There are people who constantly ask why am I planning for retirement so early or why focus so much attention on CPF 101 hacking. For that matter, also why am I starting so young for my child. Is 55 years ahead too young to plan? How about 30 years ahead?
Identify, Exploit, Subordinate, Elevate, Repeat.
If you know your constraints and work around to Boss over it, you will use it as a weapon to your advantage.
Retirement – whether it is extended (to re-employment age), normal (legislative retirement age), early (due to illness or incapability to work) or forced (retrenchment) – sometimes it is just unpredictable when you might leave a job and never come back to work again.
By diversifying, you’re making sure you don’t put all your eggs in one basket.
While the overall amount is still small, I have been working hard at allocating my portfolio, not just diversification across but within. Having many baskets are important so that you do not rely on just one for retirement should it fail. This is one of the failures when Singaporeans identify and are fully dependent on their CPF balances as their main source of retirement funds.
For stocks and shares, I keep watch over the SGX and HKEX markets. Even within, I spread it over Blue chips, REITS and undervalued counters etc. For cash, I have a few accounts, whether it is for forced savings, expenditure account or a higher-interest bearing account by fulfilling the various necessary conditions. For insurance, I cover the risks should I fall sick or incapable to work.
Cash, Stocks, Bonds, Exchange-traded funds, Mutual funds, Insurance, CPF are your different baskets for Retirement
Finally, I can identify with CPF contributions being my own monies. It is essential to know the constraints and work your way around it to use them as weapons to your advantage.
I recognised right from the start the financial potential of the substantial 37% monthly contribution from both my employer and myself as an employee. 37% of my income is almost half of it. I know that my CPF LIFE monthly payouts are dependent on how much I would have in my Retirement Account (RA) when I reach 65. Regardless of the payout plan I choose, the simple logic is, the more I had the more I will have.
CPF LIFE monthly payouts if I were to age 65 today
|$88,000||$522 – $550||$480 – $505||$416 – $441|
|$176,000||$977 – $1,032||$887 – $939||$772 – $822|
|$264,000||$1,427 – $1,509||$1,295 – $1,373||$1,125 – $1,201|
CPF LIFE monthly payouts if I were to age 65 today and delay payouts to 70
You can start your payouts anytime from your payout eligibility age till age 70. You can receive up to 7% higher payouts for each year you defer your payouts.
|$88,000||$672 – $719||$610 – $653||$547 – $588|
|$176,000||$1,248 – $1,340||$1,129 – $1,214||$1,010 – $1,092|
|$264,000||$1,820 – $1,958||$1,649 – $1,775||$1,471 – $1,595|
Kickstart early for my Child
We know that Life is never easy nor going to be easy. Inflation continues to grow and strike us hard. Markets go up and down. Policies change.
However some natural laws are consistent and just do not change over time.
Save a little each day and you end up with a lot in future. Power of Compounding interest. Time in the market, not time the market. The more you learn, the more you earn. The Rich believe “I create my life”, the Poor “Life happens to me”.
I do not believe in handing over your child the golden spoon. However, I strongly believe in inculcating the value of money and financial education from as early age as possible. Also, I see the little bit of investment which I am doing on a monthly basis as a duty of a Father to his Child.
With this mentality, I refuse to fall between the cracks during my retirement. Neither for my family.