One of the key change that will happen in 2016 is the tweaking of the current Minimum Sum (MS) and CPF LIFE scheme. The Basic Retirement Sum (I.e. 1/2 of the MS, which in term will be renamed as the Full Retirement Sum, FRS) will continue to increase at 3% till $90,500 by the Year 2020.
To allow for a higher payout for life, you can choose to top up to the Enhanced Retirement Sum (ERS) to have an estimated payout of ~$1,800/mth for life.
BRS: $80,500
FRS: $161,000
ERS: $241,500
Burning question: Is CPF LIFE a good one? A quick assumption based on FRS on a female getting a payout of ~$1,200/mth for 20 year, the total payout will be $288,000. Even if death occurs at Age 80 (average mortality of male), he would have drawn out a total of $216,000. And that is based on the initial amount of $161,000. Of course, guarantee has a price, that is the rigidity of the payout of such system.
On a macro level, I feel that by having CPF LIFE as a basic retirement income amount allows for more flexibility to take a longer view towards your other investments.
PS: By the way, CPF LIFE is the acronym for CPF Lifelong Income For the Elderly.
© Wee Khai
Wee Khai is an avid soccer player, who is also a finisher of 12 half-marathons and 3 full marathons.
Wee Khai 