CPF & Medisave minimum sums

[3Boys]

CloudeeDaz:

Irrelevant:

[quote=\"raysusan\"]why must they raise the min sum?

how is that going to help the people?

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?

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?

i see a few posts graded D-minus.
so this one is A*?

oh sorli.... this is supposed to be the model answer, my bad. :slapshead:[/quote]Well, if people want to ignore hard truths.....many countries are crippled by social welfare spending, many companies are bankrupted by their pension funds. What happens to the pensioners then?

It's all well and good to say we look after the retirees, but if they haven't saved enough then someone else is paying, I.e., you and me and our children.

[3Boys]

winchester:

raysusan:

why must they raise the min sum?

how is that going to help the people?

agree with you. in theory it is to force people to save more as few people save enough for their retirement.

but it is our money, cpf already is a forced savings and we should be able to draw what we can when we retire.

And what age should people be retiring, since they can be expecting to live to 80 on average? Should it be at 55, having worked 30 years from age 25 and expecting the savings of 30 years work to last them another 25 years? Should it be 65, so that savings from 40 years work can last them another 15? Which seems more realistic to you?

Taking everything out at age 55 is just courting disaster.

There is so much talk here about 'personal choice', as if thats the only thing that matters. If something goes wrong for those people who take out money early, the forumers here on KSP are not the ones picking up the pieces, it's the families of those people and taxpayers who bear the brunt. If government say we raise GST to support those pensioners who run out of money, how? You will happily support? Talk is cheap.

Of course we can all stick our heads in the sand and twist the government's arm........

[Irrelevant]

CloudeeDaz:

i see a few posts graded D-minus.

so this one is A*?

oh sorli.... this is supposed to be the model answer, my bad. :slapshead:

Thank you for your sarcasm, although I would very much look forward to your contribution to the debate instead. Look on the bright side, I could have given them an \"F\" grade.

[3Boys]

Not sure why people are so up in arms about this. It’s a very simple philosophy: make sure you have enough in your old age when you really can’t work. If you hit age 55 and you still ain’t got minimum sum, then please consider all ways and means to stretch your working life and dollars you do have, CPF will hold back your savings till later, so that you have a fighting chance not to be destitute at 75.


Next, 55 is waaaayyyyy too early to retire these days. Of course we are going to get into a debate about how sad it is to be forced to work at 55 vs having a ‘choice’ to work, as if so many people actually have that luxury. Working past 55 is the new reality, get over it already.

I would have thought this would be blindingly obvious to parents who are teaching financial prudence to their kids…

[Irrelevant]

3Boys


Actually, I’m very much against the CPF scheme too! Why does the government allow all the dumbos, erm… I mean less financially savvy folks dictate the rules in CPF? It is there to serve just the lowest common denominator!

Besides the silly rant above, the specific issues I have against the CPF are:

1. Why the hell is CPF paying an interest rate that is lower than inflation?! This is tantamount to taking our money today and returning them back to us in depreciated dollars!

2. The CPF investment rules are crazy. They are designed such that folks who lose money in investments are protected. However, in protecting these folks, they are making life very difficult for folks (yes, like me) making money instead.

[CloudeeDaz]

Irrelevant:

CloudeeDaz:

i see a few posts graded D-minus.

so this one is A*?

oh sorli.... this is supposed to be the model answer, my bad. :slapshead:

Thank you for your sarcasm, although I would very much look forward to your contribution to the debate instead. Look on the bright side, I could have given them an \"F\" grade.

Goodness!
No. I am not being sarcastic. Far from it.
Well, sorli if it seemed so.
Am bad in Engrish, bo pian.
Ok . Give me a failing grade for bad in expression and for non participation in this debate then .

p/s : did i spot a name calling in yr new post?

[Dora1]

Irrelevant:

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.

Irrelevant
I dunno who gave you the authority to go around grading people D minus or F, but I always thought that we are mature people here exchanging ideas. We can disagree with each other, but pls show respect to fellow forummers.
I feel that this is extremely childish and I shall not stoop to your level. So I will not reply to your posts anymore.

[Harlequin]

raysusan:

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.

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?

why must they raise the min sum?
how is that going to help the people?[/quote]Inflation la, the biggest monster.

[winchester]

Harlequin:

Inflation la, the biggest monster.

http://mycpf.cpf.gov.sg/CPF/my-cpf/reach-55/Reach55-2.htm

indeed, inflation is the killer for rising min sum. biggest jump in absolute $ was from 2008 to 2009 - $106,000 to $117,000 i.e. $11,000 difference.

[winchester]

3Boys:

winchester:

[quote=\"raysusan\"]why must they raise the min sum?

how is that going to help the people?

agree with you. in theory it is to force people to save more as few people save enough for their retirement.

but it is our money, cpf already is a forced savings and we should be able to draw what we can when we retire.

And what age should people be retiring, since they can be expecting to live to 80 on average? Should it be at 55, having worked 30 years from age 25 and expecting the savings of 30 years work to last them another 25 years? Should it be 65, so that savings from 40 years work can last them another 15? Which seems more realistic to you?

Taking everything out at age 55 is just courting disaster.

There is so much talk here about 'personal choice', as if thats the only thing that matters. If something goes wrong for those people who take out money early, the forumers here on KSP are not the ones picking up the pieces, it's the families of those people and taxpayers who bear the brunt. If government say we raise GST to support those pensioners who run out of money, how? You will happily support? Talk is cheap.

Of course we can all stick our heads in the sand and twist the government's arm........[/quote]some pts i agree.

should raise withdrawal age and peg with retirement age, no longer 55 but 63 or 65. people can withdraw all they want. if they want to spend it all foolishly, agree too, taxpayers should not bear the weight. but the hard part is those of us who can manage our finances well, or think we can mange our finances well, we want the flexibility to deal with our own money the way we see fit.