How To Build Sustainable Retirement Income With Your CPF Money

Yen Joon

Yen Joon

Last updated 27 July, 2022

Our CPF savings is one of the main sources of retirement income, so it's important that maximise them for your retirement years.

You probably know that the main purpose of CPF savings is to support our living needs during retirement. However, the CPF board adjusts the retirement sums annually to keep up with inflation, which could make the target sums seem unachievable to many. Hence, knowing how you can build a sustainable CPF retirement income is important if you want to receive monthly CPF income.

In this article, we’ll be looking at ways on ways you can build up your CPF savings to sustain your retirement. Before going further into detail, you could divide your retirement income into two categories: guaranteed and non-guaranteed income. 

The former refers to the CPF payouts, withdrawals from CPF accounts, SRS savings, annuity or retirement income insurance, cash and near cash assets like the Singapore Savings Bonds (SSBs), annuity, money market funds, and index funds.

Non-guaranteed income typically refers to proceeds from more volatile assets such as stocks, some bonds, investment-linked insurance plans, commodities, etc. 

An overview of how CPF works

If you’re a working Singaporean or Singapore Permanent Resident, you and your employer will make monthly contributions to your CPF accounts. 

There are three CPF accounts: CPF Ordinary Account (OA), CPF Special Account (SA), and MediSave Account (MA). Your CPF savings can be used to fund three basic retirement needs, including housing, healthcare including medical insurance, and a retirement income. 

You’ll also earn risk-free interest on your CPF savings, which is higher than the interest provided by banks. On top of that, you also earn compound interest on top of the interest you already earn, helping to grow your savings faster.

When you reach 55 years old, a CPF Retirement Account (RA) will be set up for you. The savings in your CPF OA and CPF SA will be transferred to your CPF RA until you hit the Full Retirement Sum (FRS). The savings you have in your CPF RA will then determine the monthly CPF LIFE payouts you’ll receive for as long as you live. 

We’ve written a comprehensive article about CPF here, for a more detailed explanation. 

How to increase your CPF retirement savings

However, as mentioned, the FRS is adjusted each year to account for inflation. If you’re worried that you might not have enough CPF money to support your retirement, here are a few ways to build up your CPF savings.

1. Make cash top ups or transfer funds from your CPF OA to SA via the Retirement Sum Topping-Up Scheme (RSTU)

The RSTU helps to grow your retirement savings by allowing you to top up your own or family’s CPF SA (for those below 55 years old), or CPF RA (for those 55 and above). You can choose to make cash top-ups or transfer funds from your CPF OA to CPF SA/RA.

Topping up your CPF SA allows you to earn a higher interest rate of 4% compared to 2.5% from your CPF OA. 

Additionally, you’ll also be eligible for tax reliefs of up to S$8,000 for top ups made to your SA/RA, and an additional S$8,000 if you make a top up to your family’s CPF SA. That’s S$16,000 in total. Though, only cash top-ups are tax-deductible. 

You also can only top up your CPF SA/RA up to the FRS if you’re below 55, and up to the Enhanced Retirement Sum (ERS) if you’re 55 and above. The FRS is S$192,000 and the ERS is S$288,000 in 2022. 

Keep in mind that transferring funds from your SA to OA is irreversible. So before deciding to transfer funds, make sure that you don’t need the funds for other purposes such as housing or paying your monthly mortgage. 

Suggested read: What Can CPF Be Used For, Aside From Supporting Your Retirement?

2. Make voluntary cash top-ups to your CPF accounts

You can make voluntary cash top-ups to your CPF accounts on top of the mandatory CPF contributions that you make every month, to boost your CPF savings.

You can make contributions to your CPF OA, SA, and MA but the maximum amount you can top up is up to the CPF Annual Limit, which is capped at S$37,740. 

If you would like to top up your MA only, you the maximum contributions you can make in a year is up to the annual Basic Healthcare Sum (BHS). The BHS is estimated savings you need in your MA for basic healthcare during your retirement and is adjusted annually. For those below 65 years old in 2022, the BHS is S$66,000. 

Note that you can only enjoy tax reliefs if you make top ups via the RSTU or specifically to your MA. In other words, you won’t be able to enjoy tax reliefs if you choose to top up all three CPF accounts. 

