Retirement Planning Is Not Just About Saving That Sum

good retirement planning is simply

Not matter how much money you set aside, whether it is in your CPF or other savings, it can be depleted in just a matter of time. However, an income would not. The untold secret about retirement planning is actually about retirement income, not the fund itself.

Retirement lifestyle and retirement fund

You must have heard a lot about setting a realistic lifestyle that is comfortable yet not overly straining on your retirement fund.

So what is your realistic lifestyle?

And have you calculated how fast will your retirement fund last you till?

If you have not, don’t be too surprised if it didn’t last you as long as you expected. It can actually deplete quite fast.

See the following scribble I draw together with a client on how fast can retirement fund deplete after one leave their full-time job.


retirement income.JPG
Retirement fund over time 


Retirement income

This is the key to successful and happy retirement, a good sustainable passive income for retirement.

It could be one or two of the following :

  • Dividend payout from stocks, bonds, insurance etc
  • Profit sharings from stakes of companies, partnership or startups
  • Returns from crowdfunding, high-interest deposits
  • Rental income from properties
  • and the list goes on

All the above has certain risk components in it, you have to decide which is the most suitable for your risk appetite and to start building it now.

Whether or not you are in 20s, 30s or 40s, start today to think about what is your retirement income and plan a way to achieve it.

It is never too late when you start today =)




Why I Won’t Choose Cash Over CPF to Pay My Mortgage?

full redemption cpf or cash

Why I don’t want to use my cash bonus to redeem my mortgage? It is simply to have more liquid cash on hand to spend on yourself and on investment.

For the benefits of our foreign friends, Central Provident Fund (CPF) is a mandatory monthly saving plan for salaried employee. This is closely similar to the mandatory provident fund in Hong Kong and employees provident fund in Malaysia. And when one reaches retirement age, he/she can withdraw money on a monthly basis for daily expenses.

Here are some points why I would rather use CPF than cash in bank to pay off my mortgage.

More cash for yourself

Whether if you are planning to get married or starting a family, both requires a substantial amount of ready cash.

Furthermore, everyone deserves some pampering, be it a good holiday or buying a car or to dine at good restaurants, these requires cash.

More cash for second property

In order to use your CPF monies to finance your second property, you will need to set aside the basic retirement sum before you can use the excess savings to pay for your second property.

Let’s say you have $100,000 cash in your bank, $100,000 in your CPF ordinary account, and you have $100,000 left to pay to fully redeem your property, will you use the money in your CPF or bank?

  • If you use the $100,000 cash in your bank; you now have only $19,500 cash in your CPF to buy a second property (because you need to set aside basic retirement sum of $80,500)
  • If you use the $100,000 cash in your CPF; you now have $100,000 cash in your bank to buy a second property.

$19,500 vs $100,000 cash for the down payment is a big gap on the property price range you can afford.


Spend more earn more

As long as your mortgage is paid via CPF, it will be paid back to yourself one day when you sell the property, regardless how much interest rate it is.

Without a doubt, if you can cover your mortgage using solely from CPF, use it!

And only use CPF, not the cash in your bank. By spending more smartly, you will earn more. 

Netting off your retirement sum

You might be thinking you will have nothing left in your CPF retirement account, if you over spend it on mortgage? That will not happen at your retirement age.

Just assume a very conservative annualized capital gain of 1.5% in your property valued at $400,000 and compare it to the extrapolated retirement sum amount (estimated).

55 Years Old in Year Full Retirement Sum Estimated Selling price
2017  $                  166,000  $                       406,000
2018  $                  171,000  $                       412,090
2019  $                  176,000  $                       418,271
2020  $                  181,000  $                       424,545
2021  $                  186,000  $                       430,914
2022  $                  191,000  $                       437,377
2023  $                  196,000  $                       443,938
2024  $                  201,000  $                       450,597
2025  $                  206,000  $                       457,356
2026  $                  211,000  $                       464,216
2027  $                  216,000  $                       471,180
2028  $                  221,000  $                       478,247
2029  $                  226,000  $                       485,421
2030  $                  231,000  $                       492,702
2031  $                  236,000  $                       500,093
2032  $                  241,000  $                       507,594
2033  $                  246,000  $                       515,208
2034  $                  251,000  $                       522,936
2035  $                  256,000  $                       530,780
2036  $                  261,000  $                       538,742

Under normal circumstances, your property will appreciate faster than the retirement sum needed. Furthermore, no matter how much you have use your CPF to pay for mortgages and its interest, you are still owing them to yourself.

At the point of retirement age, you effectively only owe yourself the minimum retirement sum.

At the point of retirement age, you effectively only owe yourself the minimum retirement sum.

When should you choose to spend cash instead of CPF?

If it is really so good, why isn’t everyone using CPF instead of cash to redeem their mortgage?

If you have no confident of spending your cash wisely and know you have the tendency of gambling it away, please put all your hard earned cash into redemption of your property. In this way, you are protecting your hard earned savings by locking it up in CPF.


In short, paying off your mortgage solely from your CPF is the way to go as it will build up more cash for yourself and investment. Let me know what you think and if you have a better approach? : )