When you start working from 25 years old in Singapore as a PR or citizen, it is highly possible that you can accumulate SGD2.9 million in your CPF till you are 65 years old. Due to the high-interest rate in Special Account, with the compound effect, you can have huge wealth in CPF after 10,20, or 30 years working and contributing in Singapore. You can read <How To Optimize And Have SGD 1 Million In CPF> to see how you can optimize and have millions in CPF.

After years of accumulating, the next question is, how can you take the money out when you reach 55 and when you retire. Let’s look at it case by case.

Withdrawal at 55 and Payouts at Retirement

In 2022, the retirement age in Singapore will be increased to 63 for females and 68 for males. You can start to withdraw money from CPF when you are 55 years old, and you can receive CPF payouts when you are 65 years old.

When you reach 55 years old, there will be a Retirement Account created for you in CPF. What’s even better, you will receive a letter from CPF to have a 1 -1 in personal retirement planning, so that you know how much you can or should put into your retirement account and how much is your payouts when you retire.

What Is Retirement Account

Retirement Account is created when you are 55th years old. Some of your money from an ordinary account and the special account will be transferred to this retirement account. The sum in the retirement account will be your source of monthly payouts when you reach 65. The more money you put in the retirement account, the higher the monthly payout will be. The monthly payout lasts forever as long as you live.

The table below shows how much monthly payout you will receive depending on how much money you put in your retirement account when you at 55 years old. Based on the current cost of living in Singapore, if you want to maintain a high quality of life when you retire, you definitely need to have extra savings or investment to supplement the monthly payouts. Here you can look at the extra money you have in CPF, any amount exceeds the $271,500. But Medisave account can not be used, it is meant for your medical expenses at old age.

If you read the <How To Optimize And Have SGD 1 Million In CPF> article and download the CPF computation spreadsheet, you will see that when you do it right, you will have an extra one million or two even after you set aside the highest retirement sum to the retirement account.

Next, let’s look at how you can withdraw the extra money from your CPF

CPF Withdrawal at 55

You can withdraw from your ordinary account and special account to supplement your monthly payout if it is not enough. But the amount you can withdraw depends on how much you have in your special account and ordinary account from age 55. The table below gives you a general guideline.

There are three scenarios

1. Savings in your OA and SA are less than $5000

You can withdraw everything but then you will have not a retirement account, which means you have zero monthly payouts when you are 65. Because you have too little savings to form an annuity.

2. Savings in your OA and SA are between $5000 and $181,000

The priority is to put money in the retirement account.

If you don’t own a property, you can only withdraw up to $5000, and the rest needs to go to the retirement account.

If you own a property, you can maximum withdraw any amount above $90,500. Because the $90,500 is the minimal amount you need to set aside in the retirement account to provide you a monthly payout. The property you own must have a remaining lease that can last you to at least age 95.

3. Savins in OA and SA are above $181,000

This means that you can reach a higher payout layer as you have enough money to put into a retirement account based on the Full Retirement Sum ($181,000) or the Enhanced Retirement Sum ($271,500). But it also depends on if you own a property or not.

If you don’t own a property, you first need to set aside $181,000 into your retirement account, then you can withdraw the rest.

if you own a property, you may choose to remain at the minimal retirement account level, put $90,500 into your retirement account, then withdraw the rest. But your monthly payout will be at the lowest level ($750 to $810). Or you can set aside a bigger sum to reach the Full Retirement Sum ($181,000) and get the higher monthly payouts. Then you can withdraw the rest from your OA and SA. The property you own must have a remaining lease that can last you to at least age 95.

The main objective is to ensure that you first set money aside into your retirement account, then you look at if there is anything extra to be taken out.

If you have enough savings in SA and OA based on the methods I mentioned in the previous article <How To Optimize And Have SGD 1 Million In CPF>, you can easily put $181,000 into your retirement account. The interest rate in the retirement account is even better than usual CPF accounts: OA(2.5%), SA(4%), and MS (4%).

The interest rate in Retirement Account:

6% per year for the first $30,000

5% per year for the next $30,000

4% per year for the rest.

Withdrawal Process

It is relatively simple to withdraw money from your CPF once you fulfilled the criteria and amount. You need to have a Singapore bank account the complete the process below, the money will be transferred to your bank account.

Step 1: Apply online using your SingPass at cpf.gov.sg

Step 2: Submit a hardcopy application Complete the form(s) available on the CPF website and submit them to CPF Board.

There are three scenarios

1. Savings in your OA and SA are less than $5000

You can withdraw everything but then you will have not a retirement account, which means you have zero monthly payouts when you are 65. Because you have too little savings to form an annuity.

2. Savings in your OA and SA are between $5000 and $181,000

The priority is to put money in the retirement account.

If you don’t own a property, you can only withdraw up to $5000, and the rest needs to go to the retirement account.

If you own a property, you can maximum withdraw any amount above $90,500. Because the $90,500 is the minimal amount you need to set aside in the retirement account to provide you a monthly payout. The property you own must have a remaining lease that can last you to at least age 95.

3. Savins in OA and SA are above $181,000

This means that you can reach the maximum payout layer as you have enough money to put into a retirement account based on the Enhanced Retirement Sum ($181,000). But it also depends on if you own a property or not.

If you don’t own a property, you first need to set aside $181,000 into your retirement account, then you can withdraw the rest.

if you own a property, you may choose to remain at the minimal retirement account level, put $90,500 into your retirement account, then withdraw the rest. But your monthly payout will be at the lowest level ($750 to $810). Or you can set aside a bigger sum to reach the enhanced Retirement Sum ($181,000) and get the highest monthly payouts. Then you can withdraw the rest from your OA and SA. The property you own must have a remaining lease that can last you to at least age 95.

The main objective is to ensure that you first set money aside into your retirement account, then you look at if there is anything extra to be taken out.

If you have enough savings in SA and OA based on the methods I mentioned in the previous article <How To Optimize And Have SGD 1 Million In CPF>, you can easily put $181,000 into your retirement account. The interest rate in the retirement account is even better than usual CPF accounts: OA(2.5%), SA(4%), and MS (4%).

The interest rate in Retirement Account:

6% per year for the first $30,000

5% per year for the next $30,000

4% per year for the rest.

Withdrawal Process

It is relatively simple to withdraw money from your CPF once you fulfilled the criteria and amount. You need to have a Singapore bank account the complete the process below, the money will be transferred to your bank account.

Step 1: Apply online using your SingPass at cpf.gov.sg

Step 2: Submit a hardcopy application Complete the form(s) available on the CPF website and submit them to CPF Board.

Conclusion

When you reach the age of 55, you will create a retirement account for your old age to receive a monthly payout. The more you put in a retirement account, the higher your monthly payout will be. When you have enough savings in the ordinary account and special account, after setting money aside for a retirement account, you can withdraw those if you wish. Or you can leave them inside to further accrue interests and withdraw in the future. It all depends on your personal situation and needs. Obviously having a property can lower your retirement account sum as you do not need to cover housing expenses, but those are the criteria for achieving minimum standards. If you want to have a comfortable life when you retire, you need to bump up your CPF, and save extra money and invest long term to build up your wealth.

This is not financial advice, I provide the information, you need to understand yourself, and based on your own personal situation to make decisions. I hope this article provided you some useful information.

Download the spreadsheet to calculate your own pension amount here.

Related article: <How To Optimize And Have SGD 1 Million In CPF>