Why I Would Choose CPF LIFE Basic Plan for My Retirement

Source: CPF

When it comes to choosing a CPF LIFE plan, many Singaporeans automatically go for the Standard Plan because it promises higher monthly payouts. In fact, the standard plan is the default plan if you don’t do anything.

But if I had to choose today, I’d go with the CPF LIFE Basic Plan — and here’s why.

1. The Basic Plan Leaves More for My Loved Ones

The key difference between CPF LIFE Basic and Standard boils down to how the premiums are used. Under the Standard Plan, more of your Retirement Account (RA) savings go into the CPF LIFE annuity pool earlier on, which gives you higher payouts — but at the expense of your bequest.

With the Basic Plan, only about 10-20% of your RA savings are deducted upfront to fund the annuity. The rest stays in your RA and continues earning interest. When you pass on, whatever’s left (including the interest) gets returned to your loved ones.

For someone who values leaving a legacy behind or simply wants to ensure nothing "disappears into the system" too early, the Basic Plan is the way to go.

2. More Flexibility

Since most of your money stays in the RA under the Basic Plan, it gives you more options. For instance, if government policies change in the future, you're not locked in too deeply.

The Standard and Escalating Plan front-loads the commitment. The Basic Plan? It buys you flexibility.

Furthermore, you can change your CPF LIFE from the Basic plan to the Standard or Escalating Plan anytime but not the other way round after a 30 days grace period.

3. Still Decent Monthly Payouts

The payout difference between Standard and Basic isn’t massive. If you top up your RA well and delay payouts to age 70, the Basic Plan can still give you a decent monthly payout.

And since I have other income from my side hustle, having a slightly lower CPF LIFE payout isn’t a deal-breaker for me.

 

Final Thoughts

Everyone’s retirement goals are different. But if you:

• Want to maximise your legacy,
• Prefer retaining more control over your CPF savings,
• And are okay with modest payouts in exchange for your legacy,

Then the CPF LIFE Basic Plan might actually be the choice for you.

But most importantly, understand how each CPF LIFE plan works, look at your lifestyle needs, and choose what fits you best. We did the same assessment for my mum when she had to make a choice and CPF LIFE Basic Plan was what we went for based on her needs.

Use my referral link (2HNL05JZ) and sign up for Maribank to get Free Money! Find out more about Maribank here and more about the updated referral benefits here.

Thanks for reading and do support me on my referral page.

Check out the CPFcalculator to plan for your retirement now!