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In Singapore, the age of 55 is a key milestone that most Singaporeans look forward to. It is the CPF Retirement Age – a time when CPF members have their CPF Retirement Account created, and when they can begin to withdraw portions of their CPF monies. As you probably know, you can (but don’t have to) withdraw at least $5,000 when you turn 55, regardless of the balances you have in your CPF. Beyond that, you are only able to withdraw money after you’ve set aside the Full Retirement Sum ($205,800 for those turning 55 in 2024). However, you also have the option of just setting aside half that amount, also known as the Basic Retirement Sum ($102,9000 for those turning 55 in 2024), if you pledge a property you own. In this article, we will explain the implications of pledging your property and what should you consider before doing so. When you’re turning 55, you’ll be sent a set of documents and forms regarding CPF, and you’ll need to indicate if you’d like to set aside the Basic, Full or Enhanced Retirement Sum, and if you choose the Basic Retirement Sum, you’ll need to pledge a property you own or have sufficient . If you co-own the property with someone, you can only pledge up to your share of the property value. Today, your share of the pledged property must be worth at least $102,900 since the purpose of the property pledge is to ensure your assets can help you meet the Full Retirement Sum. Also, the property needs to have more than 40 years of lease remaining (or last you till age 95) and it cannot be a HDB 2-room flexi flat. HDB flats that have undergone a  are also ineligible for pledging. One misconception of property pledging is that CPF or the government suddenly owns part of your property. This is untrue. Pledging does not change property ownership in any way, and you’re still able to sell or rent out your home as usual. The only thing that happens when you’ve pledged your property is that if you do sell your property, the pledged amount will be returned to your CPF account, along with the CPF monies (and accrued interest) you used to pay for the property over the years. In the event the proceeds of selling your property at market value or higher falls short of the monies you need to refund to your CPF, you need to make up the shortfall. By pledging your property and only keeping the Basic Retirement Sum in your Retirement Account, you’ll receive significantly lower CPF LIFE payouts, which commences between the ages 65 or 70 (if you choose to defer receiving payouts). You can use the  to gauge how much (lesser) you’ll be receiving if you pledge your property and withdraw more of your CPF in cash. To illustrate, CPF members who turn 55 in 2024 will receive around $1,670 in monthly payouts for life if they set aside the Full Retirement Sum and are on the Standard Plan. In contrast, the same CPF members would only receive around $900 for life if they pledged their property and only set aside the Basic Retirement Sum. Obviously, $900 is barely adequate for your retirement needs, unless you’re willing and able to make drastic lifestyle changes. When you choose to pledge your property and withdraw a larger sum of money from your CPF, the onus is now on you to wisely manage that money and protect your retirement adequacy. Blowing all that money on a round-the-world trip may not be the wisest decision, unless you have other means for taking care of your future retirement needs. Another point to consider is that keeping the Full Retirement Sum would allow you to enjoy higher CPF LIFE payouts for life. Even if you were amazing at managing your money, the $102,900 in additional cash would eventually be drawn down, and you may find yourself having to live on lower payouts near the tail end of a long life.