How a Singaporean accumulated CPF Full Retirement Sum in his Special Account by the age of 34

Last Wednesday, Daniel, a 34-year-old Singaporean wrote a post in Seedly's Facebook group to share how he managed to achieve the current CPF Full Retirement Sum of $181,000 this year with screenshots of his CPF account balances as proof.

Screenshot of Daniel's CPF Statement

Shocking? Let's break down the details to understand how Daniel did it.

How it all started

When Daniel was 29, he read the Secrets of the Millionaire Mind by T. Harv Eker and a series of blog posts on A Singaporean Stocks Investor (ASSI) about CPF.

He was motivated to set a series of financial goals for himself to improve his financial situation. One of his mid term goals was to achieve the CPF Full Retirement Sum with his CPF Special Account by the age of 40. He has only one job and doesn't have any side hustles.

Here's how Daniel did it

Like all Singaporeans, regardless of our financial status, we have 3 methods to increase the balance of our CPF Special Accounts.

  1. By working to get 6% (age 35 and below) of CPF contribution from both employee and employer into Special Account.
  2. By transferring money from Ordinary Account to Special Account to tap on the 4% interest rate that Special Accounts earn.
  3. By making cash top-ups to Special Account through the Retirement Sum Topping-Up Scheme (RSTU) to make a direct impact to the account balance.

In Daniel's case, he made use of all 3 methods to grow his CPF Special Account and that required 6 years of disciplined saving and meticulous planning, laser-focused on the single goal of achieving Full Retirement Sum.

On top of full-time employment, Daniel did a combination of cash top up and OA transfer to achieve Full Retirement Sum in his CPF Special Account

Referring to the table above, Daniel started with a $3,000 cash top-up through RSTU and $10,000 transfer from his Ordinary Account to his Special Account in 2015. I imagine the $3,000 was spare cash that he had at that time.

We should also note that Daniel owns a HDB property with his wife and they use the money in their Ordinary Account to pay for the monthly mortgage. The $10,000 that Daniel transferred from his Ordinary Account to Special Account must have been carefully calculated to ensure he has enough cash buffer in his Ordinary Account to service his mortgage loan after the transfer.

From 2016 and 2017, Daniel became more intentional in growing his Special Account as he set aside cash specifically for cash top-ups through RSTU and transferred more money from his Ordinary Account to his Special Account.

In 2018, he pivoted in his plans to not make any transfer from his Ordinary Account to his Special Account in order to be able to make a few more years of cash top-ups through RSTU (both 2018 and 2019) and be entitled to the $7,000 tax relief. This makes a lot of sense, especially when you intend to work for at least a few more years.

By 2020, Daniel was done. He did a cash top-up of $7,000 and transferred $12,266.87 from his Ordinary Account to his Special Account. This was because he calculated that he would have achieved Full Retirement Sum without doing the transfer. But by doing so, he would be able to have more money in his Special Account and accumulate more interest next 20 years before he reaches the age of 55.

That's a smart and intentional planning in getting as much Full Retirement Sum money in Special Account as possible.

Here's what we don't know about Daniel

What I've written above is based on what we know from Daniel's post. It may not be the entire story that allowed Daniel reach Full Retirement Sum by 34.

What if Daniel is CEO of a multi-national company, earning loads of money above the average Singaporean? PS: By the way, I know for a fact that Daniel isn't.

The Ordinary Wage Ceiling for CPF contribution is currently capped at $6,000. No matter how much salary you earn every month, only 37% of $6,000 gets into your CPF accounts if your age is 55 and below.

The Additional Wage Ceiling is a CPF contribution cap on your additional wages, such as your bonuses. Currently, up to $30,000 of your additional wages will have mandatory CPF contributions.

Personally, I don't believe being a super high earner would have made a drastic difference that the average Singaporean can't achieve with a few more years.

What we can learn from this?

I believe that CPF LIFE will be one of my core retirement income stream when I retire. If you have the same mindset as me, it definitely makes sense to start accumulating more money in your CPF Special Account beyond the usual salary contribution.

By doing so, you can achieve the Full Retirement Sum earlier when the figures are much smaller, and let the 4% interest pay for future incremental Full Retirement Sum adjustments.

Strive to rise up the corporate ladder as early as possible to earn a $6,000 monthly salary as early as possible to maximise your CPF contribution.

Make voluntary contribution to your MediSave Account to hit the Basic Healthcare Sum so that work contributions to your CPF MediSave Account along with end of the year interest will overflow into your CPF Special Account.

Create good saving habits so that you have surplus money to be able to make the decision to top up your CPF Special Account through RSTU when it becomes beneficial for you to do so.

What changes are you making to get to Full Retirement Sum earlier? I'd love to hear your thoughts in the comments section below.

