Enough in my CPF for retirement (2022)?

Around 3 years ago, as I was building up my CPF account, I did a similar post "Enough in CPF for Retirement?" after wondering how much I will need to accumulate in my CPF in order for it to be sufficient for my retirement.

Now, 3 years later, I have gained a much better understanding of the CPF system, Special Account Shielding and CPF LIFE and so I have decided to relooked at it again.

Similarly, I start by looking at how much Money (in today's dollar) I will need monthly when I retire at age 65.

With the recent inflation run up, most of the estimation in expenses have actually increased since 3 years ago. However, I have considered some "lifestyle deflation" such as less visit to restaurant for meals and less Grab rides for transport, in order to keep my retirement expense under controlled.

The cost of Medshield Integrated Shield plans have also sky rocketed in these past 3 years. As a result of that, I have downgraded my Integrated Shield plan to a lower tier and this helps to keep my Medical Insurance cost estimates the same as that 3 years ago.

In the last 3 years, I have also added housing mortgage payment to my expense. Hopefully nothing goes too wrong and I will be able to finish my payment before I turn 65 as planned. So I have not assumed any mortgage payment during my retirement years.

So 3 years later, my estimated monthly expense for retirement in today's dollar is $2050, just $50 more than my estimates 3 years ago.

Category	SGD$/Month	SGD$/Year	Remarks
Meal	900	10800	Based on $20 per day + occasional spurges
Medical Insurance	500	6000	Based on AIA Gold Max B + vital health B + Miscellaneous insurance
Transport	200	2400	Public transport and occasional Grab
Utilities/Phone/Internet bills	250	3000
Miscellaneous	200	2400
Total	2050	24600

Since the expense is in today's dollar, the $2050 would have compounded for 24 years before I hit my retirement age of 65. With an assumed average inflation rate of 3%. (Singapore's average inflation rate from 1961 till 2021 is 2.5%) the retirement expense would have grown to $4167 per month.

Courtesy of Moneychimp Compound interest calculator

From the CPF projection calculator, assuming that I get the same pay and 1 month bonus until I retire at 65, I will have the following in my CPF without Special Account (SA) shielding.

Ordinary Account:$650000

Special Account:$240000

Retirement Account:$470000

The $470000 in the Retirement Account (RA) for CPF Life will get me around $2400 per month estimated with the CPF LIFE estimator under the standard plan.

You can see that the CPF Life payout of $2400 is insufficient to pay for the monthly expense of $4167 at age 65 and this short fall will be covered by the withdrawal from the CPF SA first followed by the Ordinary Account (OA).

With all these figures below

Ordinary Account:$650000 getting 2.5% interest

Special Account:$240000 getting 4% interest

CPF Life payout: $2400/month

Monthly expense:$2050/month @ 3% inflation

and some excel work, my CPF savings will be able to fund my retirement until I hit age 92. At 92 both my OA and SA will be depleted. Of course CPF Life will still be paying me $2400/month if I live past 92.

With SA shielding, the money in my OA will be used for the RA and I will have more in SA earning 4% and lesser in OA. This will stretch the amount to fund my retirement till 95.

And If  assumed a 4% average inflation rate instead of 3%, the age drops to 85

This exercise brought up some important point for me.

1) CPF Life is likely not going to be sufficient to fund my retirement needs.

2) Accumulating my OA and SA diligently and performing SA shielding to maximize the 4% interest will provide me with the additional money to cover the short fall from CPF Life.

3) Inflation rate plays a crucial part in how long my CPF will last in my retirement years.

So, if inflation don't go too crazy during my retirement years, I should be able to accumulate sufficient money in my CPF to fund my basic retirement need. This forms the safety net for my retirement.

The side income from rental, dividends and interest payment from stocks, bonds and savings will be the bonus if I can grow them well to add on to my retirement. These can then fund bigger and more extravagant expenses like frequent and longer distance travelling.

As always, thanks for reading and do support me on my referral page. Stay Safe and Happy CPFing!