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The CPF LIFE scheme is meant to provide Singaporeans with the security of a monthly income in our retirement, regardless of how long we live. This security of a lifelong payout is important, especially with rising life expectancy in Singapore. Living longer and getting to spend more time with out loved ones is always a blessing. However, along with it, we have to plan for a retirement that may be longer than the previous generations, and one that may even be prolonged further with continued advancements in medical care. The first thing we have to note is that the CPF LIFE scheme is not a handout from the government. It is merely a scheme that allows us to draw on our own CPF contributions during our working years in a sustainable manner. In other words, individuals who do not contribute to their CPF accounts, such as those working overseas, housewives, those unable to work and even freelancers or business owners who don’t make contributions, may not receive as much as someone who regularly contributed over the years. Of course, these individuals or their loved ones can choose to make regular voluntary contributions, via the Retirement Sum Topping-Up (RSTU) Scheme, into their CPF accounts if they want to enjoy a comparable CPF LIFE monthly payout. Doing so will also provide a dollar-for-dollar tax relief. We can start receiving our CPF LIFE monthly payouts once we hit our Payout Eligibility Age (PEA). Currently, the Payout Eligibility Age starts at 65. We can also choose to defer our CPF LIFE monthly payouts for any period of time between 65 and 70. Once we hit 70, we must start receiving our CPF LIFE monthly payouts – and cannot defer any longer. How much we receive in our CPF LIFE monthly payouts is a result of how much we have contributed over the years – either as part of our salaries or through making voluntary contributions. However, three other factors can impact how much we receive each month: – Whether we have saved the Basic Retirement Sum (BRS), Full Retirement Sum (FRS) or Enhanced Retirement Sum (ERS); – Whether we choose the Basic Plan, Standard Plan or Escalating Plan for CPF LIFE payouts; and – When we choose to start our CPF LIFE monthly payouts between 65 and 70 In this article, we will look at the third point – how deferring the payout start age between 65 and 70 will impact our CPF LIFE monthly payouts. To derive the calculations, we use a scenario of a male who turned 55 in 2024, with the Full Retirement Sum of $205,800 saved in his Retirement Account. Here’s how much the person will start off receiving each month. If we are on the Basic Plan, we stand to receive a CPF LIFE monthly payout that is 33.1% higher by deferring our starting age from 65 to 70. On average, this translates to 5.9% higher CPF LIFE monthly payouts for every year we defer. On the Standard Plan, we receive CPF LIFE monthly payouts that is also 33.3% higher by deferring our starting age from 65 to 70. This is similar to the Basic Plan, and also works out to 5.9% higher CPF LIFE monthly payouts for every year we defer our CPF LIFE payouts to 70. On the Escalating Plan, we receive a CPF LIFE monthly payout that is 37.7% higher by deferring our starting age from 65 to 70. This works out to getting 6.6% more in CPF LIFE monthly payouts for every year we defer. Deferring our starting age not only impacts our CPF LIFE monthly payouts, but also the cumulative payouts we receive over time as well as the bequests we leave behind. Here’s how deferring our starting age from 65 to 70 will impact our cumulative payouts and bequests. As we can see, if we pass on at 75, we would have been better off starting our payouts at 65 instead of 70. However, if we live to the average life expectancy, we can expect to be better off by deferring our CPF LIFE payouts to when we hit 70. Additionally, for those who defer but pass on before 70, our CPF savings would not have gone into the CPF LIFE scheme – and instead still remain in our CPF Retirement Account. Hence, our beneficiaries will be entitled to the full amount – inclusive of interest returns. Nevertheless, we will never take out of the CPF LIFE scheme less than what we put in. This means that if we pass on before withdrawing the amount we contributed to CPF LIFE, our beneficiaries would be entitled to the remain amount (not inclusive of interest returns). Of course, as an individual, we would not have been able to enjoy the fruits of our life’s labour if we don’t live close to 85 or beyond. If we aim to leave behind a larger bequest, deferring our payouts from 65 to 70 looks to be the logical choice. We could also look at the combination of cumulative payouts and bequests to make a decision on which plan we want to be on and how long we want to defer our CPF LIFE monthly payouts. We also have to consider that the results may alter in some ways if we do not save up to the Full Retirement Sum. We could have only the Basic Retirement Sum or save more, up to the Enhanced Retirement Sum, but this should impact the numbers in a largely similar manner. We all have unique circumstances, and our decision on our CPF LIFE is an important retirement planning decision. Do not withdraw the $5,000, or any sums that we are eligible to withdraw, at age 55. Do not make further withdrawals at age 65. Consider making Voluntary Contributions (VC) to our CPF accounts while we are young to enjoy the effects of compounded returns. Consider the Retirement Sum Topping Up (RSTU) Scheme to contribute more to our CPF accounts, while enjoying tax savings as well. Periodically transfer our Ordinary Account balances to our Special Account to earn an extra 1.5% per annum in interest returns. In the current higher interest rate environment, we earn slightly more than the minimum 1.5% higher interest between OA vs SA. Pay for part of our housing needs with cash to allow our CPF Ordinary Account balances to grow or for transfer to our Special Account. Lastly, if we are still earning an income that can sustain us beyond the age of 65, we should consider deferring our CPF LIFE monthly payouts. This would give us higher monthly payouts when we stop earning an income.