The Straits Times published an article on My Yang and his wife recently and how Mr Yang, the sole breadwinner of the family helped build up the CPF savings of both his and his wife’s account.
Mr Yang realized the benefits of leveraging on his and his wife’s CPF to work towards their retirement. And thus he took action from 2011 to transfer a portion of his CPF to his wife’s account and then through steady contributions over the next 6 years, manage to build $166k in both his own and his wife’s CPF accounts. This is the full retirement sum (FRS) recommended by CPF, which should give them an regular payout of between $1,200 to $1,300 per month from age 65 onwards.
So what are the benefits of adopting such an approach?
1) Additional 0.5% interest above the standard interest earned for the first $60k in CPF account. By transferring a portion of his CPF savings to his wife, he allows his wife to enjoy higher interest rates compared to what he is getting.
2) Cash top-ups of one’s CPF account is tax deductible only if the Retirement Account is below the FRS amount of $166k. Thus if Mr Yang’s RA account already has more than $166k, any further top-ups will not give him tax benefits. But by transferring part of his CPF to his wife, he can potentially get more tax relief benefits.
3) My Yang also created monthly streams of income for both he and his wife instead of income only for one party.
To understand how you can more fully take advantage of the CPF scheme, feel free to get in touch with me for a free consultation.