Planning for your retirement

CPF announced a series of changes in February that, in my view, make it more flexible for individuals to design their own retirement plans according to their own circumstances. The link is here. 

You should plan early so that you can design the lifestyle you want (assuming we all live to a ripe old age! ^_^)

Do you know which plan you are going to choose when you turn 55?

There are currently 3 plans to choose at 55 but note that the monthly payout only starts from 65 onwards. This is basically an annuity plan to pay you "till you die". 

The reason why the govt allow "property" to be "mortgaged" against the minimum sum is to prevent social issues so that you have a roof over your head while using "$650-$700" per month payout for the monthly expenses for life. 

The "normal" package is to keep $161,000 for a full payout of $1,200-$1,300 per month for life. 

Frankly I have not explored if it is a good idea to opt for "enhanced retirement sum" where I will get $1,750-$1,900 per month for life until I know how much I will get back if I "die early". Hahaha. If it makes sense, I will then opt for it. No point giving my money to govt right?

However, if you think you will live to a ripe old age, you may want to consider topping up to enhanced retirement sum using your personal savings. In that way, you can have an enjoyable retirement travelling the world! :)

Will you have enough in your CPF accounts to meet the "normal" package? 

This is one way to let compounding work harder for you. If you have no use of the cash in your CPF ordinary account and have yet to hit the "minimum sum", you should transfer them to the CPF special account up to the maximum allowed each year. 

The earlier you transfer, the better the compounding effect, so plan your retirement early and let time help you, especially when the returns in these accounts are risk-free! You can view the slides from CPF on how to transfer the balance here.

If you haven't read this post from AK, you should. He has shared how a lot of his money in his CPF SA balance is from the government by transferring the OA balances in to the SA balance early in his working life. Similar to AK, i have hit the minimum sum so there is no reason why you couldn't too. You can max out your voluntary contributions of ($31450 less mandatory contributions) if you don't mind having your money "stuck" in the CPF balances till you retire. Here is a little peek at my CPF SA, i managed to hit the minimum sum of $161,000 in December last year.

Ability to withdraw some cash at 65!

There are further flexibility to withdraw from retirement account at 65. You can first draw $20,000 at 55 and up to 20% of the balance at 65. You can also top up your spouse CPF so that he or she can have higher payout and both parties benefit for life.

This is one area which you should seriously consider because retirement planning is a family matter if you want your loved ones to be well taken care of too! Some other ways to top up the CPF of your loved one are listed here. 

More interest for the silver generation!

Seems like the government wants to "reward" the pioneer generation by giving those above 55 years old a higher interest and a higher CPF contribution rate.

Higher contribution limit for SRS from 2016 onwards

In a bid to encourage more Singaporeans to plan for their own retirement, the SRS cap will be increased from the current $12,750 to $15,300 next year. This is good news for those who have been taking advantage of the scheme and are in a position to contribute more. The link from IRAS is here.

Stock picks by Singapore Edge in 2014 - No horse run

The year of the horse stock pick by the Edge outperformed the index and really "no horse run" - in hokkien means done extremely well. I also include its 2015 stocks picks for the year of the Goat!

Click here for the link to a better picture and some brief reasons for the stock picks.

The reason why included the table above is for my SRS account as i could have constructed a similar portfolio using my SRS account. I keep it here for record keeping purpose, so that i can refer back and kick myself in the butt if it outperformed STI again in 2015! :-P

That is it for now. Happy retirement planning and do something your future self will thank you!