Endowus launches CPF Calculator to provide Singaporeans with a hyper-personalised experience to close retirement gap
Endowus has launched the Endowus CPF Calculator to help Singaporeans create a hyper-personalised plan that is designed to help users to make better CPF financial planning decisions throughout their lives. This is the first time such a tool is created, taking into account one’s personal financial circumstances, CPF balances and desired retirement age and income, to provide insights on how best to optimise their CPF account.
The launch right after the release of the 2021 Endowus Singapore Retirement Report with the objective of better understanding Singaporean attitudes towards the generational challenge of retirement and the role that CPF monies play in building a retirement lifestyle that is closer to individual goals. Through this survey commissioned with YouGov Singapore of 1,099 respondents, data showed that 1 in 3 Singaporeans are worried about retirement adequacy and almost 1 in 2 (45%) not having started planning.
The user is first prompted to share their age, salary and CPF balances, then their desired retirement age and retirement income. With these inputs, the calculator will be able to estimate how long the user’s CPF balance can last after retirement, and also the growth and decline of the user’s CPF balance at different life stages.
Figure 1: Calculator showing how CPF withdrawable balance grow and decline across different life stages, with and without investing CPF
The user will also be sent a personalised CPF Prepared Report on the projected balance of their CPF accounts to help better plan for housing purchases, and how they can grow their CPF accounts by investing or making use of existing CPF schemes. The Report also helps them quantify how their financial plans, such as retiring later, or using less CPF for monthly mortgage payment, can impact their retirement adequacy.
Figure 2: CPF Preparedness report giving personalised information on how delay retirement slightly can impact retirement adequacy and CPF balances
Figure 3: CPF Preparedness report giving personalised information on how investing a portion of available CPF balances can impact retirement adequacy and CPF balances
Singaporeans are looking for a tool to better manage their CPF
The Endowus Retirement Report, an online survey commissioned in May 2021 to be nationally representative, showed that nearly a third of Singaporeans (31%) are looking for a tool that can help understand the impact of financial decisions around managing their CPF, with an equally high percentage (28%) indicating that they are keen on a tool that can help them estimate retirement income from their CPF.
The survey shows that only 53% plan to use CPF for retirement, despite many (89%) being aware of CPF usage for retirement. The results indicate that more can be done to help Singaporeans quantify and understand the impact of effectively using CPF and CPF LIFE for retirement.
“Providing Singaporeans with the tools and insights to help them better utilise CPF for their retirement planning is critical for us as the first and only digital advisor for CPF monies.” It is essential for Singaporeans to look beyond their CPF for a viable financial future.” said Gregory Van, Chief Executive Officer of Endowus. “Beyond providing our clients with an investment solution, we want them to be able to make informed financial plans so they can stay disciplined with their financial goals''.
“By providing Singaporeans with a tool to visualise how they can effectively grow their CPF, we are hoping to empower people to actively plan for their short term financial needs and retire adequately and meaningfully. ”
How the Endowus CPF Calculator differs from other CPF planning tools
Factors in CPF complexities into calculations
The Calculator takes into account the different interest rates, additional interest rates, overflow mechanism and different contribution rates at different age brackets into the calculation. Also, assumptions on growth of the Full Retirement Sum (FRS), as well as CPF LIFE payouts are made so that it takes into account different cohorts’ FRS amount and potential retirement income.
Personalised to every user’s financial circumstances
The Calculator requires each user to fill in personal details on their age, salary, CPF balance, their desired retirement age and income, as well as the percentage of their investable CPF Ordinary Account that they are willing to invest. Based on this, the calculator will be able to provide personalised insights on how long their CPF withdrawable balance can last them after retirement, how much wealth they have, and also when and how they can tap onto their CPF based on their desired retirement age.
Within the CPF Preparedness Report, the user will also be able to get suggestions on how to better manage their CPF, based on each individual’s CPF balances.
Help CPF members quantify impact of decisions around CPF
Within the CPF Preparedness Report, the user will be able to understand how changing their financial decisions, such as retirement age, using a smaller portion of their OA to pay for mortgage, and investing different amounts of CPF can have an impact on their retirement adequacy. The Calculator is able to intelligently derive how the change in financial decisions lead to greater CPF savings and investments, and how that can compound over a period of time to improve on retirement adequacy.
“Based on our findings in the Endowus Retirement Report, many Singaporeans are not planning to use CPF for retirement,” said Samuel Rhee, Chairman and Chief Investment Officer of Endowus. “Our mission has always been to solve the generational challenge of retiring well and managing our CPF responsibly is imperative for retirement planning success. With the Endowus CPF Calculator, CPF members should be better able to visualise how much CPF balances one needs for a meaningful retirement, especially if they manage and invest it effectively.”