Photo by Clark Tibbs on Unsplash

20/20 goal setting for 2020

How has 2019 treated you? If you have read my self reflection of 2019, I would like to think that I've been really privileged to have enjoyed growth in both the personal and professional space.

My 2020 goal setting strategy will largely focus on things that worked well for me last year with additional goal targets to achieve even more. That's why I'm calling it 20/20 goal setting this year.

While I try to keep most of the goals measurable but I'm aware that some goals around eating habits can't be measured and is more around developing a disciplined mindset.

I've grouped my goals in 4 categories:

Health and wellness

Over the course of 2019, I've lost close to 20 kg through a disciplined calorie tracking regime. It felt very similar to when I just started tracking my expenses in 2015 where I was a little too strict with myself and it took a few years to change that mindset.

I want to cultivate a better relationship with food this year, by being more mindful about the food I eat.

Here are my health and wellness goals:

  • Continue to maintain a daily 1,500-1,700 calorie-deficit meal plan to bring my weight down to 70 kg.
  • Switch to whole foods (mostly) diet, starting with weekday lunch and dinners.
  • Increase the amount of fruits and vegetables in my daily diet with at least a fruit a day while vegetables should take up half of my plate during each meal.
  • Meditate at least once a week, either by taking classes or on my own with guided meditation apps.

Fitness transformation

Having achieved success in my fitness journey in 2019, I intend to continue expanding my fitness lifestyle and add more exercises/activities that pique my interest. That will help to create a sustainable and meaningful fitness lifestyle.

These are my fitness transformation goals for 2020:

  • Work out in the gym for at least 5 days a week
  • Reduce my body fat percentage to 15%
  • Learn how to perform a handstand without assistance
  • Pick an additional sport activity that I enjoy and become competent in it

Wealth building

2019 worked really well for me in the wealth department as I maintained a disciplined saving process. I intend to continue doing most of the same things this year just because they worked well for me.

  • Maintain an average net savings rate of 70% for the whole of 2020.
  • Continue to make monthly cash top-ups of $995 to my CPF Special Account using CPF's Retirement Sum Topping-Up Scheme to achieve Full Retirement Sum by 2023 (1 year ahead of my projection last year).
  • Continue to make the maximum contribution of $15,300 to my Supplementary Retirement Scheme (SRS) account by contributing $1,275 each month.
  • Continue to stay invested with my globally diversified investment portfolio with AutoWealth this year and keep growing it with monthly investments.
  • Continue to build a secondary investment portfolio for retirement using surplus cash from my salary. This secondary investment portfolio only consists of my NetLink Trust shares at the moment.

Learning and development

The concept of lifelong learning has 2 different meanings for me.

  1. Professional development: To continue learning either broadly or in-depth about subjects related to my work to grow my career and human capital. This will in return, grow my salary in future.
  2. Personal development: To learn either broadly or in-depth about subjects that pique my interest and may not be related to my career. That keep life interesting and rewarding for me as I am acquiring knowledge purely for interests.

For professional development, I intend to pursue the following Salesforce certifications as my company has made the switch to Salesforce Marketing Cloud over the course of 2019 to further my expertise in the platform. As Salesforce is a popular enterprise platform, these certifications will also increase my career prospects in the near future as there is a growing demand for Salesforce certified individuals.

  • Marketing Cloud Email Specialist certification
  • Marketing Cloud Consultant certification
  • Marketing Cloud Developer certification

For personal development, I intend to learn more about the science behind fitness and nutrition. I have not decided on the courses I wish to take, but I'm contemplating to take on a few online courses provided by reputable universities and certifications from a credible fitness organisations such as American Council on Exercise.

Have you set your goals for 2020?

Benjamin Franklin supposedly once said, “If you fail to plan, you are planning to fail.” Sir Winston Churchill is credited with another saying: “Those who fail to learn from the past are doomed to repeat it.”

What changes do you intend to make in 2020 to improve yourself?

I'd love to hear about your plans. Please share them in the comments section below.

Photo by Estée Janssens on Unsplash

2019: My year in review

I found 2019 to pass me by surprisingly fast. I guess when you have most of the things going well for you, time passes by really quickly. As I'm writing this article, I've already closed off my work year and am clearing my annual leaves all the way till 2nd Jan 2020.

Last year, I wrote about the 5 goals that I wanted to achieve in 2019. In this article, I'll look back at these goals and reflect on my achievements in each of them.

These are the 5 goals that I'm going to be reflecting on and you can click on them to jump to the goal you're interested to read about.

Goal 1: Increase my health and fitness activities

I wanted to cycle at least 3,000 km in 2019. According to my Strava account, I've only done 390.9 km over 11 rides. 🙁  This happened because I failed to bring back my past habit of waking up early to join my cycling group on our morning rides that start at 5am.

However, I managed to pivot quickly after I realised that I wasn't able to clock my cycling mileage this year.

