For subscribers
https://www.straitstimes.com/business/invest/how-a-retiree-topped-up-her-cpf-yearly-to-receive-a-4600-monthly-payout
2026-02-22
Tan Ooi Boon
Invest Editor
The Straits Times
=====
SINGAPORE - A 71-year-old Singapore woman probably holds the current record for receiving the highest CPF monthly payout of about $4,600 every month, thanks to the high balance in her Retirement Account (RA).
Her payout is unusual by today’s standards because even if a 55-year-old member tops up to the highest tier of CPF LIFE at $440,800 in 2026, the expected monthly payout at age 65 would be only about $3,400.
The reason why Janet, as we shall call her, can achieve such a high payout is that she had been diligently topping up her RA annually for the last 16 years after she joined the scheme at 55.
The payout sum was further boosted because she opted not to start the payout at 65 but had delayed it until she hit 70.
Her dogged effort in planning her retirement income has resulted in a payout that is about five times more than the payouts of other members in her cohort who did not make any top-ups to their accounts.
At this rate, she will receive a tax-free income of about $55,000 annually just from her CPF monthly payouts.
As Janet had also been making her own annual contributions to CPF even after she stopped working at 63, she had accumulated over $1 million in her Ordinary and MediSave accounts, which would enable her to enjoy an annual interest income of at least $30,000.
This means that, together with her monthly income, her annual retirement income from CPF alone is about $85,000, or about $7,000 a month.
Based on the OCBC Financial Wellness study, a retiree who can plan for a monthly income of about $6,000 can enjoy a comfortable lifestyle, such as living in a private home and affording a car and domestic help, and paying for two long overseas holidays annually.
In her e-mail to Invest, she wrote: “CPF is the best retirement scheme in the world and everyone should try and top up their RA to the maximum to enjoy the 4 per cent interest rate. It is impossible to get this rate either from the banks or other institutions.”
Her story underscores the reason why the CPF Board is introducing an age-based and specially curated investment scheme in 2028 so that members who are willing to take some risk can aim to attain better returns than the prevailing CPF rates for their invested sums.
The idea is for such investment schemes to help members increase the balance of their accounts so that they can have more money to top up their RA to boost their monthly payouts from CPF LIFE, the national annuity scheme.
How to plan for higher payout
The good news is that existing and future cohorts of members can actually match or even beat Janet’s record payout if they follow her method of consistently topping up their RA until age 70.
For instance, a member hitting 55 in 2026 who saves the Enhanced Retirement Sum (ERS) of $440,800 in the RA will be getting about $3,400.
If he continues to make incremental top-ups of the prevailing ERS, which increases marginally every year, the monthly payout is expected to increase by about $100 each time.
Based on Janet’s experience, a member who consistently puts more money in the RA annually for the next 15 years can hope to get about $5,000 a month, if not more, by age 70.
Indeed, current members have an advantage over Janet’s cohort, which is on the previous Retirement Sum Scheme that will stop paying when members hit 90.
If you are on the CPF LIFE scheme, longevity will be a big plus as it means you will continue to enjoy the high payout for as long as you live.
More On This Topic
Save more in CPF now if you want to invest in the new scheme in 2028
Making your CPF work harder for a comfortable retirement
Focus on the payout, not how it works
Take the current cohort of 55-year-olds, who have the option of topping up their RA to the ERS of $440,800 for a monthly payout of about $3,400 from age 65. Those who do so can receive $408,000 by age 75, $816,000 by age 85 and over $1 million if they live beyond 90.
There are no hidden costs or risks for the payout because it is guaranteed by the Government.
It is not easy to produce such results on your own with a similar sum. Some people have even ended up with losses when they tried to plan for similar retirement income, such as by investing up to $2 million in private products.
But there are members who hesitate to plan for such payouts because they are overly focused on how the CPF LIFE scheme is run.
For instance, they baulk at the idea that, at age 65, the entire balance of their RA, which includes any interest earned, will be put into a common pool that will be used to fund current and future payouts.
In doing so, these members feel they will be shortchanged if they die early because their beneficiaries will get only the unpaid portions of the original sums, and not the earned interest.
When planning for retirement, you should focus on not just profits but also on preparing for worst-case scenarios so that you won’t end up broke in your later years.
It is the same as buying travel insurance or hospitalisation plans. It is fair to say that those who buy such insurance do not want to be in an accident overseas or end up being hospitalised just to “profit” from the policies.
Instead, you will be pleased to waste such an expenditure by not making any claims because it means you are safe and sound, on top of being in good health.
The purpose of having CPF LIFE is the same but instead of calamity, it protects you from not having enough money in your old age.
So those who worry about not getting their money’s worth should ask what happens if they have a long life and their savings run out because they opted not to have a better payout from CPF LIFE.
It’s paramount to have a good lifelong income
A good retirement does not depend only on how much you have saved but also on your ability to pay for all your expenses for life.
This is why it is better to have a good and continuous retirement income instead of just relying on a fixed sum, which can run out due to unexpected expenses.
Just take the current ERS payout of $3,400. It is possible to aim for savings of $440,800 with over 30 years of working, and doing so means you don’t need to worry about having higher sums because the payouts can add up to over $1 million if you live a long life.
Having a good retirement income means you can also save, say, $1,000 every month, so that you can use the extra cash to pay for your holidays or pay for healthcare policies, which will become more expensive as you age.
Note that having a higher payout means you are less dependent on your other savings, which you can certainly rely on to fund a better lifestyle.
Finally, we don’t need to outdo Janet’s record, but we can certainly draw a good lesson from her, and that is how your small and regular savings to CPF today can help you in a big way when you are older.
More On This Topic
Retirees should consider CPF LIFE first to avoid investing in unsuitable products
Invest microsite: Get more investment and career tips
Tan Ooi Boon writes for and oversees the Invest section of The Straits Times.
Posts
No comments:
Post a Comment