How much cash can you withdraw in lump sum from your CPF Account at age 65?

Many of us may already know that we have the option to start our CPF LIFE payouts from age 65. What fewer of us may be familiar with is that we can withdraw another lump sum amount at 65 – on top of what we may have withdrawn from our CPF at 55.

(Recap) What we can withdraw from our CPF at 55

When we turn 55, we are finally able to withdraw some of our CPF savings in cash. How much we can withdraw typically depends on how much CPF savings we have, and whether we have hit our Full Retirement Sum (FRS) for our cohort.

In 2020, the FRS is $181,000. In 2021, the FRS is $186,000 – about 2.8 per cent higher.

If we have less than $5,000 in our CPF accounts

In the scenario we are a stay-at-home parent, a self-employed person throughout our career or unable to work, we will not have much in our CPF Ordinary Account (OA) or Special Account (SA).

If we have some amount but less than $5,000, we can withdraw everything. However, even if we have funds in our MediSave Account (MA), we cannot touch that money.

If we have CPF savings amounting to less than the Full Retirement Sum

In the situation where we have more than $5,000 in our Ordinary Account or Special Account, but it falls short of our Full Retirement Sum, we can only withdraw up to $5,000.

If we have more than the Full Retirement Sum

Having more than the Full Retirement Sum enables us to withdraw anything above it, while the rest of it flows into our Retirement Account. This will be locked away to enter the CPF LIFE scheme from age 65.

We can also choose not to withdraw any amount to let our funds roll into the Retirement Account, up to the Enhanced Retirement Sum (ERS).

ALSO READ: How much you need in your CPF Retirement Account at 65 to afford the average retiree's expenses with CPF LIFE payouts?

If we only want to save to Basic Retirement Sum (BRS)

In the situation we only want to save the Basic Retirement Sum, by pledging our property, we may be able to withdraw more funds.

If you want to find out more about these scenarios, you can read a previous article we wrote – How Much Can You Withdraw From Your CPF At Age 55?

At 55, we can also choose not to withdraw any funds from our CPF if we don’t require the money immediately. This is because we can withdraw these funds at any point after turning 55, while enjoying higher interest rates and risk-free returns from our CPF compared to bank accounts or investments.

How much can we withdraw from our CPF Account at age 65?

As mentioned at the start of the article, we are able to withdraw more funds from our CPF account when we turn 65, and before we contribute our funds into CPF LIFE.

If we are born in 1958 or after , we can withdraw up to 20 per cent of our Retirement Account Savings as at age 65. This 20 per cent figure includes the first $5,000 that can be withdrawn from age 55.

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If we are born in 1957, which means we turned 55 in 2012 and will turn 65 in 2022, we can only withdraw a further 10per cent of the savings in our Retirement Account. This is because such members already had the option to withdraw up to 10per cent of their Ordinary Account and Special Account balances when they turned 55.

If we are born in 1956 or earlier , which means we turned 55 before 2012, we cannot withdraw any additional CPF savings when we turn 65. This is because such members already had the option to withdraw up to 20 per cent of their Ordinary Account and Special Account balances when they turned 55.

Like when we turn 55, there is also no need to withdraw these funds immediately when we turn 65. Even after contributing it to CPF LIFE, we retain the option of withdrawing this money partially or lump sum to supplement our CPF LIFE payouts or if the need arises.

Note that any lump sum withdrawals we can make at 65 exclude top-ups made under the Retirement Sum Topping Up (RSTU) Scheme, or any bonus top-ups.

How to know how much and when we can withdraw this amount from our CPF?

We don’t have to worry about not knowing this policy or overlooking it when the time comes.

When we are approaching 65 (or our payout eligibility age which stands at 65 today), CPF Board will write to us to inform us of the estimated amount that we can withdraw from our CPF Retirement Account.

Once we get this letter, we can make the withdrawals within seven working days from the day we reach our Payout Eligibility Age (PEA). We need to make a decision at this point:

#1 Withdraw this lump sum from your Retirement Account

We can decide to make immediate withdrawals once we turn 65. If we choose this option, there is not further actions we need to take. The remaining funds we have will be contributed into the CPF LIFE scheme for our lifelong monthly payouts.

While there’s no need to rush to withdraw, there is a deadline to choose one of the three options we have for our lump sum withdrawal – when we want to start receiving our CPF LIFE monthly payouts. We can start these payouts at any time after turning 65 and up to age 70.

#2 Preserve flexibility to withdraw by moving earmarked withdrawals into your CPF Ordinary Account

If we want to start receiving our CPF LIFE payouts but want to retain the flexibility to withdraw this lump sum, we need to have it transferred to our Ordinary Account in the following month after the start of our monthly payouts.

ALSO READ: CPF Shielding Hacks (Special Account & Ordinary Account): Do they really make sense?

#3 Convert to monthly payouts

If we do not want the lump sum withdrawal, and would prefer a higher CPF LIFE monthly payout, we can simply allow the funds to be contributed into CPF LIFE.

#4 If we do not make a decision

If we don’t make a decision on our CPF LIFE payouts, it will only start at age 70 by default. At this point, the lump sum will be automatically transferred into our Ordinary Account for future withdrawals should we wish to do so.

This article was first published in Dollars and Sense.