How to Grow the CPF OA since the SA will no longer be available after 55.

This article i am writing is with regards to the OA. With SA no longer available after age 55.

1. Regular Contributions from your job : Ensure that you make regular contributions to your CPF OA through your monthly salary deductions. The more you contribute, the more your CPF OA will grow over time. The first $6800 monthly salary in year 2024 will attract 37% contribution to the OA, SA, MA accounts. The first $7400 monthly salary in year 2025 will attract 37% contribution to OA, SA, MA accounts. The first $8000 monthly salary in year 2026 will attract 37% contribution to OA, SA, MA accounts.

Without Housing Loan :

For people that do not have housing loan and your MA is maxed out. Depending on your age before 55, the contribution rate to OA will range from 25% - 29% of the monthly salary subjected to cap at $8000 in year 2026.

1. Maximize CPF Interest Rates: The CPF OA provides a basic interest rate, and there is an interest rate of 3.5% for the first $20,000 of your combined CPF balances.

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3. Investment Schemes: CPF OA funds can be invested in various instruments to potentially generate higher returns than the default interest rates. CPF Investment Scheme (CPFIS) allows you to invest in a range of instruments, such as stocks, bonds, and unit trusts. The potential returns can range from 3.5% - 30% depending on the instruments you used.

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5. Top-Up Schemes: Consider taking advantage of the CPF Voluntary Contribution (VC) scheme, where you can make additional voluntary contributions to your CPF accounts. This can help to enhance your CPF savings over time.

The main target is to grow the OA savings to $500,000 by the time to reach age 55 so that can at least enjoy $12,500 of passive income from OA every year or even more if you are investing in other instruments. Why $500,000. As a salary worker with a family of 4, with $500,000 in my Ordinary account when i am age 55 that generates $12,500 in passive income. I have an additional of $1,000+ to spend every month. It also acts as my emergency funds and i can access it easily if i need to. It serves as my buffer as well.

Enhanced Retirement Sum in 2025

Come in Year 2025 the enhanced retirement sum will be 4x of the Basic Retirement Sum. With the Basic Retirement sum increasing to $114,100 in year 2027. The Full Retirement sum will be $228,200. The Enhanced Retirement Sum will be 4x of BRS which is equal to $456,400. My age will be 50 whereby i still have 5 more years to go till 2032 before i reach age 55. 

Based on the current projection of 3.5% per annum increase of BRS retirement sum, the FRS will be projected to be $271,200. The BRS in year 2032 will be $135,600 and the ERS will be $542,400. 

For people who can reach the ERS sum in year 2032, they can potentially get $4,100 per month for the rest of their lives. That is $49,200 per year. 

From 2032 to 2042 with the interest rate assuming at 4%, the $542,400 will balloon to $808,627. Such is the power of compounding. In order to gain back the total amount of $808,677, one would need live at least 16.5 years which is 81.5 years old before they can get back the money that was in their CPF RA. If i manage to have $542,400 in my SA and Ordinary accounts when i am age 55. Assuming if i only put the $271,200 and the rest of the money continues to be in Ordinary and i come up with the table for the below to show what money i will have left in my ordinary earning 2.5% and how much money that RA is going to pay me. 

From the computation it can be seen that even though i will be getting less from FRS compared to ERS. However once I reach 82 years of age, i will have accumulated $532,271 in Ordinary account which will generate $13,306 per year and i still have the $532,271 left to use if i need to. To me it will be no brainer to go for FRS instead of ERS and to use the ordinary account as spare cash like an emergency fund. Although some people may prefer to go for ERS and get a higher monthly pay out from 65 years old but my opinion it lacks of liquidity and you cannot access the funds in the event you need it. 

Extract from Dollars and Sense website on the table for the changes in BRS , FRS, ERS

Year that Members Reach Age 55
	2022	2023	2024	2025	2026	2027
Estimated Monthly Payouts Provided By Retirement Sums at Age 65*
BRS	$850	$870	$900	$930	$950	$980
FRS	$1,570	$1,620	$1,670	$1,730	$1,780	$1,840
ERS	$2,300	$2,370	$2,450	$3,330	$3,440	$3,550
Retirement Sums at Age 55
BRS	$96,000	$99,400	$102,900	$106,500	$110,200	$114,100
FRS	$192,000	$198,800	$205,800	$213,000	$220,400	$228,200
ERS	$288,000	$298,200	$308,700	$426,000	$440,800	$456,400

Announcement of $4000 for 40 years old and above

 With the announcement of the $4000 for 40 years old and above, i believe that there will be a lot of people going for courses in the next 2 years. Hopefully the courses that will be provided by the skills future and NTUC learning hub will have more depth instead of an overview. 

Currently for NTUC learning hub, they provided a list of certifications for Prince 2, PMP, Cisco, Microsoft etc which is quite affordable less than $500. For people who are 40 and above and have not utilized the skills future credit. you will have $1500 in the account. Do take note that $500 will have to be utilized by 2025. 

Below are the areas of interest for people who are age 40 and above.

1. Digital Literacy:

   • Embrace technology and stay updated on digital tools, social media, and online platforms.
   • Learn basic coding or data analysis skills, as these are increasingly in demand across various industries.

2. Project Management:

   • Acquire project management skills to effectively plan, execute, and oversee tasks, projects, or even career transitions.

3. Communication Skills:

   • Enhance your communication skills, both written and verbal, as effective communication is crucial in any profession.

4. Leadership and Management:

   • Develop leadership and management skills to take on more responsibilities or leadership roles within your current profession.

5. Entrepreneurship:

   • Explore entrepreneurship and business skills if you're considering starting your own business or pursuing freelance opportunities.

6. Data Analysis and Business Intelligence:

   • Gain skills in data analysis and business intelligence to make informed decisions and understand trends in your industry.

7. Health and Wellness:

   • Focus on maintaining a healthy lifestyle and consider learning about holistic health practices, fitness, or nutrition.

8. Language Skills:

   • Brush up on or learn a new language, especially if you're involved in international business or have plans to work in diverse environments.

9. Financial Literacy:

   • Strengthen your financial literacy to make informed investment decisions, plan for retirement, and manage personal finances effectively.

10. Networking and Relationship Building:

    • Develop networking skills to expand your professional connections, both online and offline.

11. Soft Skills:

12. • Enhance soft skills like adaptability, problem-solving, and critical thinking, which are valuable in any workplace.

13. Industry-Specific Skills:

• Identify specific skills that are in demand in your industry and invest time in acquiring them.
14. Home | Myskillsfuture.gov.sg
15. Digitalisation Training - NTUC LearningHub
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