CPF forms up to 37% of our gross salary, and therefore a substantial part of our wealth. Yet many Singaporeans struggle to make measured and deliberate financial decisions with it.

Based on a survey commissioned by Endowus, many Singaporeans would like a tool that can help them make better financial decisions with their CPF monies, on top of projecting their retirement income. The Endowus CPF Calculator answers this call by helping CPF members project their CPF balances through various life stages and also into retirement.

0:00 - Introduction  

8:03 - Retirement inadequacy amongst Singaporeans

11:06 - Planning CPF well can alleviate uncertainty

14:24 - Why we created the CPF calculator

18:03 - Question: “What is the rate of return that the calculator assumes?”

19:12 - Case study 1 - Young adult planning property purchase

30:45 - Example of a detailed report from the CPF calculator

43:03 - Question: “Does the calculator take into account the bonus 1% interest on the first $60k of CPF balance?”

43:26 - Question: “Is the calculator accurate? How far is it from my actual CPF outcome?”

45:55 - Case study 2 - Financially stable adult, planning for retirement

48:36 - What should you do next?

51:53 - Question: “Does the calculator take into account personal tax?”

53:00 - Main takeaways

57:13 - General QnA

Key excerpts from the webinar

Retirement inadequacy amongst Singaporeans (8:03)

Sheng Shi: Based on Endowus’s Singapore Retirement Report 2021, 39% of Singaporeans are not confident about having sufficient money for retirement. This inadequacy is exacerbated in the sandwich generation - people between the ages of 35 and 44, who have to care for both their parents and children.

Most Singaporeans are highly aware of the different usages of CPF, but are either unsure of how to utilize them, or do not intend to utilize them. One reason for this would be unfamiliarity on how best to utilize their CPF - which is something Endowus attempts to address with our CPF calculator.

45% of Singaporeans have not started planning for retirement and this is a large concern, as starting early is crucial in ensuring we have a sound plan for managing our CPF such that we have sufficient money for retirement.

36% of active CPF members were not able to reach Full Retirement Sum (FRS) in 2020. The FRS provides CPF members with monthly payouts to support a basic standard of living during retirement. In 2020, CPF members could receive a monthly retirement income of around $1,300 when they reach 65 years of age. However, $1,300 might not even be sufficient to cover monthly medical, transport, and living expenses. Compounded with the fact that only a small percentage of CPF members are able to reach FRS, retirement inadequacy is indeed a very pressing concern.

Read more: What you should know about CPF before hitting 25

Why planning CPF well can alleviate uncertainty (11:06)

Sheng Shi: A large portion of our monthly income - 37% - goes into CPF. If left untouched, our CPF monies will continue compounding until you retire, forming a substantial bedrock for our retirement income, savings, and medical needs.

Lean Sing: Is CPF the only means we should rely on for retirement, or are there other considerations we should keep in mind too?

Sheng Shi: It would be wise to treat CPF as part of our retirement plan, rather than our entire retirement plan. We should also allocate a part of our monthly income for longer term financial goals, namely retirement.

Why we created the CPF calculator (14:24)

Sheng Shi: Firstly, existing CPF calculators have very specific uses - they only work for people in certain specific circumstances. Endowus wanted to create an all-encompassing CPF calculator that is applicable and useful for all CPF members, no matter what circumstances they are in.

Secondly, we want to focus on how financial decisions can change financial outcomes. For instance, what if I were to use my CPF for housing now instead of for retirement purposes? Or what if I were to retire later? We want to help our clients quantify the impact of the financial decisions they make, and provide them with a view on how their decisions would impact their retirement.

Lastly, we want to create a product that is very personalized - a product that takes into account where you are financially with your CPF monies, what you want to achieve in terms of your retirement age and retirement income, and how much of your CPF you want to invest. Having a personalised recommendation will incentivize you to take action, and start planning holistically for your retirement.

What should you do next? (48:36)

Sheng Shi: After trying out the CPF calculator, it is important you start taking ownership of your CPF plans. In terms of priority, you should review your housing payment decisions, CPF investment decisions, CPF “hacks” to maximise your CPF balance, and lastly your retirement age.

Endowus will update the calculator yearly as needed, based on any related CPF changes by the government. Do use the calculator to review your financial goals, plans, and CPF balances yearly.

Questions and answers from the webinar

Is the calculator accurate? How far is it from my actual CPF outcome? (43:26)

Sheng Shi: We try to be as accurate as possible by incorporating all the publicly available information we can find. But we cannot guarantee that the various interest rates will remain the same in the future. The assumptions we made on CPF interest rates and investment returns will definitely affect your actual outcome as well.

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