How much are you giving up in interest earned if you withdraw all your CPF at 55?
The answer is a lot.
CPF interest rates for money in your retirement account are as follows:
- 6% for the first $30K
- 5% for the next $30k
- 4% for the remaining balance
If you have $90,000 in your retirement account at 55, by the time you reach 65, it would have accumulated almost $55,000 in interest earned.
Bear in mind that this is compound interest, not simple interest. The rates are also guaranteed by the Government. This means that even when the economy is doing badly, you are assured of the interest earned.
SUSTAINABILITY and ADEQUACY
With people living longer lives and a low birth rate, a familiar scenario in many countries east and west, responsible people from the World Bank to the UN are talking about the sustainability of various pension schemes and how to grow retirement funds so that the elderly can be adequately taken care of and live in dignity.
Singapore is no different. We are a rapidly ageing society. In fact, we have transited from an ageing society to an aged society. By 2025, we would be considered a super-aged society. That’s not very far away from today. Having adequate funds for retirement is a necessity, not a luxurious choice.
The Melbourne Mercier Global Pension Index rated CPF as the top pension fund in Asia and the 7th best in the world. The Index recommended that pension age be delayed to improve CPF’s global ranking.
Singaporeans can in fact delay withdrawal of CPF LIFE monthly payout from 65 to 70. Beyond 70, members will no longer be allowed to delay retirement payouts.