3. Monetise your home to increase your CPF savings

Aside from making contributions to build up your CPF savings, you can also monetise your home to increase your retirement funds. 

There are two ways to unlock the value of your home and increase your CPF LIFE monthly payouts: Silver Housing Bonus and Lease Buyback Scheme. 

Silver Housing Bonus (SHB)

Through the SHB, you can increase your CPF RA savings and receive a cash bonus of up to S$30,000 when you downsize to a 3-room or smaller flat, which can be bought from HDB or the resale market. 

To qualify for SHB, you’ll need to top up S$60,000 from the sale proceeds of your home into your CPF RA. 

The sale proceeds are the net proceeds from the sale of your property. This is calculated by deducting the property’s remaining loan, resale levy, and purchase price of the new flat from the sale price of your property. 

For example, say that you’re selling your current 4-room flat for S$500,000 and buying a 3-room resale flat for S$300,000. Below is the breakdown of the costs involved:

Sale price of your propertyS$500,000
Remaining loan − S$60,000
Resale levy− S$40,000
Purchase price of the new flat− S$300,000
Net proceeds S$100,000

As you can see, the net proceeds from the sale is S$100,000. To receive the cash bonus of S$30,000, you’ll need to top up S$60,000 from the net proceeds to your CPF RA, which will be used to join CPF LIFE. 

On the other hand, if the top-up amount is less than S$60,000, the cash bonus will be prorated based on a 1:2 ratio — you’ll receive S$1 cash bonus for every S$2 top-up made. 

For example, if the net proceeds of the sale is S$40,000, you’ll need to top up the difference of S$20,000 to your CPF RA to hit the minimum S$60,000 required. Based on the pro-rated 1:2 ratio, the cash bonus you’ll receive is S$10,000.

Also, note that if there aren’t any net proceeds from the sale, you won’t be eligible for the SHB. 

The SHB is also available for private property owners. However, your property must have an annual value of S$13,000 or less.

Lastly, the SHB is eligible for Singapore Citizens who are at least 55 years old and have a gross monthly income of S$14,000 or less. You must also meet the Minimum Occupation Period (MOP).

Lease Buyback Scheme (LBS)

If you would much rather continue living in your flat, another option is to sell part of your flat’s remaining lease back to HDB through the LBS. The proceeds of the sale are determined by HDB (who will also determine the value).

You can choose how much of your flat’s remaining lease to retain, which will be based on the age of the youngest buyer. 

Age of the youngest ownerLease retained (minimum)Other options
65 to 69 30 35
70 to 742530, 35
75 to 792025, 30, 35
80 and above1520, 25, 30, 35

The proceeds of the sale must first be used to repay the outstanding home loan (if any), before being used to top up your CPF RA so that you can receive monthly CPF LIFE payouts. 

If you’re the sole owner of the flat, you must use the proceeds to top up your CPF RA to the current FRS (which is S$192,000 for those turning 55 in 2022). If there is more than one owner, each owner needs to top up to their BRS (which is half of the FRS). 

Once you’ve topped up your RA to meet the requirements, you can withdraw any excess in cash (up to S$100,000). If there is still any excess after that, you must use the proceeds to top up your CPF RA until your reach the current FRS, before you can retain any balance in cash. 

On top of the cash proceeds that you receive from the LBS, you’ll also receive a cash bonus if you can top up at least S$60,000 to your CPF RA from the proceeds of the sale. The maximum cashback you can receive depends on the size of your flat:

  • 3-room flat: S$30,000
  • 4-room flat: S$15,000
  • 5-room or bigger flat: S$7,500

The cash bonus will be prorated if the top-up is less than S$60,000:

  • $1 for every $2 CPF top-up for 3-room or smaller flats; or
  • $1 for every $4 CPF top-up for 4-room flats; or
  • $1 for every $8 CPF top-up for 5-room flats or bigger flats

Also read: Lease Buyback Scheme: A Step-By-Step Guide To Cashing Out

The LBS is eligible for owners who are at least 65 years of age. At least one of the owners must be a Singapore Citizen, with a gross monthly household income that’s not more than S$14,000. 

In addition, you must also meet the MOP, do not own more than one property, and your property must have at least 20 years of lease to sell to HDB.

