I'm A Singaporean Millennial. How Much CPF Do I Need To Retire?

I'm A Singaporean Millennial. How Much CPF Do I Need To Retire?

profileKenneth Lou

A Scary Upwards Trend

So, here is a short story. My Mother turns 55 in April this year, and she’s been bugging my older brother and I to help her consider the options and whether she should opt for the Basic Retirement Sum (BRS) or Full Retirement Sum (FRS) for her CPF Savings, because she is simply confused.

“By the way, she also happens to be an English speaking, educated, Senior staff engineering manager who has worked in a EU and US Multi National Corporation for over 20 years.”

It really got me thinking, beyond the fiasco of the current 65 or 70 year old opt in issue now with the CPF, I came across a very fact-based piece of sharing by one of our community members in the Seedly Personal Finance community, of which I have asked if we could kindly repost to our large Millennial base here in Singapore. (Credit: Mark Rozells post)


TL;DR: For A 27 year old, you will probably need around $316k in your CPF before you can withdraw the excess

  • Singaporeans will need to know that the basic retirement sum will DEFINITELY INCREASE over the years
  • For example, at age 55, if you have $400k in your CPF, you will only be able to take out $84k (400-316) based on the above estimate of $316k for retirement sum
  • If you don’t have this amount, you will continue contributing to your CPF till age 65 or 70 where your payouts will begin
  • For most people who factor CPF into your retirement nest egg, your basic amount in that account will be higher over the years
  • This is due to inflation and increasing costs of living (very legit reasons) so the earlier in life you know this, the better (Period. If not You Not be LIT AF when you are 55)
  • You should probably take a more pro-active step to managing your money (outside CPF) to counter this in later years (particularly if you are like me and have made your first huge HDB purchase)

Here is a quick chart on how it has been increasing from Year 2000 ($65,000) to Year 2020 ($181,000) and these are facts.

A Simple Formula to Predict How much CPF you will need at age 55 

If you want to guesstimate what the Minimum Sum (Full Retirement Sum) will be when you turn 55, use this formula:

$5000 × (55 – your age this year) + $176000 = __________

For a 27 year old (like me, my full retirement sum would probably be around $316,000). Wowzers.

Huge disclaimer: At this point, I would want to share that Seedly is by no means a political blog. But instead, I am personally inclined to find out how these could affect Singaporeans (and Millennials in particular, aged 20 to 35) to prepare financially for it. Huge kudos and credit to a member named Mark Rozells who crafted this piece which I have pasted below whole-sale and helped him add in charts for easier reading.

Also we appreciate fact-finding, and this ticks all the boxes in that respect. (reference links attached)

A Minimum Sum with no Maximum

It’s not that easy to find information on the changes to the CPF over the last 40 years. You would think that the CPF Board would have made a simple, easy to read article or poster charting those changes, but no. (I wonder why…)

So I looked through the Hansard, (the record of what is discussed in Parliament) to find out when the changes took place and the reasons for those changes and the promises each Minister made, and whether they stuck to those promises or not…

So here is what I’ve got so far. Apologies for the long post.

In 1984, the PAP govt proposed raising the CPF withdrawal age from 55 to 60. There was widespread opposition to this plan, with objections from NTUC and even PAP MPs like Lim Boon Heng and Toh Chin Chye opposing the plan in Parliament. It didn’t go through.

In the 1984 General Election, the PAP’s share of the vote dropped from 77.7% (1980 GE) to 64.8% (1984 GE). And for the first time since 1965, the opposition won seats in a General Election, capturing not just one but two seats (Chiam See Tong and JB Jeyaretnam).

So the PAP went and licked its wounds, and then came up with the Minimum Sum Scheme. The idea was that age 55, you could still withdraw all of your CPF, but…

… the govt was worried that people might squander their retirement savings or they might lose it to conmen or bad investments. So the govt proposed the setting up of this thing called the Minimum Sum Scheme.

A sum of money from your CPF withdrawal at age 55 would have to be placed in a retirement account. A fixed minimum amount, set at $30,000. Money from this account would be paid to you from age 60 onwards, about $230 every month, for the next twenty years.

