CPF Minimum sum to be raised to $131,000

The CPF minimum sum will be raised to $131,000, up from $123,000. This will apply to members who turn 55 from 1 July 2011 to 30 June 2012.

Those who have $131,000 can apply to withdraw the monthly payout of $1,170 when they reach the draw-down age of 65.

From 1 July 2011 as well, the Medisave minimum sum will be raised to $36,000 from $34,500 to ensure Singaporeans can meet healthcare expenses

This increase, which includes an adjustment for inflation, seeks to ensure Singaporeans set aside sufficient funds for their retirement and medical expenses.

Author's comments:

Singaporeans who rely solely on CPF for retirement may find it insufficient for their daily needs in future due to the high inflationary environment. In 1990s, a bowl of noodles cost only $1.50 in coffee shop, 10 years later in 2000s it raised to $2.00. Today the same bowl of noodles cost $3-$3.50. That is about 100% increase in 20 years.

The monthly payout may even be insufficient for a basic standard of living. With the property prices ever increasing, majority of the CPF funds of many Singaporeans would have been used to pay for their home.

Thus it may be even more difficult to accumulate to the desired minimum sum, which in turn affects the monthly payout during retirement. Without a retirement accumulation plan, other than just relying on CPF, most people may find retirement unachievable.

Members reaching age 55 can attend CPF's monthly seminars to find out what happens to their CPF savings when they reach 55. Do you know how much you need at retirement? Consult for your financial adviser and start planning!

Original Article: Straits Times 31 May 2011, "CPF Minimum sum to be raised to $131,000"