The Straits Times (ST) published an article today describing how a retiree is able to save over $1.6 million in her CPF accounts (‘How retiree in Singapore saved over $1.6m in her CPF‘, 25 Jul).

ST said that the 67-year-old retiree has more than $1.2 million in her CPF Ordinary Account (OA) and another $400,000 in her Retirement Account (RA). In addition, she also has over $50,000 in her MediSave account.

“These savings allow her to enjoy close to $50,000 in annual interest from the CPF alone,” ST said. The retiree not only refunded all the money she had withdrawn from the CPF when she was younger, such as for a mortgage, she is still making further contributions to CPF, ST noted.

“She is putting in the maximum allowed every year – $37,740 – even though she has been retired for about four years,” ST added. “Thanks to her own contributions, her Special Account, which was initially depleted after the funds were moved to the Retirement Account, has grown to over $15,000.”

“In addition, she uses only cash savings for her expenses because she is keen to grow her CPF money further before she starts to draw down when she hits 70,” ST wrote.

The retiree said that the key is to start CPF monthly contributions as early as possible, because any monthly income above $6,000 will not be eligible for contribution. So such balances have to be gradually saved over three to four decades.

“I have shown that it can be done,” She proudly announced. “I am not trying to show off or anything like that, but to reiterate the point that it is possible to accumulate your savings in CPF and achieve your million-dollar status even at age 55.”

She said she easily withdraw over $30,000 of interest annually now without affecting her principal sums. She can also access a further $2,000 or more a month from her Retirement Account if she wants since the CPF monthly payout will start at 65 but chooses not to do so until she is 70 so that the payout then will be higher, she said.

“Like what they say, compounded interest is the eighth wonder of the world and this is particularly true in the case of CPF. This is especially so if you start working from age 25 and then save and grow the money there for the next 40 years,” she advised everyone.

What about taking the money in excess of one’s Retirement Account and use it for investment? She said, “It is not so easy to make money in the stock market, and I think it is better to leave your money in the CPF and treat it like an insurance policy where you can withdraw at any time you want after 55.”

ST: Give CPF regular boosts by refunding money taken out from CPF for home loans

The ST article also advised Singaporeans to refund the money that one might have withdrawn from CPF for home loan. ST wrote, “You should now set targets to give your OA a regular boost by refunding the money that you withdrew for your home loan.”

It advised people to go to myCPF website and “Make a housing refund with cash”. This is so that one “can have a high level of savings in your CPF again, as if you have never used a dollar to pay for your home loan”.

ST said this is the “secret” to how people can achieve about $700,000 in their OA when they are in their early 50s, by “dutifully contributed to their CPF since they were young”.

“If you can achieve this, you will stand a chance to have $1 million or more in your OA when you are in your 60s,” concluded ST.

There are 394,710 CPF members with over $500,000 such as the featured CPF member with 1.6 million in her CPF account. The CPF member’s age group (65-70) has 25,599 other similar members.

On the other hand, over 2.5 million CPF members have less than $160,000 in their account and of these, there are 949,170 CPF members who are aged 55 and above.

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