Playing catch-up with CPF Full Retirement Sum
I was reading Dollars and Sense's article on Here’s What Your CPF Full Retirement Sum Might Look Like When You’re 55 and wondered how far I am from the required Full Retirement Sum. I am still playing catch-up with the Full Retirement Sum. Rightfully so since I am 36 years old in 2018 with 19 years to 55.
What am I expecting the CPF Full Retirement Sum to be in the year 2037?
We already know what the Singapore Government (or CPF Board) expects someone turning 55 to have until the year 2020 - S$181,000. However, I am only reaching 55 years old in the year 2037. According to the article, which I totally agree, the CPF Full Retirement Sum might range from S$244,000 - S$408,000 based on different increment estimates:
Based on 1.5% increment - S$244,000
Based on 3% increment - S$299,000
Based on 4.9% increment - S$408,000
My best guess for the CPF Full Retirement Sum in the year 2037 will be within the range of S$270,000 - S$350,000.
Trying to stop the catch-up...
I have been doing small transfers from my CPF-OA to CPF-SA over the last 3 years. The biggest transfer was S$10,000 and that happened in Jan 2018. The aim was to quickly reach the CPF Full Retirement Sum stipulated for the year. I am working towards reaching S$181,000 by the year 2020.
Once my CPF-SA reaches the stipulated CPF Full Retirement Sum, I believe I do not have to worry about it anymore and let compound interest take over the job.
One source of retirement income should be completed.
The plan moving forward...
I am 33 months away from Dec 2020. Provided my job keeps me and CPF Board does not lower the interest rates, that will be another 33 S$400 (monthly) contribution to my CPF-SA.
I am S$46,000 away from the stipulated CPF Full Retirement Sum of S$181,000 in the year 2020.
Based on the sums, I should have S$138,600 at the end of 2018 and get ~S$5,500 interest at the start of 2019. I will also transfer another S$10,000 from my CPF-OA on Jan 2019. Total at the start of 2019 - S$154,100.
At the end of 2019, I should have S$158,900. Interest will be ~S$6,300. I will transfer another S$10,000 from my CPF-OA (again) on Jan 2020. Total at the start of 2020 - S$175,200.
I think everyone gets the picture. I would have to stay employed for at least another 2 years. At the start of the year 2020, at S$175K, I am pretty close to the stipulated CPF Full Retirement Sum.
I believe the catch-up game will stop then and I will let CPF Board contribute to my Retirement with their 4% interest on my CPF-SA.