You will calculate a number that combines the bridge years with the long-term gap after CPF LIFE begins.
By now you have three figures that each describe part of your number: the 25 times estimate from lesson 2.1, a long-term gap from lesson 3.2 and a rough bridge from lesson 3.3. Left in three places, they invite you to quote whichever one feels best on the day. This exercise puts them on one sheet, works out a single two-part number, and shows you which assumption moves it most.
Allow about thirty-five minutes. Open the spreadsheet that holds your spending base from lesson 1.4 and add a new tab.
At the top of the tab, put one input per row, each in its own cell so you can change it later:
Yearly spending base at today's prices, from lesson 1.4 Target stopping age, and your payout eligibility age from cpf.gov.sg Estimated yearly CPF LIFE payout at today's prices, from lesson 3.1 Your chosen withdrawal rate, from lesson 2.4
Write the date and the source next to the payout estimate. It is the input most likely to change between now and your payout age.
Below the inputs, calculate the number of bridge years: payout age minus stopping age. Then multiply it by your yearly spending base. That is your bridge figure, the money you need to cover full spending from the day you stop to the day payouts begin.
Keep it as a formula that points to the input cells rather than typing the answer in. You will change the stopping age later and want the figure to follow.
Next, calculate the yearly gap after payouts, which is your spending base minus your yearly payout, and divide the gap by your withdrawal rate. The result is the long-term figure, the portfolio you need at your payout age to fill the gap for the rest of your life at that rate.
If your payout covers your entire spending, the gap is zero and so is this figure. That is rare, but it can happen for someone with a modest base and a large Retirement Account.
Add the bridge figure and the long-term figure to get your two-part number, and give that cell a bold border so it stands out on the sheet.
Beside it, put two comparisons: your spending base times 25, and your spending base divided by your own withdrawal rate. The first is the shortcut everyone quotes. The second is the single-figure number from lesson 2.4. Seeing all three together shows what the bridge and CPF LIFE do to your target.
Priya's inputs, all made-up figures from earlier lessons: spending base S$44,000, stopping age 50, payout age 65 in this example, CPF LIFE estimate S$16,800 a year at today's prices, withdrawal rate 3.5%.
Bridge: 65 minus 50 is fifteen years. Fifteen times S$44,000 is S$660,000.
Long-term: S$44,000 minus S$16,800 is a gap of S$27,200. Divided by 0.035, that is about S$777,143.
Two-part number: S$660,000 plus S$777,143, about S$1,437,000.
Comparisons: 25 times S$44,000 is S$1,100,000. S$44,000 divided by 0.035 is about S$1,257,000.
Her two-part number is higher than both, and the bridge is the reason: fifteen years of full spending before CPF LIFE costs more than the payout saves her afterwards. If she planned to stop at 60 instead, the bridge would be five years, S$220,000, and the two-part number would drop to about S$997,000, below both comparisons.
The two-part sum is also cautious in one respect. The long-term figure is not needed until her payout age, so in reality it has years to grow while she spends the bridge money. The model in module 4 handles growth, so the sheet keeps the simpler, more prudent sum.
Now change one input at a time and watch the total.
When Priya moves her stopping age from 50 to 52, the bridge shrinks by two years of spending, S$88,000, and her number falls to about S$1,349,000. When she lowers her payout estimate from S$1,400 to S$1,200 a month, the gap grows by S$2,400 a year and her number rises by about S$68,600, to about S$1,506,000. Every S$100 a month of payout is worth about S$34,000 in her number at 3.5%.
For her, the stopping age and the withdrawal rate move the answer most. Each year earlier adds S$44,000, and moving the rate from 3.5% to 4% would take about S$97,000 off the long-term figure. The payout estimate matters less for her, though not by much. Yours may differ. Someone stopping at 60 will find the payout estimate matters more than the stopping age, because their bridge is short.
Whatever moves your number most is the one to check every year, and to treat cautiously until you do.
A finished sheet has the inputs at the top with sources and dates, three formulas below them, the two-part total, the two comparisons beside it, and a note naming the assumption that moves your number most. Put the two figures the activity asks for next to each other, where you will see them first when you open the tab.
Complete the two-part number sheet and write both totals, the simple multiple and the two-part figure, side by side.
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