And if you had property worth more than $30,000, you could pledge your property, so you could still withdraw all of your CPF savings. Lee Yoke Suan, the minister proposing the scheme said that most Singaporeans would be able to pledge their property and so they would be able to withdraw all of their savings. And they would also enjoy a monthly sum of money from age 60 onwards, from their retirement account. Seems wonderful right?

But then the Minimum was adjusted in 1989 because of worries about inflation.

Then it was hiked by 5K each year from 1995 because of worries of longer lifespan and higher expectations of living, with the promise that after it hit 80k, adjustments would go back to being pegged to inflation.

This promise was abandoned (or forgotten?) in 2004 when it was hiked by annual amounts ranging from $4,500 to $11,000 from 2004 to presently 2019. I guess the only way is up…

Minimum sum through the years:

YearRetirement Sum
1986Minimum sum scheme announced by Lee Yoke Suan
1987$30,000 - could be fully covered by a property pledge
1989$30,900 - minimum sum starts to be adjusted yearly for inflation (Minister Lee Yoke Suan, in reply to MP Charles Chong)
1994Minister Lee Boon Yang announces changes to CPF, Minimum Sum to be raised to $40,000 in 1995 and by $5000 each year up to $80,000 in 2003. After 2003, increase will be pegged to inflation).
1995$40,000 - Now only 50% can be covered by property pledge (announced in 1994, Lee Boon Yang)
2002$75,000 (Minister Lee Hsien Loong announces that Minimum Sum will be raised beyond 80k in 2004, by an amount yet to be decided)
2004$84,500 (+$4,500)
2005$90,000 (+$5,500)
2006$94,600 (+$4,600)
2007$99,600 (+$5,000)
2008$106,000 (+$6,400)
2009$117,000 (+$11,000)
2010$123,000 (+$6,000)
2011$131,​000 (+$8,000)
2012$139,000 (+$8,000)
2013$148,000 (+$9,000)
2014$155,000 (+$7,000)
2015$161,000 (+$6,000)
2016$161,000 (no change because date of change of minimum sum changed from July to January)
2017$166,000 (+$5,000)
2018$171,000 (+$5,000)
2019$176,000 (+$5,000)
2020$181,000 (+$5,000)
2021$186,000 (+$5,000)
2022$192,000 (+$6,000)

$181,000 – the minimum sum today (now called “Full Retirement Sum), of which only 50% can be covered by a property pledge – so you will still have to set aside $90,500 in your CPF.

Reference Link: https://www.cpf.gov.sg/Members/Schemes/schemes/retirement/retirement-sum-scheme

Visual chart from 2000 to 2020

Age where you start receiving payouts from the Minimum Sum:

1987Monthly payouts can start from 60
1999raised to 62 
2012raised to 63 
2015raised to 64
2018raised to 65

What a difference 35 years makes, doesn’t it.

In 1985 

At 55, you get access to all your CPF money and can use it how you see fit.

In 2020

At 55, you can get $5,000 of your CPF money plus the rest except for the first $181,000 (or first $90,500 if you pledge your HDB) which you will get in a monthly payment from age 65 onwards.

A Simple Formula to Predict How much you will need at your age

If you want to guesstimate what the Minimum Sum (Full Retirement Sum) will be when you turn 55, use this formula:

$5000 × (55 – your age this year) + $176000 = __________

Mine is $251,000

*Post edited for clarity and accuracy of figures.

Now what can you do about it?

For me, I’m currently 27 this year… So if I use that prediction formula above, I would need around $316,000. Wow, tough retirement life ahead. Some ideas in mind… if you plan to retire here in Singapore.

Take a DIY pro-active step to:

  • Manage your own investment portfolio to yield returns between 4-5% p.a (outside CPF)
  • Grow your own savings pool (outside CPF)
  • Limit your use of CPF Ordinary Account especially where some young couples over-extend early on in their careers and buy HDB BTOs or Resale flats up to $600k or $700k

Hope this article sparks some thoughts and again thanks to Mark Rozells for sharing his thoughts with the rest of us!

About Kenneth Lou
Co-founder of Seedly. Passionate about helping people make smarter financial decisions.
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