An Essential Guide to Calculating Your CPF LIFE Payouts

Funding our retirement is a huge reason why we work as hard as we do. Fortunately, the Central Provident Fund (CPF) helps folks in Singapore retire free of financial worries. Contributing 5–20% of your monthly salary to your CPF accounts stings, but it will be worth it once you’re 65 years old and begin enjoying your regular CPF LIFE payouts.

Before this, the CPF’s main purpose for most Singaporeans would be to pay for their first Housing & Development Board (HDB) flat purchase. However, when you’re long past this milestone, you can essentially bid farewell to your CPF Ordinary and Special Accounts.

That’s because the savings in those accounts will be transferred to your CPF Retirement Account (CPF-RA) when you turn 55. Your CPF-RA will then fund your CPF LIFE payouts a decade later.

Read on to learn what CPF LIFE is, when exactly you’ll start receiving your monthly payouts, and how you can increase the amount you get.

Related: A Guide to Understanding the CPF

What Is CPF LIFE?

CPF LIFE stands for CPF Lifelong Income for The Elderly. It’s a successor to the Retirement Sum Scheme. As the name suggests, it’s Singapore’s annuity programme which provides senior citizens with a regular income. The “lifelong” in the “LIFE” acronym isn’t an exaggeration either. You do receive a monthly payout for as long as you live.

Remember the CPF-RA? On your 65th birthday, a percentage will be deducted from it as a contribution to the CPF Lifelong Income Fund. The exact percentage depends on the CPF LIFE plan you’ve picked, but more on this later. The remaining amount, if any, will go directly to you as part of your CPF LIFE payments every month.

Rest assured the deduction does not affect the money you get. In fact, it guarantees you and everyone else in the CPF LIFE scheme an income for life, hence the name. Everyone enrolled in CPF LIFE contributes to the Fund, basically folks born from 1958 onwards.

There are three monthly payout plans for CPF LIFE: Escalating, Standard, and Basic.

Check out their features and how they differ:

*Assuming your combined CPF balance drops below S$60,000 only at this age

How Do I Start Receiving My CPF LIFE Payouts?

The CPF Board will notify you to select your CPF LIFE plan and payout age three months before your 65th birthday. As mentioned above, you can choose either the Escalating, Standard, or Basic plan. You can also specify the exact age at which you’d like to start receiving your payouts, from 65 to 70 years old.

Assuming you pick the Standard plan and opt to get your CPF LIFE payments at 65 years old, here’s what happens next:

• Your CPF LIFE payout will be credited to your bank account every month after you turn 65
• You’ll be paid on the 2nd or 3rd day of the month if your bank account supports the Fast And Secure Transfer (FAST) service. If it doesn’t, you’ll receive the funds in your bank account via Interbank GIRO (IBG) at a later date that month.

This works the same way even if you choose another plan and payout age. For example, if you select the Basic plan and a payout age of 67 years old, your payouts will only come in every month after your 67th birthday.

However, your payouts will automatically start when you’re 70 years old on the Standard plan if you don’t inform the CPF Board of your intentions by then.

Related: Retiring With S$6,000 Monthly: How Much Do I Need to Earn Now?

How Do I Calculate My Monthly CPF LIFE Payouts?

The CPF scheme isn’t easy to wrap one’s head around, no matter how old you are. Thankfully, there’s the official CPF LIFE Estimator to calculate ballpark figures for your monthly payouts. Key in your sex, current age, desired payout plan, and estimated CPF-RA amount before running the Estimator.

Although this tool is meant for people 55 years old and above to estimate their monthly payments at the age of 65, you can select a different birth year to calculate your payouts from age 66 to 70. However, the figures you see are truly estimates as laws or policies might change. For instance, the starting payout age might get raised.

Below are several sample payouts across the CPF LIFE plans to give you a clearer idea of how much you might receive. They assume your payouts begin when you’re 65 years old and showcase your payments at ages 85 and 95 too.

The samples are based on the Basic Retirement Sum (BRS) of S$102,900 for 2024. To calculate what you’d get if you believe you’ll have enough in your CPF-RA to meet the Full Retirement Sum (FRS) or Enhanced Retirement Sum (ERS) milestones, double and triple the amounts respectively.

The BRS, FRS, and ERS are estimates from the CPF Board for what expenses your monthly payouts can settle. For example, the BRS can cover your necessities, such as food, transport, and utility expenses.

Escalating Plan: Payouts Increase 2% Annually

Remember, double or triple the amounts above if you have enough to qualify for the FRS or ERS. To illustrate, a man would get S$940 (FRS) and S$1,410 (ERS) every month at 65 years old for a year under the Escalating plan. This increases by 2% annually thereafter.

