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Improving retirement funding adequacy for my father.

12 Sep 2017 
SOURCE: AK

To have aged parents is our good fortune. However, they could be a drain on our financial resources if they do not have adequate savings to fund their golden years.

Add to this the greater possibility of being stricken by illnesses which require hospitalization or even long term medical care, we could have a very stressful situation on hand.

In recent years, I have been suggesting that we contribute to our parents' CPF accounts. Contributing to their CPF Medisave Accounts (MA) which earns 4% per annum would, in effect, make the government help us grow this contingency fund.

 

 

However, my dad's CPF MA has been maxed out. So, this year, for his birthday red packet, although I will be doing a voluntary contribution to his CPF Account, the money will go to his OA and SA instead of his MA.

If my dad's MA is not maxed out, the bulk of the voluntary contribution would go to his MA as he is above 65 years of age. See table below: 

 

With the money going into his OA and SA only, he would earn 2.5% to 4% per annum from this voluntary contribution. 

No longer having an earned income means he would be able to withdraw this money anytime he wants although withdrawing only the interest income from his CPF Account, leaving the principal untouched would be a better idea.

 

Good company= Good celebration.
See how we celebrate birthdaysHERE.

 

Happy Birthday, 我的老爸!

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