CPF Full Retirement Sum increases to $166K but will you need to beyond till 90 to be better off?

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“In 2015, life expectancy for women here was 84.9 years and for men, 80.4 years, making people here among the longest-living in the world. But women spend 10.7 per cent of their lives in ill health, and men 9.4 per cent.” – ‘Women lose out to men in extra healthy years‘ (Straits Times, Jan 14)

By: Leong Sze Hian

Full Retirement Sum has increased to $166,000

Since the Full Retirement Sum (FRS) has increased to $166,000 from 1 January 2017 – according to the CPF web site –

“How much CPF LIFE monthly payout will I receive?

Your CPF LIFE monthly payouts would depend on the savings you have in your Retirement Account.

*Payout figures are estimates, based on the CPF LIFE Standard Plan and computed as of 2017″

CPF Life vs Retirement Account withdrawals?

Using 4% interest plus an extra 1% on the first $60,000 and extra 1% on the first $30,000 – the Full Retirement Sum’s ($166,000 a age 55) accumulated sum at age 65 is estimated to be about $244,448.

CPF Life Payout Estimator?

I used the CPF Life Payout Estimator on 14 January 2017 with a male date of birth of 12 January 1962 (age 55) and $166,000 in the Retirement Account – the results for the Life Standard Plan – monthly payout from age 65 is $1,289 – $1,420 – Bequest at age 65 ($239,344 – $249,632), age 75 ($79,172 – $84,572) and age 85 ($0).

After withdrawing $1,355 ($1,289 + $1,420 divided by 2) monthly until age 75, the account balance is estimated to be about $178,000.

Worse off by $96,128 at age 75?

So, does it mean that if one dies at age 75, he would in a sense, have lost about $96,128 ($178,000 – $81,872 ($79,172 + $84,572 divided by 2) bequest)?

After withdrawing $1,355 monthly until age 85, the account balance is estimated to be $74,325.

Worse off by $74,325 at age 85?

So, does it mean that if one dies at age 85, he would in a sense, have lost about $74,325 ($74,325 – $0 bequest).

By the way, what is the bequest at age 80?

The account is estimated to become $0, after about 25 years, or after about 90 years old.

Live beyond age 90 to be better off?

In other words, does it arguably, mean that one has to live beyond age 90, in order to be better off under the CPF Life Standard Plan, compared to just making monthly withdrawals from one’s Retirement account, until the money runs out.

Of course this option to make monthly withdrawals until the money runs out (the former CPF Minimum Sum scheme withdrawal) is no longer available with CPF Life being mandatory now.

What is the probability that a male will live beyond age 90?

Female has to live beyond age 93 to be better off?

Similarly, if you are a female, your estimated monthly life annuity is lower at about $1,262 – and correspondingly, does it mean that you may have to live beyond age 93 in order to be better off?

So, what’s the probability of a female living beyond age 93?

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