New Plan for CPF at 55

By now, are you sick of reading and hearing about the closure of SA account at 55?

As mentioned in my earlier post, I am minimally affected by it as I have planned for a non-shielding SA option. And given that I have intended to draw down from my CPF from 55, I would have depleted my SA in a few years time after setting aside for FRS.

Picture taken from our trip at Elephantine Island, Egypt. 2006.

Nonetheless, the saga made me rethink my plan. The good thing is I get a refresher about CPFLife and I did learn something new which I wasn’t aware of in the past. Do choose the right youtube channels and/or websites to learn. There are some that perpetuates misleading information. I would strongly recommend watching the various videos by Christopher from Providend. He explains it very well and provides very reasonable suggestions. I will embed two videos which I found useful at the end of this post.

Going for Basic Retirement Sum (BRS) at 55

Originally, I was planning to just go for Full Retirement Sum (FRS). It’s a typical lazy thinking model. There are three choices – BRS, FRS and ERS; so just go for the middle choice. Just found out that his cognitive bias is known as the Centre-Stage Effect.

After rethinking about it, and running the numbers, I decided to change my plan. I am very likely to go for BRS, instead of FRS. There are a few reasons behind this decision.

Prioritising liquidity

As mentioned in my post Why I did not top up CPF with cash?, I do not like my money to be locked up. So similarly, why lock up more for 10 years from 55 to 65 before I can payout? This will also a period of time when my children will be doing their tertiary education. So having access to cash and CPF-OA will come in handy.

Getting a better return than RA

One advantage of RA is its “risk-free” 4% return. However, given that I am an experienced active investor, I do stand a good chance of getting a better return. The current portfolio’s XIRR since its inception in 2020 is around 8.9%. If I can continue to get such average return, then the CPFLife payout really does not matter to me. Base on current projection, I should be doing alright if I get high 5% average return. Hence, I do have some buffer.

Will I be taking too much risk?

It’s manageable. From 55 to 65, maximum invested amount is no more than 70% and it will decrease after that. Also, I am planning to have 4 to 5 years of cash buffer, so that I do not need to draw down on my portfolio during bear markets.

Option to top up to FRS before 65

I am not ruling out having FRS in CPFLife to get a higher payout. I could still do that any time before 65, for one reason or another. Maybe I am not getting a good enough investment return, or I might be bored with investing along the way. I do not know. However, given that this option is available, I don’t have to rush to lock up my money at 55.

This is my current thinking but I might still change my mind, nearer to 55. I will definitely make an appointment to speak to them at 54 to find out more of the nitty gritty, and fine prints.

Below are the videos from Christopher. Enjoy.


These are the referral links for the services and platforms I used. If you would like to use any of them, do sign up my referral links.

Trust Bank (code: 1X9DDP1V, additional $10 Fairprice voucher)
Keppel Electric
FSMOne (code: P0003528)
StocksCafe (code: TFI)

Read more from source