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During Budget 2024, DPM and Finance Minister Lawrence Wong announced a policy tweak that caught most Singaporeans off guard. From 2025, seniors turning 55 will see their CPF Special Account closed. Instead of having 4 CPF accounts, the Retirement Account will replace their Special Account. Along with this, another change to the CPF system was announced – and may have flown slightly under the radar. The Enhanced Retirement Sum (ERS) would be raised from 3x the Basic Retirement Sum (BRS) to 4x the BRS from 2025. From 2025, the ERS will rise from $319,500 (3x BRS) to $426,000 (4x BRS). This move will take CPF LIFE payouts from $2,530 to $3,330.   While this is definitely a positive move to encourage more Singaporeans to commit our retirement savings into CPF LIFE, the one drawback may be the math of it. The maximum we can contribute to our Retirement Account (i.e. the ERS) increases 33.3%, but the payout will only rise 31.6%. As we can also tell from the table above, the Enhanced Retirement Sum (ERS) is not going to stay static. Each year, we can expect the ERS to rise in tandem with the BRS – which is raised based on long-term inflation, longer life expectancy and improvements in standard of living. Today, we already know what the ERS (and by extension the BRS and FRS) will be until 2027. From what we can tell, it used to rise by about 3.0% and more recently has . * ERS raised from 3x BRS to 4x BRS From 2019 to 2022, the ERS increased 3.0% each year. After that, the ERS increased about 3.5% each year (not accounting for the one-off increment of ERS from 3x BRS to 4x BRS). We should not be too surprised if the ERS (and BRS and FRS) continues to rise at around 3% to 3.5% every year. For anyone entering the workforce today, it’s hard to imagine hitting the ERS at nearly half a million dollars today. Let alone the fact that it will continue to rise each year. To get to our Enhanced Retirement Sum (ERS) when we turn 55, we simply have to multiply the current ERS by 3% to 3.5% each year. For example, someone who enters the workforce today at 25 will have an ERS target of over $1.1 million. To hit the ERS in the future, we all may need to be CPF millionaires! The Basic Retirement Sum (BRS) – which can allow us to live a basic retirement in Singapore – is significantly more reachable at $289,000. The , and has been growing at an average of nearly 3.5% each year in the last decade. As promised in the title of this article, we will determine whether such a person can ever reach the Enhanced Retirement Sum (ERS). While it is not simple, there is a chance for an average worker to hit the ERS if they are actively working towards an enlarged retirement pot. From the table below, we can see that an employee earning just the median income (and getting the average salary increment till 55), can achieve beyond the BRS at 55. Through any combination of their SA and OA contributions or SA and annual RSTU contributions, they can achieve beyond the FRS by 55. They can hit beyond the ERS by combining both their SA and OA contributions. Of course, this scenario may be unlikely as most of Singaporeans will have a significant sum locked up in our homes. That’s why right-sizing our flats in our old age can help us with our retirement adequacy. By about 2030, the Retirement Age will rise to 65 and the Re-employment Age will rise to 70. That clearly shows the expectations that more of us will be working till we hit these milestone ages. If we continue working into our Retirement and Re-employment Ages, we can potentially hit our FRS with our SA contributions alone. In this scenario, it is also not so out of the question that potentially combining our SA and OA balances of $2.33 million can afford us both a home and hitting the ERS of $1.16 million. Finally, all of these calculations must be taken with a pinch of salt. They are simply calculations based on statistics such as median salary and average salary growth. Individually, we may not be able to hit them. Specifically, the calculations also consider wage growth into our senior years, which may be even harder to achieve. Or, we may also be able to earn more than the median during the height of our career. For those who want to contribute even more to our Retirement Account, we don’t have to be confined to the ERS for our cohort either. Instead, we can contribute even more – up to the prevailing ERS each year.