CPF
1M65: sure or not?
Is a million dollars in CPF by 65 achievable, or just aspirational?
When I was topping up my CPF, I had never heard about this 1M65 strategy coined by Mr Loo Cheng Chuan. Instead, all of my knowledge on using CPF as a tool for retirement came from a mysterious fella who called himself AK. Through AK's blog, I learned how to build a financial safety net using CPF monies. AK blogged in 2019 about having $1.5M in CPF by doing nothing.
Why do both AK and Mr Loo endorse CPF? Is 1M65 really achievable?
To be very clear, one must not conflate matters such as accrued interest, using OA for housing, and whether CPF will shift withdrawal dates in future. As long as the policies are reasonable and serve to help the masses, I have nothing to complain about.
After doing intensive research on CPF, I felt that the math behind 1M65, and more importantly how to integrate CPF as one of the retirement tools, was logical. I explained the concept to my wife and managed to convince her to top up her CPF as well. Of course, this was only done after I put my money where my mouth was.
Today is a milestone for my wife and me. My wife made her final CPF OA to SA transfer. We turn 37 and 36 this year respectively. What will this number translate to at 65 years of age?
Assuming no further contributions, an off-the-cuff calculation of combined SA and MA balances compounded till 65 years old will yield:
Me = ($201,701.33 + $66,000) × (1 + 0.04)28 = $802,756.87 Combined = approximately $1.6 million as a couple.
As you can see, Mr Loo's strategy works. My wife and I will minimally have $1.6M as a couple for retirement. As long as we keep working and contributing to CPF, this number will continue to go up.
1M65? Definitely doable.
I hope this post inspires you to take action.