Retirement planning is an essential aspect of financial management, especially in a city like Singapore where the cost of living is high. One of the main sources of retirement savings for Singaporeans is the Central Provident Fund (CPF). CPF is a mandatory savings scheme that aims to provide a safety net for retirement, housing, and healthcare needs. It is important to have a basic understanding of CPF to effectively plan for your retirement.
The CPF system in Singapore is based on three accounts – Ordinary Account (OA), Special Account (SA), and Medisave Account (MA). These accounts serve different purposes and have different interest rates. The OA is primarily used for housing needs, while the SA is for retirement planning and the MA is for healthcare expenses. A portion of an individual’s monthly income is automatically deducted and allocated to these accounts. The money in the CPF accounts earns interest and can be withdrawn when a person reaches the retirement age of 55. Understanding how the CPF system works and how it can be utilized for retirement planning is crucial for every Singaporean.