Let’s say that you have cash and you have also balances in your CPF Ordinary Account. You have already set aside the full sum for your Retirement Account ($166,000). What can you do with the cash sitting idling waiting for investment opportunity?
CPF Ordinary Account balances earn 2.5% p.a. interest rate while the Retirement Account balances earn 4.0% p.a. interest rate (subject to higher interest rates under certain conditions).
If you can find investments for your idle cash that earn 4.0% p.a. with principal protected, then the question at the start of the blog post is no longer relevant.
If not, CPF allows members to use cash to top up their Retirement Accounts up to the Enhanced Retirement Sum of $249,000. Do not concern yourself with the Ordinary Account balance. (It would continue to earn 2.5% p.a.)
With Enhanced Retirement Account balance, your monthly payout under CPF Life on reaching 65 would be higher than if your do nothing.
One condition is that cash top-up in Retirement Account is not reversible.
Please refer to CPF for more details and seek advice.
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