In April, I started applying my discipline way of tracking my expenses on tracking my calories. The goal was to maintain a daily calorie deficit of 1,500 calories so that I'm not overeating and my body would use my body fats (and some muscles) to create energy to facilitate my daily functional needs.

By July, I managed to shave off 10 kg just by moderating calorie intake and avoid overeating. While I was physically lighter, I felt better psychologically too. I even walking up the stairs to my office on the 7th floor as a form of cardio exercise every morning.

I started getting more sophisticated with weight loss, with the aim of losing fats while retaining muscles. I had a bump up on my salary with a salary increment this year and I decided to invest the extra money on myself by signing up for a gym membership at Fitness First.

The result of maintaining a calorie deficit with at least 30 minutes of exercising daily was a further reduction of 10 kg in body weight and shaving off 8.9% body fat to date. I think a 20 kg weight loss within a year is quite impressive given I was able to eat whatever I wanted and not sacrifice on my favourite food.

Goal 2: Remain focused on lifelong learning

Last year, I wanted to continue focusing on learning data science. My interest in that topic waned after I learnt sufficient knowledge to have proper conversations with my colleagues who are working in the data science field. I also didn't see myself going into the data science industry as I didn't like the mathematics side of the work.

Instead, I chose to dive deeper into personal finance and nutrition through workshops and online courses in my spare time.

I attended a couple of personal finance and investment events conducted by Seedly and SGBudgetBabe. The Seedly Personal Finance Festival 2019 was especially enjoyable given that none of the speakers and exhibitors were allowed to hard-sell their products. I got to speak to the folks from Funding Societies to learn more about how their P2P lending platform works and eventually invested $2,000 through the platform. I've earned a net income of $103.93 from the platform so far so that's around 5% of my investment.

I've also benefitted greatly from Dawn's SG Budget Babe Readers' Investment Workshop 2019 where I learnt how analyse stocks based on my investment objectives. That led to me investing in NetLink Trust in March 2019 for dividend income. I got in at 84 cents and the stock is priced at 93.5 cents at the moment so I'm looking at around 11% paper gains. That's on top of the 5.9% dividend yield received this year.

On the nutrition side of things, most of my learnings have been mostly online courses where I learnt more about macro nutrition and how to see food from a different perspective. I was able to apply this to my weight management by allowing myself to eat all kinds of food in the right proportions. This was very useful as I formed a better relationship with food and was able to maintain my weight loss through a sustainable lifestyle.

Goal 3: Achieve a 70% net savings rate

My goal in 2019 was to achieve a 70% net savings rate. While the year hasn't exactly ended, I should be closing 2019 with around 74% net savings rate.

It's worth noting that I did not go on any vacation this year which may knock my net savings rate down a notch.

Maintaining a high savings rate not only means that I managed to control my expenses, but also allows me to have surplus cashflow to grow my investment portfolio.

Goal 4: Stay invested through 2019

When I was planning my goals in 2018, I was expecting to go through a bear market in 2019. I mean, we're looking at the 10th year of bull run in the market. Who knew that 2019 would not only create the longest bull market in history, but also one of the best-performing bull run in the decade.

I know of many friends and financial bloggers who have opted to keep a large war chest of cash on hand to capitalise on a bear market where their favourite stocks go on sale. Unfortunately, that didn't happen and they missed out on a year of bullish returns from Mr Market.

By sticking to my goal of staying invested this year, my investments through AutoWealth achieved 5.75% time-weighted annualised returns this year. The best thing was that there was literally zero effort on my part other than transferring funds into my AutoWealth account religiously every month for automated dollar-cost averaging investments.

Even the one-off salary bonus received this year was invested in NetLink Trust for a 5.9% dividend income had 11% paper gains on the side.

This year, I am also continuing to steadily receiving quarterly rental income from my Cambodia property and the rental income gets deposited into USD fixed deposits at around 4% interest.

Looking at the combined performance from both my investment and rental portfolios, I am content with the returns, given how little effort I spent on managing my portfolios this year.

Goal 5: Top up CPF Special Account for next 5 years

I was able to fulfil the first year of this mid-term goal with a consistent monthly top up of $995 into my CPF Special Account once my salary comes in. I found that being disciplined and making the top-up each month works better for me.

While some may think that topping up beyond the $7,000 that qualifies for tax relief is not tax efficient, I feel that my goal of reaching Full Retirement Sum earlier is more meaningful towards my retirement plans.

I hope to continue topping up my CPF Special Account next year.

Closing remarks for 2019

I've found that I was able to meet all my personal financial goals by automating my savings and investments. It's much more efficient and requires very little work on my part.

Understanding my habits and interests allowed me to pivot my non-financial goals to other directions when the original plans didn't work out. At the end of the day, accomplishing something is always better than accomplishing nothing right?

Stay tuned as I map out my 2020 goals in a later post.

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