As you near retirement age, one important decision to make is what to do with the savings in your CPF Ordinary Account (OA) once you’ve met your Full Retirement Sum (FRS) or Basic Retirement Sum (BRS). With the upcoming closure of the CPF Special Account (SA) for individuals aged 55 and over in January 2025, it’s crucial to plan ahead for your financial future.
- Transfer to CPF Retirement Account (RA) for higher payouts
Consider transferring your excess savings in the OA to your CPF Retirement Account (RA) up to the Enhanced Retirement Sum (ERS). By doing so, you can take advantage of the minimum guaranteed 4% interest rate, which will lead to higher monthly payouts from age 65 onwards. This move can provide you with a steady stream of income during your retirement years.
However, it’s essential to note that once you transfer your funds to the RA, this decision is irreversible. The transferred amount cannot be withdrawn for other purposes and will only be disbursed monthly once you reach 65. Therefore, carefully weigh the need for liquidity against the desire for higher payouts before making this decision.
- Maintain liquidity and explore investment opportunities
Alternatively, you can choose to retain your excess savings in the OA, which offers liquidity and a decent interest rate of 2.5% per annum. This option allows you to access your funds more readily and provides flexibility in managing your finances during retirement.
If you’re comfortable with taking on some risk for potentially higher returns, consider investing a portion of your savings in diverse investment options. This strategy can help you grow your retirement nest egg over the long term, but it’s essential to assess your risk tolerance and investment goals before embarking on this path.
In conclusion, whether you opt for transferring your excess savings to the RA or keeping them in the OA, it’s crucial to plan strategically for your retirement. Consider your financial needs, goals, and risk appetite to make an informed decision that aligns with your retirement objectives. By carefully evaluating your options and seeking professional advice if needed, you can secure a financially stable and comfortable retirement lifestyle. Start planning today for a brighter tomorrow.
Leave feedback about this