Dear Mr. XXX,

Thank you for reaching out to us, and we appreciate your patience as we address your inquiries regarding retirement planning.

You have raised the following points:

Bequest amount at each age year (60 to 90) based on Standard Payout Full Retirement Sum and Basic Retirement Sum.

It’s crucial to understand that CPF LIFE functions as insurance rather than an investment product. Therefore, while the bequest feature exists, it shouldn’t be the primary consideration when choosing a plan. Instead, your preferred retirement lifestyle and desired payout quantum should guide your decision.

Comparing payouts and bequests among the three CPF LIFE plan types isn’t the most effective method for decision-making. This approach can lead to errors, particularly because individuals often underestimate their life expectancy. Hence, the CPF estimator has been redesigned to better cater to members’ needs.

All three plans offer capital protection, meaning any unused premiums will be refunded to you or distributed with your other CPF savings according to your CPF nomination. While bequest amounts can be calculated by deducting total payouts received from total CPF LIFE premiums paid, it’s important to note that most CPF LIFE members typically exhaust their premiums during their lifetime.

Your projected monthly payout for Full Retirement Sum (FRS) and Basic Retirement Sum (BRS) from 60 years old (Oct 2025), considering you’ve opted for payout from 60 years old under Exempt Occupation (SAF Act).

Based on your current Retirement Account (RA) balance and assuming you commit your eligible withdrawable amount to the LIFE plan and join the LIFE Standard Plan in August 2025, the estimated monthly payout from age 60 would range between $1,090 and $1,160*.

Additionally, considering you meet the conditions to withdraw $90,500 from your RA in August 2025 and commit your eligible withdrawable amount to the LIFE plan, the estimated monthly payout from age 60 would be between $670 and $710*.

I hope this clarifies your queries. Should you require further assistance or clarification, please don’t hesitate to reach out.

Warm regards,

CPF Representative’s

From the CPF Life Estimator website, it’s noted that the bequest amount can generally be calculated by subtracting the total payouts received from the total CPF LIFE premium paid.

Upon conducting my own calculations using Excel, for the standard plan, with an initial amount of $426,000 at 55 years old and assuming a 4% interest rate, the maximum bequest achievable would be $630,584 at 65 years old. This calculation is based on compounding the initial amount at 4% until reaching the age of 65. However, this figure will gradually decrease depending on the monthly withdrawals made, which are estimated to be around $3,300 per month. Consequently, by around age 79 or 80, the account value is expected to diminish to zero.

Between the ages of 79 or 80 and 85, withdrawals will be sourced from the common pool bequest funds, which comprise the interest earned on the account value after age 65. Beyond age 85, withdrawals will be sourced from the bequest funds contributed by other individuals who have passed away before fully utilizing their common pool funds. These funds are derived from the interest earned on other individuals’ account values after age 65.

This illustrates the dynamic nature of CPF LIFE payouts and bequest calculations, which are influenced by factors such as initial contributions, interest rates, and individual withdrawal patterns.

I recently sought clarification from CPF regarding the Basic Plan, particularly concerning the implications for my retirement payouts. Despite my initial inclination towards this plan for its potential to safeguard my bequest, I have since reconsidered due to the significant reduction in monthly payouts it entails. It appears that the CPF Life Estimator for the Basic Plan may not accurately reflect the fluctuating nature of payouts, which can drop substantially once the account value dips below $60,000.

Based on CPF’s response to my inquiry and subsequent calculations, it seems that opting for the Basic Plan would result in approximately 80-90% of my Retirement Account (RA) savings, including accrued interest, being directly utilized for payouts until the age of 90. The remaining 10-20% would then be deducted as CPF LIFE premium upon enrollment and utilized for payouts beyond age 90. Consequently, due to the lower proportion allocated towards CPF LIFE premium, the monthly payouts are diminished compared to the Standard Plan.

Furthermore, CPF clarified that the monthly payouts under the Basic Plan will progressively decrease once the CPF balances fall below $60,000. This decline is attributed to the reduced extra interest earned on the first $60,000 of CPF balances, which is credited to the RA and incorporated into the monthly payouts. As the balances deplete due to payouts, both the extra interest and subsequent payouts diminish accordingly.

It is evident that regardless of the chosen plan, individuals are likely to predominantly utilize their own funds (including accrued interests) until approximately age 84 or 85, after which they may begin tapping into funds contributed by others. Additionally, delaying the payout until age 70 exacerbates this situation, as it delays access to the collective funds until a later age, approximately 87 or 88, even with the increased monthly payout.

I’ve streamlined my retirement planning by opting for the Basic Retirement Sum (BRS) and selecting the earliest payout option. I intend to utilize the $90.5k cash withdrawal along with monthly CPF payouts to invest in secure fixed-income options such as long-dated Singapore Government Securities (SGS), Singapore Savings Bonds (SSB), or statutory bonds. My primary objective is to safeguard the financial security of my next of kin.

Additionally, I believe the BRS is particularly advantageous for individuals with dependents. By receiving the monthly payout and allocating it towards safe fixed-income investments, we can ensure a steady income stream while preserving the financial well-being of our families.