13 Oct 2023

SOURCE: CPF Board

Your CPF savings belong to you and are accumulated through years of hard work. Naturally, you might wonder "why can’t I withdraw all my CPF savings at age 55?"

In the second part of our CPF Answers Series, where we answer your most pressing questions, we'll address this very question and share more about the conditions for withdrawing your CPF savings at age 55.

The CPF retirement sum

Before diving into CPF withdrawals, let's first understand the concept of the CPF retirement sum. In short, it is a guide on how much CPF savings you need to meet your desired monthly payouts in retirement.

There are three levels of retirement sums:

· The Basic Retirement Sum (BRS) provides monthly payouts in retirement to cover basic living needs, excluding rental expenses.

· The Full Retirement Sum (FRS) is an ideal point of reference of how much one needs in retirement.

· The Enhanced Retirement Sum (ERS) provides a higher monthly payout, making it suitable for those who want more retirement income.

What happens to my CPF savings at age 55?

Turning age 55 is a significant financial milestone as the distribution of your CPF savings changes in preparation for your retirement. It is a good time to assess your financial situation to ensure that you are on track to meet your retirement goals.

Firstly, a Retirement Account (RA) is opened for you. The main purpose of this account is to provide monthly payouts in retirement. You can start your payouts anytime from your payout eligibility age of 65.

Savings from your Special Account (SA), up to the Full Retirement Sum (FRS), is moved over to fund your RA. If your SA falls short of the FRS, savings from your Ordinary Account (OA) will be used to make up the difference.

If you do not have enough in your OA or SA to reach the FRS but have used your CPF savings to buy a property, your CPF savings withdrawn for your property (including accrued interest) will be used to meet your FRS. The maximum amount you can use for this is equal to your BRS. Your monthly payouts will not increase by using your property as a pledge. When you sell your property, you will have to restore your RA up to your FRS with the sales proceeds.

Why can’t I make a full withdrawal of my CPF savings?

So why can't you fully withdraw your CPF savings at age 55 then? This is due to increased life expectancy and the need to ensure you have enough funds that can last through your retirement.

CPF was established in 1955 when most people lived to around 60. Members were able to fully withdraw their savings at age 55 and spend on their needs and wants. 

However, rising life expectancy over the years has increased the risk of members outliving their CPF savings. Today, more than 1 in 2 Singaporeans aged 65 can expect to live beyond 85, and about 1 in 3 can expect to live beyond 90.

With increasing advances in technology and healthcare, you are likely to live longer than previous generations. Given the longer lifespans, there is a real risk that your CPF savings could run out if they are fully withdrawn early.

While the thought of receiving all your retirement money at one go at age 55 is appealing, underestimating your lifespan and poor money management can deplete your withdrawn CPF savings and leave you short during retirement.

On the other hand, lifelong payouts through using your RA savings to join CPF LIFE provides a sound financial safety net and peace of mind in retirement that can be useful. This is especially so when you do not have another source of income.

Your CPF savings also earn risk-free interest that are compounded, allowing your money to grow over time.

Partial withdrawal conditions after age 55 

While you are unable to withdraw ALL your CPF savings at age 55, you have the flexibility to withdraw part of it. 

From age 55, you can withdraw:

· Up to $5,000 of your SA and OA savings if you are unable to set aside your Full Retirement Sum;

• Your SA and OA savings after setting aside your Full Retirement Sum; and

• Your RA savings above your Basic Retirement Sum if you own a property with a residual tenure that lasts you until at least age 95. 

Keep in mind that these withdrawals will lower your RA savings and reduce your monthly payout. Consider your desired monthly payouts before making any withdrawals.

Growing your CPF savings further

1) Top up to the prevailing ERS

If you are looking to receive higher monthly payouts, you can make cash top-ups or CPF transfers to your Retirement Account (up to your prevailing ERS).

You will also enjoy tax relief of up to $16,000 a year if you make cash top-ups for both yourself and your loved ones (up to the current FRS).

2) Making a top-up via the Matched Retirement Savings Scheme

To help senior Singapore citizens with lower retirement savings build up more, the Matched Retirement Savings Scheme (MRSS) provides a dollar-for-dollar grant (up to an annual cap of $600) for every cash top-up made to their Retirement Account.

Find out if you are eligible for MRSS with the Matched Retirement Savings Scheme Eligibility Checker.

Lifelong payouts that last for life

It is hard to accurately predict your lifespan. In fact, with consistent advances in technology and healthcare, there is a high probability that we might live longer than what we think. CPF LIFE provides monthly payouts for life, reducing the worry of you outliving your retirement savings.

As you plan your finances to prepare for retirement, keep in mind that you have options to grow your CPF savings and the flexibility for partial withdrawals at age 55. 

If you have enjoyed reading this CPF Answers article, check out our other piece on why is CPF important as well! 

The information provided in this article is accurate as of the date of publication.