What happens after you reach 55 years old?

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When we hit 55 years old, a new account known as the Retirement Account (RA) is being created in our CPF Account. Savings from our Ordinary Account (OA) and Special Account (SA) will be transferred to the RA to form the retirement sum. Anything in excess of the retirement sum can be withdrawn in cash or you can have the option to keep it in CPF to enjoy higher interest rates as compared to putting them in a regular savings account.

How much is the retirement sum?
There are 3 figures that we need to know about.
1. Basic Retirement Sum (BRS) – This will be made known to you ahead of time for you to plan for retirement earlier.

2. Full Retirement Sum (FRS) is set at two times the BRS

3. Enhanced Retirement Sum (ERS) is set at three times the BRS

55th birthday in the year of Basic Retirement SumFull Retirement SumEnhanced Retirement Sum
2017$83,000​$166,000​​$249,000
2018$85,500$171,000​$256,500​
2019$88,000$176,000​$264,000​
2020$90,500$181,000​$271,500​
2021$93,000$186,000​$279,000​
2022$96,000$192,000$288,000
Retirement Sums

How does RA affect property buyers?
If the buyer do not have enough funds in the RA to meet the BRS or FRS, all the funds from the OA + SA will have to be transfer to the RA. As such, they will technically have no CPF to be used for the purchase.

CPF Usuage for property purchase

What if I can’t meet the Basic Retirement Sum?
If you can’t even meet the Basic Retirement Sum, below are some of the possibilities:

$5,000 or less: For those who have $5,000 or less in their entire Retirement Account, you can withdraw the entire amount when you turn 55. You will not receive any retirement payouts, so you should hopefully have done some retirement planning on your own.

More than $5,000, but less than BRS: You will be allowed to withdraw $5,000 when you turn 55, and that’s it. You will then wait till you’re at least 65 to receive CPF LIFE payouts, which will be pro-rated based on how much you have in your account.

More than BRS, but less than FRS: If you own property and have pledged it, then you can withdraw any savings above the Basic Retirement Sum. Otherwise, you will be allowed to withdraw $5,000.

You do not need to top up your account to hit the Retirement Sum. But if you receive any new CPF contributions or top-ups after age 55, the money will be kept in your CPF until your balance meets the next Retirement Sum.

So if all else fails, there is one final solution — continuing to work past age 65 and delaying the onset of your retirement payouts, so you have more time to accumulate your desired Retirement Sum.


Above section extracted from MoneySmart

If you have more than BRS, but less than FRS and would like to pledge it, below is an example for your reference.

Pledging of property, what is it?
Many of us could have the perception that we need to pledge our property if there is a shortage of BRS. But it is not. 1.After reaching 55 years old and if your client would like to withdraw BRS, he can do so if there is sufficient property charge/pledge.

Example:
Mr Tan turns 55 in 2021 with a fully paid up property. He has $80,000 in his OA and $120,000 in his SA. This means $120,000 from his SA and $66,000 from his OA will be transferred to his RA to form his retirement sum of $186,000.

He then has two options:

Option 1: Retain the FRS of $186,000 in his RA and withdraw the remaining $14,000 from his OA.

Option 2: Set aside the BRS of $93,000 since he has a property, and withdraw $14,000 from his OA and an additional $93,000 from his RA. This means he can withdraw a total of $107,000.

Hope the above scenario and examples helps in giving you a clearer understanding of how RA works. For more information, you can visit this website, areyouready.gov.sg created by CPF. A very comprehensive that can answer most our questions!

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