Tuesday, November 20, 2012

CPF enough for retirement, but only with conditions

If young Singaporeans in today’s workforce purchase homes within their means, they will have enough savings in their Central Provident Fund (CPF) account when they retire, according to a study commissioned by the Ministry of Manpower (MOM).

Conducted by Chia Ngee Choon and Albert Tsui, two Associate Professors from the National University of Singapore (NUS), the research assumed that Singaporeans entering the workforce now will be planning to buy their first house in 2017 and that women would be 28-years old while men would be aged 30.

The study indicated that a property within the means of lower-middle income households with an overall monthly income of S$5,100 in 2017 is a three-room flat.  

For median-income households earning a combined monthly income of S$7,100, a four-roomer is the ideal choice, while a five-room unit is the prudent choice for upper-middle income earners with a total monthly income of S$9,200.

When prudence is exercised, the loan instalments can be fully paid using a CPF member’s monthly contributions to the CPF Ordinary Account, the study added.

Meanwhile, members who have stretched their finances to buy a bigger house should consider monetising their property later in life to supplement their retirement income if the need arises.

They can look to rent out a room or move to a smaller flat to boost their retirement pay-outs as well as take advantage of monetisation schemes offered by the government.

View the original article here

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