For most Singaporeans and permanent residents (PRs), CPF LIFE payouts will provide us basic monthly income during our retirement. The exact CPF LIFE payout we end up receiving is computed based on our CPF Retirement Account (RA) balance. This amount is dependent on our contributions, on a mandatory and voluntary basis, to our CPF Special Account (SA) and Ordinary Account (OA) while working.
The bigger the amount we have in our RA, the greater our monthly CPF LIFE payouts will be.
One easy way to increase our retirement nest egg is to make voluntary contributions to our SA. The amount we contribute will go directly into our SA (or RA if we are age 55 or above), earning us a risk-free interest of at least 4% per annum. In addition to this, we also enjoy a tax relief of up to $14,000 per year when we make voluntary contributions.
Be aware that CPF LIFE monthly payouts only start from age 65. If we intend to retire earlier, we can’t count on our CPF LIFE payouts to tide us through.
In addition, any voluntary top-ups we make into our CPF account today is also irreversible.