Most of my reading on current affairs happens on Facebook, thanks to friends sharing various articles. I also read comments to see what other people say about the articles. Often, I see people asking for CPF to be returned in full at age 55. I don’t agree with that, not before and most definitely not after a recent knowledge came to me.
Before
I was at first quite bo chup. Then hub and I were calculating our needs for retirement a couple of years ago, and read more about CPF life.
Honestly, I’ve never bothered to find out more about it earlier coz hello, still young and far from CPF life age right?
I was glad I found out!
With CPF life and us being quite low maintenance, we only need to have enough money for the kids’ education, contingency and some discretionary spending before we can retire. Or at least retire from siong work. We don't mind working but the hours are really no good for family life. It's better for me now with part-time; I hope to never return to full-time work so that I can be with the kids after school. But there's still plenty room for improvement for Sito's hours..
The recent knowledge
On 8 June, my siblings and I each received a letter from the Commissioner for the Maintenance of Parents (CMP). Our father had made a claim against us.
We had a long whatsapp discussion during which I learnt that while I haven't seen him for maybe 15 years, my siblings had been giving him money to get him off their back, even paying off loan sharks a few years back so that he wouldn’t show up in front of Mother.
I couldn’t help thinking of 房似锦 in 安家 hoho!
Long story short, we signed the maintenance agreement by 16 June. Chop chop formalise all our payments to him, divided equally among the three of us.
What's this got to do with CPF? Ah....
We were given a PDF of his bank book in the process. He had over $700 in deposit in the first 10 days of June. This included a sum of close to $400 from CPF. The CMP officer mentioned it had ended, which was an impetus for the claim, but it was still in the June statement so we supposed it was ending. $400 is not a lot of money but it is enough to feed one person - $4 each for lunch and dinner every day = $248 for a 31-day month, with enough left over for bread and spread for breakfast, 3-in-1 beverages, utilities for a rental flat and the occasional MRT/bus trip. My siblings have been paying rental and town council fees directly, and this arrangement would continue as part of the maintenance agreement - no chance for cash for rent to be drunk or smoked away!
Digress a bit: Goodness knows what happened in eight days but he called on 18 June coz he ran out of money, i.e. $700 was gone in eight days! Now, my household of three adults and three kids spend about $600-$700 a month on regular groceries for all meals except weekend dinners. Regular groceries exclude the many pints of B&J ice cream which I fully intend to quit for health and waist *.*
Now back to CPF.
Retirement Sum Scheme
My father was in an old CPF scheme - the Retirement Sum Scheme, I think. Based on the website, he had to set aside some minimum in the Retirement Account before he could withdraw the remaining CPF money at age 55.
Now, he withdrew all that he could at 55yo, just before the divorce. He gave each of his kids maybe $4k or so each - I can only vaguely remember the range now. The rest, he lost in no time - apparently he was cheated by some woman. I’m sure that’s not a trivial amount if he could give us that much - this is the same man who proposed to give a total of $200 a month in maintenance to his three children and ex-wife, which was thrown back by his own LAB lawyer. (Quite unfortunately, I was at the court hearing and out-of-court discussions...)
Mother later withdrew all the CPF money he gave us to pay him so that she could keep the flat. Of course that was gone swiftly coz the monthly maintenance was not forthcoming even from the beginning.
Anyway, the point is, I think his CPF would bring him far into retirement if he had been prudent, even though he did not earn much. He earned only about $1k a month in my primary school years before he was retrenched and started driving a taxi - I saw his payslips as I filled in the forms to apply for bursary awards. I don't think he was otherwise employed before age 55. Yet, the flat was fully paid up using CPF money. I don't know when though. But it was likely before he was 55yo coz there was no mention of that during the divorce.
Mother later withdrew all the CPF money he gave us to pay him so that she could keep the flat. Of course that was gone swiftly coz the monthly maintenance was not forthcoming even from the beginning.
Anyway, the point is, I think his CPF would bring him far into retirement if he had been prudent, even though he did not earn much. He earned only about $1k a month in my primary school years before he was retrenched and started driving a taxi - I saw his payslips as I filled in the forms to apply for bursary awards. I don't think he was otherwise employed before age 55. Yet, the flat was fully paid up using CPF money. I don't know when though. But it was likely before he was 55yo coz there was no mention of that during the divorce.
And after he withdrew a significant amount at age 55, he had a monthly payout of almost $400 every month since age 65 at the latest - I don't know if it was 65 back then. He is now 77yo so at least 12 years.
It looks like a pretty good deal to me. Whatever is lacking after CPF payouts and any of the person's own retirement funds should be covered by the family. Those with no savings and no family support should be eligible for government support.
While the Retirement Sum Scheme will run out of money at some point, CPF Life is, as the name suggests, for life. Under the standard plan, someone aged 65 in 2030 will get $750-$810 a month until he dies. I think that's sufficient to get by, based on 10% yoy inflation and my $700 a month on groceries for 3A3C. I mean, retirement doesn't mean you go into enjoy mode and splurge on lifestyle and travel etc right?!
If we take out CPF in cash at 55yo, can the amount last until we die? I don't know, especially for those who use CPF for housing.
So, why do people complain about not being able to withdraw CPF in full at age 55? Why do you need a lump sum at age 55? If it's to splurge, see negative example above, and I worry for their retirement. If it's to pay back debts, I also worry for their retirement. If it's to alleviate hardship, I again worry for their retirement after alleviating current hardship for which there are support measures. If it's to just guai guai keep in the bank, kena scam how? If it's to invest, CPF interest rates are very good too.
What about people with no CPF? Then the debate of whether they can withdrew everything at age 55 does not apply to them. Like Mother but she has the three of us. There are programmes to help low-income with no savings and no family support.
***
Sito and I love to talk about retirement, be it planning for it or what we would do then (read whole day in bed!) and in between. Recent talks centre more on cash planning. CPF is, I guess, our insurance, and it looks like a darn good one :)
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