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What does it take to save a million dollars in your CPF Account as your retirement plan?
You may have heard about a Singaporean who accumulated a million dollars in CPF savings. ดาวน์โหลดjoker Is it possible and what do you need to do if this amount is going to form the bulk of your retirement savings?

What is CPF?
CPF stands for Central Provident Fund. Managed by the Central Provident Fund Board (CBFB), it is a social security savings scheme that helps working Singaporeans and Permanent Residents save for retirement, healthcare and home ownership.

Depending on age, all working Singaporeans and Permanent Residents contribute a certain percentage of their monthly salary a month to CPF. In addition, employers also contribute a percentage of their employeeďż˝s monthly salary to their employeeďż˝s CPF.

How can you save a million dollars in your CPF?
In order to get a million dollars in your CPF, you need to max out your Special Account (SA). The CPF is composed of three portions:

Ordinary Account (OA)

Special Account (SA)

Medisave Account (MA)

The OA is primarily used for housing, while SA is used for retirement. MA is used to pay for healthcare.

Earlier this year, CPF has announced that between 1 January to 31 March 2021, CPF members under 55 can earn up to 5% p.a. on their first $60,000 of their combined balances. CPF interest rates are reviewed every quarter.

In addition, CPF members aged 55 and above can earn an additional 1% interest on the first $30,000 of their combined balances, and up to 5% on the next $30,000. As a result, CPF members aged 55 and above will earn up to 6% interest per year on their retirement balance.

In order to accumulate a million dollars in your CPF, the key is to move the lower interest OA money into your SA. Then, the compounding effect of 5% per annum builds up your cash reserves faster.

Note the time this takes will differ, based on how much you earn. Singaporeans below the age of 55 are required to contribute 20% of their monthly pay to CPF. Employers contribute an additional 17%.