How Much Can I Withdraw From Retirement Savings

How Much Can I Withdraw From Retirement Savings – If you’re reading this, there’s a good chance you rely – or intend to rely – on your Central Provident Fund (CPF) to pay the monthly mortgage payments for your property. However, in some cases there is a limit to how much CPF funds you can use. To avoid the unpleasant shock of finding out that you have exceeded the CPF housing withdrawal limit for the property (and need to pay off the housing loan balance in cash), read this article.

In short, the total amount of CPF funds you can use to cover your property is subject to two limits: the Valuation Limit (VL) and the Withdrawal Limit (WL).

How Much Can I Withdraw From Retirement Savings

Let’s define this for a moment: VL refers to the purchase price or the value of the property at the time of purchase (whichever is lower). WL refers to the maximum amount of your CPF that you can put into property and this is currently set as 120% of VL.

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Note that your CPF savings can only be used if the property you are buying is freehold or has a lease for more than 20 years, enough rent to cover until the youngest buyer turns 95.

Good news! Neither VL nor WL applies to you and you can use your CPF to pay off your house in full.

VL is about you. If you want to use your CPF savings in addition to your VL, you must:

Say you want to buy a flat for sale with a 65 year lease. Given that the purchase price of the flat is S$500,000 and the cost of the flat is S$480,000, your VL will be S$480,000.

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Assuming a down payment of S$100,000, a loan amount of S$400,000, a term of 30 years and an interest rate of 2.6%, you will pay S$1,601 per month.

If you are unable to meet your BRS at this time, you will need to switch to cash as soon as you do. If you have met your BRS, you can continue to use your CPF savings to pay off your mortgage.

As long as you get a bank loan, both VL and WL apply to you, regardless of your type of residence.

As in the previous scenario, once you exceed your VL of $480,000, you will need to meet with your BRS to continue servicing your mortgage with your CPF savings.

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The difference here is that once you reach a WL of S$576,000 (27 years, 4 months at the 30 year mark), you may or may not meet your BRS.

Scenario 1: If you have an OA savings-backed property that won’t cover you until age 95:

Scenario 2: If you have a property backed by OA savings that will cover you until age 95:

The percentage of your OA payment for any of these three is determined by the lower of the property’s purchase price or appraisal value.

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Regardless of the situation you find yourself in, the lease must cover the youngest buyer until they are under 95.

This is HDB’s way of ensuring you have a roof over your head while having enough funds for retirement.

To reduce cash costs for their property, many Singaporeans will try to milk CPF for all it’s worth. Before you do this, note that you will reach the CPF housing withdrawal limit before the loan is repaid.

If you do, make sure you have enough cash saved up by then and have the financial means to pay off the remaining term of the loan in cash. The more CPF funds you set aside for living, the less you’ll have for retirement, so make sure your debt payments don’t take up too much of your income.

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Also, consider whether paying your installments through CPF is worth it, given that you face the double whammy of sacrificing the 2.5% interest rate you would otherwise earn on your CPF General Account, plus the fact that you have to repay the accrued interest . . Your CPF account if you are selling a property.

In short, if you decide to use a large portion of your CPF funds to fund your property, make sure you have adequate cash savings and/or an investment plan for your retirement.

If you found this article helpful, tips on deciding between an HDB loan and a bank loan? Here’s a quick tip and 5 property finance disasters that homeowners don’t realize they’re subject to

Property Purchase Condo CPF CPF Valuation Limit CPF Withdrawal Limit First Time Buyers HDB Resale Property Second Renewal

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Whether your HDB flat is nearing the end of its Minimum Occupancy Period (MOP) or your flat has passed the Seller’s Stamp Duty (SSD) window, it’s always good to know how much you can potentially earn if you list and sell. You can benefit. . Not just the property, you also need to know if your benefits will allow you to get the right size neighborhood dream for you and your family.

An easy way is to send us a request for a trusted and reliable property consultant to connect with you.

Whether you’re looking for your dream home as a first-time or experienced home buyer or seller – say, upgrading or downsizing – you’ll find it on Singapore’s fastest-growing real estate portal.

In the meantime, if you have an interesting property-related story to share with us, drop us a line here — and we’ll look into it and get back to you.

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Browse curated articles to help you find the answers you need for a more complete home search experience. When you start planning for your retirement, the first thing you’ll want to do is understand how CPF works.

That is why this guide is designed to provide only meat in the dish and eliminate potatoes and vegetables (they are still discussed in other articles).

One of the main objectives of the Central Provident Fund (CPF) is to provide retirement income that will cover at least basic needs as we age.

But because it is also a comprehensive social security system (eg bao ka liao), there are many other uses for your CPF savings.

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This is important because as humans we tend to be distracted. And when we have a lot of incoming wants/demands, we can’t sort them out and figure out where our money should go.

Mandatory savings will allow us to buy property and receive income in our retirement years.

You can use OA balance for different needs. But be careful, if you use it too much (eg buy a large property you can’t really afford), it directly reduces your retirement savings in later years.

And for this reason, it is ready for retirement purposes. Especially when it grows with high interest rates.

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MA Savings covers your basic health care needs, not just for you but for your dependents.

Unlike other accounts, the Medisave account has a ceiling which is the Basic Health Sum (BHS). It is currently $63,000 in 2021. If you have more, it will roll over to other CPF accounts (more on that later).

If you are under 55, there will be an additional 1% on the first $60,000 of your combined CPF balance. There is a $20,000 limit for OA savings.

If you’re 55 and above, you’ll get an extra 2% on the first $30,000 of your combined CPF balance and an extra 1% on the next $30,000. There is a $20,000 limit for OA savings.

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For the additional interest earned on the OA balance, they are transferred to a Special Account (SA) or Retirement Account (RA).

The sequence used to determine what your combined CPF balance is for bonus interest calculation:

As long as you are a citizen or permanent resident of Singapore, you will receive income in the CPF.

Contributions to CPF can be from your normal salary (eg monthly salary) and additional salary (eg annual bonus) but there are limits.

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What this means: If you earn $10,000/month, only $6,000 is eligible for CPF contributions. If you are 55 and below, your CPF contribution will be $1,200 (20% of $6,000). And your take-home pay would be $8,800 (10,000 – 1,200). Your employer will also contribute $1,020 (17% of 6,000) to your CPF.

There is also an Additional Wage (AW) ceiling. The formula for the AW ceiling is $102,000 – total ordinary wages (OW) subject to CPF in that year.

What this means: Based on the above example, your AW ceiling is $30,000 ($102,000 – (6,000 * 12)). So if you receive an annual bonus of $20,000, the entire amount is subject to CPF contribution; If you receive an annual bonus of $50,000, only $30,000 is subject to CPF contributions.

Earlier I mentioned that the Medisave account has: Basic Health Sum (BHS) $63,000 in 2021.

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As soon as you hit this ceiling, the excess will be transferred to another one

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