Project your balances to 55 and map what moves where under three scenarios.
You can project your own CPF balances to 55 with one row per year and three columns, then run that projection three ways to see how much reaches your Retirement Account (RA) in each. It takes about half an hour, and the result shows which path you are on and what one change would improve it.
In lesson 6.1, Linda used round, supposed figures to see how the RA is formed. She is about three years from 55 and now wants the real version: what she will have at 55 from her actual balances, and whether her choices over the next three years make a difference. You'll do the same with your own numbers.
You need your current OA, SA and MediSave balances, the contribution worksheet you made in lesson 1.4, the current interest rates, and the Basic and Full Retirement Sums for your cohort. If your cohort's sums are not set yet, use the latest published figures from cpf.gov.sg. The Enhanced Retirement Sum works differently. It is the most you can top up your RA to from age 55, it is set at double the current year's FRS, and it goes up every year, so check the current figure with the CPF Board.
Make one row for each year from now to the year you turn 55, with three columns: OA, SA and MediSave. The formulas are the same in every row:
OA: last year's balance, plus a year's interest, plus the year's OA contributions, minus anything paid out for housing SA: last year's balance, plus interest, plus SA contributions, plus any top-ups MediSave: worked the same way as the SA, but capped at the Basic Healthcare Sum (BHS), with anything above the BHS moving to the SA, as lesson 1.3 explained
Add contributions and payments at the end of each year. This keeps the formulas simple. It slightly understates interest, which is acceptable for planning.
If you are many years from 55, work at today's prices. Keep your salary and the retirement sums at today's figures, and subtract an assumed inflation rate from each interest rate. Lesson 8.1 explains why. Write the assumption beside the input so you can see it when you come back to the sheet.
Linda's starting figures are invented for this example: S$70,000 in her OA, S$120,000 in her SA, and MediSave already at the BHS. She owes S$40,000 on her HDB loan and pays S$700 a month, S$8,400 a year, from her OA. Each year S$9,000 goes into her OA and S$6,000 into her SA, including MediSave overflow. She uses example rates of 3% for the OA and 5% for the SA, which are not the current rates.
Copy the projection into three blocks and change one thing only in each. Scenario A has no top-ups and follows your current plan. Scenario B adds regular top-ups, such as a yearly cash top-up to the SA. Scenario C uses CPF heavily for housing, such as a bigger loan, an upgrade, or paying off a loan early from the OA.
Linda's version: A carries on as now, B adds a S$7,000 cash top-up to her SA each year, and C uses S$40,000 of her OA now to pay off the loan in full.
In the row for your 55th year in each block, apply the rules from lesson 6.1. The SA goes into the RA first, then the OA makes up any shortfall, up to the Full Retirement Sum (FRS). If the SA is above the FRS, the excess moves to the OA. For each scenario, record the amount that goes into the RA, the amount left in the OA, and how far above or below the retirement sum the RA lands. Linda uses an example FRS of S$240,000.
In scenario A, her SA reaches about S$157,830 and her OA S$78,345.43, a total of S$236,175.43. All of it goes into the RA, which is about S$3,824.57 short of the FRS. Her OA is empty and she still owes S$14,800 on the loan, so she pays the next instalments in cash until new contributions refill her OA.
In scenario B, her SA reaches about S$179,897.50 and her OA S$78,345.43, a total of S$258,242.93. The RA reaches S$240,000 using S$60,102.50 from the OA, and S$18,242.93 stays in the OA for the remaining instalments.
In scenario C, her SA is again about S$157,830, but her OA is S$60,599.91 because S$40,000 went into the flat. The total is S$218,429.91 and the RA is about S$21,570.09 short of the FRS. She has no loan left.
First note which scenario reaches the FRS without a property pledge, then weigh what each one costs and what side effects it has. If your RA is below the FRS at 55, you still receive payouts from 65, but they may be lower than you expected or need.
For Linda, only B reaches the FRS without a pledge. The top-ups cost S$21,000 of cash over three years, and they also left enough in her OA to finish the loan without using cash. Scenario C surprised her: paying off the loan with OA felt prudent, but it put her RA furthest below the FRS, which could mean payouts from 65 that are lower than she expected or needs. She also noted that A came close enough to the FRS that a smaller top-up might close the gap.
Your finished map has three projection blocks with labelled inputs and today's rates, and a row for your 55th year in each showing the RA, the OA left over and the gap to the retirement sum. Under it, write one sentence saying which scenario you are on track for, and a second sentence naming the single change that would move you to a better one.
Build the map with your own balances and scenarios, then write which scenario you are on track for and what would change it.
Draw up your three-scenario map. Write down which scenario you are on track for and what would change that.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).