CPF & Medisave minimum sums
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Oppsgal:
CPF amount also need to deduct for paying of housing and insurance coverage.
A D minus to you too!
Since you are referring to my scenario, the focus is the CPF SA and not the OA. Since when do you plan to use the SA to pay for housing and insurance? -
Oppsgal:
You obviously miss the point of CPF.
Put in SA means money cannot touch anymore? Why not let people has a choice to use CPF or not anytime, instead of put a minimum sum?Irrelevant:
I'm surprised by the emotions exhibited here, but then again maybe I shouldn't be.
Being curious, I decided to do a simulation with the following assumptions:
1. Started with $2,000 pay at age 24.
2. Annualised increment of 3% a year =>pay at just b4 55 yrs is around $4,850.
3. Annual bonus (whether AWS or VB) assumed to be zero.
4. CPF Special Account contribution rates based on current rates, i.e. 6% at <35, 7% <45, etc.
5. Interest rate on CPF SA assumed to be 4%
6. Interest on CPF balance is calculated on a 1 year lag basis, i.e. new contributions to CPF is assumed to earn interest only in the following year.
7. The data point that once Medisave ceiling is reached, the Medisave contribution will go to CPF SA is ignored.
Given the above conservative assumptions, at age 55, CPF SA balance will become ....ta dah..... approximately $150k. -
Irrelevant:
Typo lah...30 lah...if u want accuracy, then 31.Nebbermind:
$2k @39 yrs ago is not conservative if you are looking at someone who will turn 55 soon.
If a person works from 24yrs old to 55, he would have worked for 39 years? D minus for your maths.
It all depends on the age group that you are describing. For a person who is almost 55 now, he would have bought his flat in the 80s at 100k or less? His CPF contribution would have started at 50% instead of 36% currently. It is more likely than not that he would also have started work at age 16 or so, which would have allowed the wonderful effects of compounding work for him.
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Irrelevant:
If minimum sum increases abt $10k per year going by the trend in the past few years, then the min sum when this guy hits 55 years old will be more than $450k, definitely not the current $150k. You get the picture now?I'm surprised by the emotions exhibited here, but then again maybe I shouldn't be.
Being curious, I decided to do a simulation with the following assumptions:
1. Started with $2,000 pay at age 24.
2. Annualised increment of 3% a year =>pay at just b4 55 yrs is around $4,850.
3. Annual bonus (whether AWS or VB) assumed to be zero.
4. CPF Special Account contribution rates based on current rates, i.e. 6% at <35, 7% <45, etc.
5. Interest rate on CPF SA assumed to be 4%
6. Interest on CPF balance is calculated on a 1 year lag basis, i.e. new contributions to CPF is assumed to earn interest only in the following year.
7. The data point that once Medisave ceiling is reached, the Medisave contribution will go to CPF SA is ignored.
Given the above conservative assumptions, at age 55, CPF SA balance will become ....ta dah..... approximately $150k. -
Dora1:
why must they raise the min sum?
If minimum sum increases abt $10k per year going by the trend in the past few years, then the min sum when this guy hits 55 years old will be more than $450k, definitely not the current $150k. You get the picture now?Irrelevant:
I'm surprised by the emotions exhibited here, but then again maybe I shouldn't be.
Being curious, I decided to do a simulation with the following assumptions:
1. Started with $2,000 pay at age 24.
2. Annualised increment of 3% a year =>pay at just b4 55 yrs is around $4,850.
3. Annual bonus (whether AWS or VB) assumed to be zero.
4. CPF Special Account contribution rates based on current rates, i.e. 6% at <35, 7% <45, etc.
5. Interest rate on CPF SA assumed to be 4%
6. Interest on CPF balance is calculated on a 1 year lag basis, i.e. new contributions to CPF is assumed to earn interest only in the following year.
7. The data point that once Medisave ceiling is reached, the Medisave contribution will go to CPF SA is ignored.
Given the above conservative assumptions, at age 55, CPF SA balance will become ....ta dah..... approximately $150k.
how is that going to help the people? -
raysusan:
agree with you. in theory it is to force people to save more as few people save enough for their retirement.why must they raise the min sum?
how is that going to help the people?
but it is our money, cpf already is a forced savings and we should be able to draw what we can when we retire. -
raysusan:
why must they raise the min sum?
