Why it Pays to Plan for Retirement Income of Up to $3,300 from CPF

Bank estimates show that such a monthly income may enable a person to run a mid-range car and enjoy short yearly holidays

- Tan Ooi Boon

If you are looking for a useful New Year resolution, make retirement planning a priority so you can take advantage of a new and important change to CPF that kicked in on Jan 1, 2025.

Those turning 55 now have the option of doubling their retirement savings, from the mandatory full retirement sum of $213,000 to the new enhanced retirement sum (ERS) of $426,000 for CPF Life.

If you make such voluntary top-ups, you will receive higher monthly payouts of about $3,300 from age 65, almost double the $1,700 payout for those who choose not to do so.

The chance to have a higher fixed monthly income in retirement is also open to folk over 55 if they make top-ups to their CPF Retirement Accounts to hit the new ERS with either cash or funds already in their CPF account.

People in this group can log into myCPF portal to check the estimated payout they could get with their top-ups as they will hit 65 earlier and so receive payouts sooner.

The new ERS is a major boost to our retirement planning effort because the higher payout of over $3,000 a month means many of us can now rely on our CPF alone to have a fairly comfortable retirement.

Estimates by banks such as OCBC show that people who can get more than $3,000 in retirement income a month may even be able to keep a mid-range car and enjoy short overseas holidays every year.

This aspiration is certainly achievable for couples who plan for the new ERS together because it means that they can receive two sets of payouts from the national annuity scheme, or over $6,000 a month.

Such an amount is not something to scoff at because it means that in just 10 years, or by age 75, a couple would have received over $720,000, and $1.44 million by age 85.

These sums are just payments from CPF Life alone, and do not include other income sources you may have, such as interest earned from the remaining CPF balances as well as your bank savings and other investments.