My first CPF top up

Lifetime Membership Last weekend, I made my first CPF top up to my spouse’s CPF Special Account. The cash top up of $8,000 was meant to be a birthday gift to supplement her retirement savings but I have decided to do it on an annual basis going forward. Previously, I have written in this blog that I would never do a CPF top up for myself nor my loved ones. This is because CPF top up is irreversible. In this article, I will share the reasons for the change of heart.

By making CPF top up to our Special or Retirement Accounts, we can grow our retirement savings through attractive CPF attractive rates. In doing so, we will enjoy higher monthly pay-outs when we retire. Currently, savings in the Special Account (SA) and Retirement Account (RA) earn interest of 4% per annum. The first $60,000 of your combined balances (capped at $20,000 for Ordinary Account) earns an extra 1% interest per annum. If we start young, the compounding effect of the interest rate could snowball our retirement savings to a significant amount through the decades.

Apart from growing our retirement savings, CPF top up also allows us to enjoy tax relief. Take note that there are some changes for tax relief for CPF top up. With effect from 1 January 2022, you can enjoy tax relief of up to $8,000 (previously $7,000) if you top up to your Special/Retirement Account and/or Medisave Account. You can also enjoy additional tax relief of up to $8,000 (previously $7,000) if you top up to your loved ones’ Special/Retirement Account.

There is a limit to which you can make a cash CPF top up, and that is the Full Retirement Sum (FRS) in your Special Account if you are below 55, and up to the Enhanced Retirement Sum (ERS) in your Retirement Account if you are 55 and above. As I have already reached the FRS threshold, I could not make any CPF top up to my Special Account. However, the same cannot be said for my spouse.

CPF top up & my family journey

Family is our priority. After our second kid was born in 2015, my spouse and I agreed that she should be a stay-at-home mom. We believe that with one parent at home, the bonding would help to increase our children’s academic performance, social and emotional developments. This is especially so during their formative years. Due to this reason, she has sacrificed her career to become a full-time homemaker.

To be honest, being a stay-at-home mom wasn’t an easy decision to make because the thought of depending of my income alone sounded scary. After all, the cost of living is high in an expensive city like Singapore.

Nonetheless, we had decided to bite the bullet and never looked back since. Looking back, it wasn’t an easy journey but we have no regrets. I considered myself lucky that my salary managed to improve steadily over the past decade. Now that we are in our forties, we are left with about 20 more years to build our retirement nest. Given that my spouse had only worked for a few years prior to our marriage, the monies in her CPF SA was a paltry amount. As such, if I consistently do cash top up of $8000 to her SA account for the next 20 years, she should have decent monthly pay-outs when we reached our retirement age.

Diversifying our retirement portfolio

Apart from CPF top up, I had also started to [This is a premium article. The rest of the content is blocked and can be accessible by SG Wealth Builder Members only. To read the full content, please sign up as member.]

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