My CPF journey and What does it mean to be #FRSLoh

I have to say I wasn't really "CPF Savvy" when I was younger. Back then, in my mind, I was just treating CPF as a housing fund. This is because I only know I can use my CPF Ordinary Account (OA) for housing and I don’t even know or bother to find out what my Special Account (SA) and Medisave Account (MA) are for. In fact, I don't really bother how much is in my SA or MA as in my head they are "locked up" and not really "my money" until I'm 65.

It wasn't until when I was around 35 years old, as I became more financially aware, that I begin to pay more attention to my CPF savings in the 3 accounts. I started to read and find out what is Full Retirement Sum (FRS), Basic Healthcare Sum (BHS), what they meant to the various CPF accounts and how I can make use of my CPF for tax savings and plan for my retirement. Slowly but surely, I made use of the available CPF schemes and hit FRS in my CPF SA account this year.

#FRSLoh

In this post, I'm going to breakdown my journey of building up my SA to reach FRS and what I would have done differently if I was more CPF Savvy in my earlier days. Hopefully this helps some of you along in your CPF Journey. You can also use the CPF Calculator to help you visualize your Journey.

Age	My CPF Journey	What I should have done
24 to 34	Mandatory contribution to CPF OA/SA/MA account via my work	I wasn't into investing during this period and most of my savings are sitting in savings account or fixed deposit earning way less than 2% p.a I should have kept 6 months of my expenses as emergency fund liquid in savings account or fixed deposit and perform voluntary contribution to my CPF with a portion of the spare cash on a yearly basis.
	Used my CPF OA to fully pay for my HDB	Use a portion of the spare cash sitting in my savings account to pay off my HDB.
Age	My CPF Journey	My considerations
35 to 39	Started OA to SA transfer	I kept a portion of my OA to make sure I can cover my HDB loan repayment for around 3 months and transferred the rest to my SA for higher interest.
	Retirement Sum top up (RSTU) to SA for tax relief	To build up my SA for retirement and also get some tax relief.
	Voluntary MA contribution for tax relief	To keep my MA at BHS so any interest overflows to the SA (up to FRS) followed by OA and also get some tax relief.
To be continued…….

Looking back, I could have done more when I was younger and I would have probably reached #FRSLoh earlier. Nevertheless I am glad I eventually took action and managed to hit FRS in my Special Account. So what does it mean to have #FRSLoh?

For a start, I know I'm likely going to have FRS in my SA when I reach 55 years old as well. Currently, the rate of increase of FRS is around 3% p.a. to roughly keep up with inflation and the SA interest rate is at 4% p.a. This mean that the SA 4% per annum interest rate will more than keep up with the 3% increase in FRS. In a way, I am getting a free 1% compounded yearly from the government that I'm free to withdraw at 55. Of course this is based on the assumption that the FRS increment and SA interest rate doesn't change for the next 15 years. Even if it does, I will probably be ok since I will still be working and contributing to my SA monthly.

Compound Growth

The downside of reaching FRS is that I can no longer perform RSTU to my SA for tax relief. A good problem I would say. Anyways, there are still other options like Supplementary Retirement Scheme (SRS),  RSTU for your parents and MA topup for tax relief. Its December now and you should be considering all these tax relief options if you have not already. Note: that there is a personal income tax relief cap of $80,000.

Thanks for staying till the end and please do support my store and referral!

Happy FRSing!