A Deep Dive into CPF LIFE
A Deep Dive into CPF LIFE
CPF LIFE stands for CPF Lifelong Income For the Elderly, you might have heard about it somewhere if you are planning to kick back and retire. Well it may seem confusing and at first glance it probably is but don’t worry this post will help break it down for you. You deserve to plan your retirement with ease.
CPF LIFE is a CPF annuity scheme, similar to the Retirement Sum Scheme (RSS), but wait. They have their differences, which I will get into later. CPF LIFE is basically the government’s way of ensuring that you as a retiree will have monthly payouts for life without ever running out of funds. Hence, the name CPF LIFE…get it?
Now to the differences between CPF LIFE and RSS. The biggest difference is obviously how long you will get your monthly payouts for. In CPF LIFE you will get monthly payouts for your entire lifespan however for RSS you will only get monthly payouts until the savings in your Retirement Account are used up or until you reach 90 years old, which can be a problem if let’s say you life past the ripe old age of 90.
So the question will now be, how can I sign up for it? Well, you can sign up at any time between 65 and a month before you turn 80. Even better, if you are a Singapore citizen/ Permanent Resident, born in or after 1958 and have a minimum of $60,000 in your CPF retirement savings before turning 65, you will automatically be signed up for CPF LIFE.
However, if you don’t fit the criteria above, no worries because any time between 65 and a month before you turn 80 you can still sign up for CPF LIFE either through your Singpass App or by going to a CPF service centre to do so.
The monthly payout for the basic plan will be reduced when the savings in your Retirement Account have dropped below $60,000. This would mean that as the years pass your payouts would eventually decrease. However, if you don’t need much to get by, a basic plan would still be sufficient.
For the standard plan, the monthly payouts will be higher than the basic plan and will remain the same throughout. The only downside to this plan is that as inflation occurs in the future, you may end up affording less due to the rise in prices of your everyday goods.
As the name suggests, your monthly payouts will rise as the years go by. Not to mention by 2% annually! In order to help fight against inflation. This means that as time passes your monthly payouts will eventually be higher than that of the standard plan.
Once you have signed up either automatically or through application, you can choose to start receiving your payouts between the ages of 65 and 70. The amount you will receive for your payouts however will mainly depend on how much savings you currently have in your Retirement Account and the plan that you have chosen. Any savings that you have left will be distributed to your nominees after you pass away. For more information on that check out our blog by clicking here.
The thing is there isn’t a minimum amount you will need and you can sign up for CPF LIFE with however much money you have in your Retirement Account. While you do need at least $60,000 to be automatically enrolled, just take note that if you have less than $60,000 your payouts will just be lesser so make sure that you consider if the monthly payouts from this scheme will be able to sustain your needs in the long run.
CPF LIFE is just here to make sure that you have enough money monthly to cover your basic needs. Other than that, you should still be taking time to plan your retirement and check whether or not CPF LIFE can help you live your ideal life after retiring. To check how much you can potentially receive for your payouts click here for the CPF LIFE estimator.
In conclusion, CPF LIFE isn't the end all be all solution to your retirement. Do ensure that sufficient planning has been done before deciding whether or not CPF LIFE is the scheme you want to live your best post-retirement days. If you have less than the desired amount of savings in your Retirement Account, consider applying for your payouts later so that you can have higher payouts in the future!