While the LBS can help in increasing your CPF savings to support your retirement, there are several drawbacks.

For starters, you can’t sell or lease your property out after joining the LBS. This means that you could potentially lose out on more money if your home can fetch a higher value in the resale market, especially if your flat has good attributes (located in a mature estate, spacious, close to amenities, etc.).

Further to that, you might get just as much or more income from renting out your home or the rooms. This also allows you to continue living in your home without worrying about running out of the lease.  

Speaking of leases, there’s also the risk of outliving the lease period. 

HDB doesn’t exactly say how to deal with it, instead that they will “look into your circumstances such as family support, health condition, and financial status, and work out an appropriate housing arrangement with you and your family members.” 

Lastly, remember that the sale proceeds will go towards topping up your CPF RA to hit either the FRS or BRS, and you’ll only receive any excess in cash once you’ve met the requirements. 

Since both retirement sums increase each year, the chances of receiving cash proceeds are extremely low. 

4. Invest your CPF savings via the CPF Investment Scheme (CPFIS)

You can also grow your CPF savings by investing them. Through the CPFIS, you can invest your CPF OA and SA savings in a variety of investments (which have been screened by CPF), such as unit trusts, ETFs, endowment policies, ILPs, gold, and more. 

You can also invest your CPF savings via robo-advisor platforms such as Endowus and MoneyOwl, which allow you to invest your OA funds for higher returns over the long term. Keep in mind like all financial products, the returns aren't guaranteed, and you should invest based on your risk appetite.

For example, aside from the low fees, Endowus allows you to invest in up to six different portfolios that are globally diversified and there’s also automated rebalancing to ensure that they’re aligned to your investment goals. Sign up for an account with SingSaver now to enjoy S$20 off your access fee. 

Suggested read: Endowus Review: Investing Your Cash, CPF And SRS Money At Low Fees

That said, there are some caveats to investing your CPF savings. Firstly, you must have more than S$20,000 and S$40,000 in your OA and SA respectively. You also cannot use your SA funds to invest in investments that are deemed by CPF to be of high risk.

Remember that investing your CPF savings (or any source of funds for that matter) also carries risks; so there’s a chance that you may lose your money as these investments are not guaranteed by CPF. 

If your risk tolerance is low, there's no need to invest your CPF savings; CPF gives you guaranteed, risk-free interest of 2.5% for OA and 4% in SA, which are already higher than what banks offer.

What’s more, you'll earn an additional 1% interest for the first S$60,000 (capped at S$20,000 for OA). If you’re below 55 years old, you can earn up to 5% interest for all your combined CPF savings, and up to 6% if you’re 55 and above. 

So unless you don’t need to use your OA funds for any immediate needs (e.g. for housing), or if you have confidence that your CPF investments can provide you with higher returns, it’s better to leave your savings in your CPF and earn compound interest. 

Your CPF savings is just one source of retirement income

While accumulating your CPF savings to hit the FRS or ERS is important if you want to receive higher monthly CPF payouts, it’s not the only source of income for retirement.

For example, you can invest your money to build your retirement funds. There are many types of investments you can invest in, ranging from REITs to ETFs, from mutual funds to cash management accounts. Consider your risk tolerance and time horizon before deciding the types of investments to invest in. 

While you can monetise your property for increased CPF savings, remember that you can also choose to rent the whole property out, or one of the rooms. This gives your greater flexibility without the cost of losing your lease or moving out. 

Lastly, don’t forget to be insured! While your MediShield Life may provide you with basic insurance coverage, it’s a good idea to have additional coverage such as critical illness, which are helpful during your retirement years, especially with medical costs rising. 

Read these next:
Investing S$100,000: How To Build A Stock Portfolio
How To Make Investing Interesting (And Work For You)What Kind Of Critical Illness Insurance Do I Really Need?
Should I Use CPF Or Cash To Finance My Home?
6 Misconceptions About Using Your CPF For Housing

In my past life, I was always broke because of a lack of financial literacy. Now, I publish a few posts every week* on personal finance to help you manage your money better. *I mean, I’ll try


Use a personal loan to consolidate your outstanding debt at a lower interest rate!

Sign up for our newsletter for financial tips, tricks and exclusive information that can be personalised to your preferences!