The CPF Homeowner’s Hack and Choosing Liquidity Over ERS at 55

You might think I’m crazy, but I love CPF LIFE. It’s the ultimate safety net that protects against longevity risk.

And guess what? As I did my research for this post and video, I realised that for homeowners, the deal is even sweeter!

While many know you can pledge a property to stick with the Basic Retirement Sum (BRS), I always had the impression that I had to make that “final” decision right at age 55.

What I discovered is that between age 55 and 65, I can actually draw down from my Full Retirement Sum (FRS) in my Retirement Account (RA) back to the BRS level.

This is the “Homeowner’s Hack”: The RA effectively acts like the “old” Special Account (SA) after 55!

That means you enjoy 4% risk-free interest with the flexibility of drawing down (up to the FRS amount) if you need the cash. Did you already know this, or am I the only “mountain tortoise” here?

Given that the vast majority of Singaporeans are homeowners, I wonder why this point wasn’t highlighted more when the SA closure was announced.

It likely would have pacified quite a number of members, except for those specifically aiming for the Enhanced Retirement Sum (ERS).

Why I’m Choosing Liquidity Over ERS

On paper, the ERS looks like the gold standard: higher payouts and a guaranteed 4% return. But I’ve realised that for my strategy, choosing liquidity is the real winner.

There is a fundamental difference between having your money in the RA as a “flexible reserve” versus committing it permanently to the ERS.

In the video below, I break down the math, the “10-Year Option” strategy, and the reason why ERS doesn’t fit into my current plan.

Watch the video below for the full breakdown.

Disclaimer

This content is for informational only. I am not a financial advisor, tax professional, or legal expert, and the information shared here does not constitute personalised financial advice, nor is it a solicitation to buy or sell any securities or financial instruments.

All opinions and commentary reflect my personal views and are based on general market commentary.

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Always conduct your own research and due diligence and consult with a qualified, licensed financial professional, tax professional, or legal advisor before making any investment or financial decision.