaches the age of 55, they could combine their Minimum Sum (at 25% discount) and withdraw the excess (don’t count on a huge amount here!)
Or he could sell off his home, encash the difference, and stay with one of his kids - or get a place in JB. How’s the market for property this year? Best time to sell?
Or why not rent out the whole unit? And stay with me, we could work out something.
What would you do? Are you still banking on your CPF for your retirement funds? Or your home?
Do you intend to work forever?