If minimum sum increases abt $10k per year going by the trend in the past few years, then the min sum when this guy hits 55 years old will be more than $450k, definitely not the current $150k. You get the picture now?Dora1:
[quote=\"Irrelevant\"]I'm surprised by the emotions exhibited here, but then again maybe I shouldn't be.
Being curious, I decided to do a simulation with the following assumptions:
1. Started with $2,000 pay at age 24.
2. Annualised increment of 3% a year =>pay at just b4 55 yrs is around $4,850.
3. Annual bonus (whether AWS or VB) assumed to be zero.
4. CPF Special Account contribution rates based on current rates, i.e. 6% at <35, 7% <45, etc.
5. Interest rate on CPF SA assumed to be 4%
6. Interest on CPF balance is calculated on a 1 year lag basis, i.e. new contributions to CPF is assumed to earn interest only in the following year.
7. The data point that once Medisave ceiling is reached, the Medisave contribution will go to CPF SA is ignored.
Given the above conservative assumptions, at age 55, CPF SA balance will become ....ta dah..... approximately $150k.
how is that going to help the people?[/quote]Cost of living had gone up. I had just increased my own annuity payout coverage because I do not think CPF savings is enough.
Some people prefer to rely on their saving first than draw out CPF cos CPF pays a higher interest than the banks. -
Dora1:
If minimum sum increases abt $10k per year going by the trend in the past few years, then the min sum when this guy hits 55 years old will be more than $450k, definitely not the current $150k. You get the picture now?
Ok, test your critical thinking. Why do you think minimum sum will increase to $450k in 30 years time?
Hint: \"Going by the trend in the past few years\" is the D minus answer. -
raysusan:
Say if you have 2 kids, one by the name of Spendy and the other by the name of Thrifty. Spendy always spends all his pocket money while Thrifty saves most of his. Whenever Spendy runs out of money to spend, he will come and manja Mummy, can I have a bit more money to spend? What is Mummy going to do?why must they raise the min sum?
how is that going to help the people?
If Mummy always will give Spendy more money to spend when he runs out, Spendy will never learn how to save. And Thrifty may sooner or later wise up to Spendy's tricks and emulate them. Bottomline is Mummy has to work harder to give more pocket money to both Spendy and Thrifty. Is this the kind of kids Mummy wishes to bring up?
The government knows that some folks will always run out of money. The minimum sum serves to slow down their spending rate. Otherwise, these folks will come crying to the government once they run out of money. As it is, there are already some folks on public assistance and other various schemes. If the \"benefits\" of living off the largesse of the government is tempting enough, you will see more folks \"migrate\" over, throwing caution to the wind on spending.
Inevitably, a government will have to decide how much to allocate to social welfare versus balancing it with sources of funding (taxes). Obviously the model in the developed countries are, as has been widely reported, broken due to serious underfunding. What is a better model? -
Irrelevant:
i see a few posts graded D-minus.
Say if you have 2 kids, one by the name of Spendy and the other by the name of Thrifty. Spendy always spends all his pocket money while Thrifty saves most of his. Whenever Spendy runs out of money to spend, he will come and manja Mummy, can I have a bit more money to spend? What is Mummy going to do?raysusan:
why must they raise the min sum?
how is that going to help the people?
If Mummy always will give Spendy more money to spend when he runs out, Spendy will never learn how to save. And Thrifty may sooner or later wise up to Spendy's tricks and emulate them. Bottomline is Mummy has to work harder to give more pocket money to both Spendy and Thrifty. Is this the kind of kids Mummy wishes to bring up?
The government knows that some folks will always run out of money. The minimum sum serves to slow down their spending rate. Otherwise, these folks will come crying to the government once they run out of money. As it is, there are already some folks on public assistance and other various schemes. If the \"benefits\" of living off the largesse of the government is tempting enough, you will see more folks \"migrate\" over, throwing caution to the wind on spending.
Inevitably, a government will have to decide how much to allocate to social welfare versus balancing it with sources of funding (taxes). Obviously the model in the developed countries are, as has been widely reported, broken due to serious underfunding. What is a better model?
so this one is A*?
oh sorli.... this is supposed to be the model answer, my bad. :slapshead:
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