Member-only story
Retirement Guru: Can we outperform the CPF Board’s Interest Rate?
Definitely possible!
The Fine Print
Depending on your age, the CPF Board tells us that our CPF savings will earn us “up to 6% or 5% in interest per annum”. This is indeed an amazing return that is not easily bettered, or even, matched. But if we look closer, there are several caveats:
- This high interest rate only applies to the first $60,000 of your combined CPF balances.
- For those below age 55, it is 5% on the first $60,000; for those age 55 and above, it is 6% on the first $30,000 and 5% for the next $30,000.
- For both age groups, it is capped at $20,000 for the OA.
Based on the $4,313 median gross monthly salary of fresh graduates in 2023, Singaporeans will easily hit the $60,000 limit within 3 or 4 years of starting work. This means that the majority of Singaporeans below age 55 are effectively earning a CPF interest rate of 2.5% in their OA, while those aged 55 and above are earning 4.08% in their RA. Not quite the 5% or 6% many of us believe we will earn.
[For the period 1 July 2024 to 30 September 2024, the interest rate for the OA is 2.5% and 4.08% for the Special, MediSave, and Retirement Accounts.]