Standard Plan: Payouts Remain Steady

The Standard plan is the easiest to calculate. You’ll get the same amount every month until you draw your last breath. To illustrate once more, this would be S$1,180 (FRS) and S$1,770 (ERS) for males.

Basic Plan: Payouts Are Progressively Lowered

The Basic plan works somewhat in reverse. Your monthly payouts start off relatively low before getting reduced. For males and females, this would work out to be S$940 (FRS) and S$1,410 (ERS) once you’re 95 years old. However, the upside is that your loved ones can inherit a higher amount than if you were to choose the other plans.

Related: Is It Enough to Retire in Singapore with S$6,000 In Monthly Expenses?

How Can I Increase My Monthly CPF LIFE Payments?

Source: Unsplash

As you can see from the samples above, even the ERS estimate for a CPF LIFE Standard plan works out to be just S$1,650–S$1,770 per month. On the other hand, the average cost of living back in 2022 was already S$1,997.20 per household member, according to the Singapore Department of Statistics. Needless to say, this has only gone up in 2024.

Granted, retirees usually spend less than adults, but costs are ever-increasing no thanks to inflation.

Here are three solutions to supplement and increase your monthly CPF LIFE payments.

1. Proactively Fund Your CPF Accounts Before Retiring

On top of your monthly mandatory contributions as a salaried employee, you can fund your CPF accounts on an ad-hoc basis too. Not only does this fatten up your CPF-RA down the road, it also grants you an automatic income tax relief. Talk about killing two birds with one stone. This relief is valid for up to S$8,000 per tax assessment year.

Assuming you do this for 20 years, it’s an additional S$160,000 in your CPF-RA, excluding the interest you earn. Add that to the current ERS sum of S$308,700 and you’re looking at an increased monthly CPF LIFE payout of around S$2,330–S$2,510 on the Standard plan. That’ll cover the average cost of living in 2022, and then some.

2. Liquidate Your Investments Upon Retiring

Retirement is one of the final opportunities to transform your investment portfolio into cash, discounting the fact that people may want to leave behind a legacy for their family. Directing your investment returns to a retirement fund lets you live financially independently for much longer, especially when combined with your CPF LIFE payments.

Let’s say you invested US$92,000 in the SPDR S&P 500 ETF in March 1994, which is almost the same amount as depositing S$8,000 for 20 years in your CPF-RA. You’ve let go of all 1,957 shares after retiring at 65 years old in 2024. Your investment would now be worth approximately S$1 million, excluding dividends.

This lump sum which you can withdraw to your bank account anytime supplements the payouts you get from the CPF LIFE scheme, and generously so at that.

3. Subscribe to an Annuity Plan While You’re Still Employed

Annuity plans from banks and insurers in Singapore work like CPF LIFE. You’ll need to contribute a fixed amount to the plan you subscribe to for a minimum number of years. The institution essentially invests your money after that. Once you reach your chosen payout age, you’ll receive your total premium paid and other bonuses, such as the gains made.

Private annuity plans do not pay you for life, but they might be the most convenient way to supplement your CPF LIFE payouts. For example, Annuity Plan A has an annual premium of S$4,800 for five years. Your payouts start at 66 years old and last for 20 years. If the plan’s participating fund generates 4.25% p.a., the final monthly payout is approximately S$438.

Add this to the current ERS estimate for a CPF LIFE Standard plan and you’ll enjoy a total monthly retirement income of S$2,088–S$2,208.

Related: How to Retire Comfortably in Singapore

In Closing

At first glance, calculating your CPF LIFE payouts can be a head scratcher. On the bright side, you only have to contend with one amount: What’s in your CPF-RA. Even without the CPF LIFE Estimator tool, it’s much easier than having to factor in all the other CPF accounts.

To summarise the sample amounts from above, expect to receive anywhere from S$430 to S$780 per month if your CPF-RA is at the BRS level. Of course, this depends on the plan you select and what age you’re at.

If you want to increase your monthly CPF LIFE payouts, you can supplement them through various means. However, they all share one common thread, which is that they require you to start planning for your retirement early.

Now that you know how to do the sums for CPF LIFE, you can make your own forecasts and work towards your ideal monthly payout sum. Be sure to invest early, have enough savings, and be sufficiently covered with insurance!

Read More:

• Guide to Estate Planning and Writing A Will
• CPF Contributions in 2024 – Everything You Need to Know
• How to Help Your Parents If They Don’t Have a Retirement Plan
• A Guide to Understanding Your CPF OA (Ordinary Account)
• 6 Retirement Planning Mistakes To Avoid

Cover image source: Unsplash