How Topping Up Your CPF Can Secure a Steady, Tax-Free Retirement Income

If you’re thinking about how to secure a steady income when you retire, topping up your Central Provident Fund (CPF) savings is a smart move, kinda like investing in property that can rent out and give you that regular cash flow. Senior Minister of State for Manpower, Koh Poh Koon, recently shared this during a panel discussion with the CPF Board’s deputy chief executive, Mr. Tang Lee Huat, and CPF volunteer Madam Ong Sin Hong.

Picture this: CPF Life is like your very own rental property, but without the hassle of managing tenants, paying taxes, or fixing up the place. That monthly payout you get from CPF Life goes on for as long as you live, acting like a steady rental income stream. Unlike actual rental income, CPF Life payouts aren’t taxable, so you get to keep all of what you receive!

For those not familiar, CPF Life is Singapore’s national longevity insurance annuity scheme. If you’re a Singapore resident born in 1958 or later and have at least $60,000 saved in your retirement account when you start your payouts, you’re automatically enrolled. You can start receiving these payouts anytime between ages 65 and 70. Your Retirement Account funds cover the premiums to join.

Here’s a neat part: you can boost your monthly CPF Life payout by topping up your Special Account (SA) or Retirement Account (RA). If you’re below 55, top-ups go into your SA; if you’re 55 or above, it goes into your RA. You can even do it for your loved ones, which is a thoughtful way to help them secure their retirement better!

Let’s talk numbers because everyone loves that! According to the CPF Board, someone with the full retirement sum (FRS) of $213,000 in 2025 can expect monthly payouts of about $1,730 lifelong starting at 65. But wait, it gets better! If you’re 55 and above, you can top up to the Enhanced Retirement Sum (ERS), which is double at $426,000. This could rake in monthly payouts of $3,330 from age 65, which is a whopping $1,600 more than just reaching the FRS.

Now, here’s a cool trick if you’re still working past 65. You don’t have to take your CPF Life payouts right away. You can defer receiving them up to age 70. And for each year you delay, your monthly payouts increase by up to 7%. That means after 5 years, you’d be looking at a potential 35% jump in those monthly payments!

For instance, a CPF member who tops up to ERS and defers takes home an additional $1,000 every month when they start payouts at 70. Honestly, that’s more than some people get as a salary raise if they continue working. No wonder more than half of eligible members opted to defer their payouts to age 70 as of December 2023.

But what if you didn’t manage to save up the Basic Retirement Sum (BRS), which will be $106,500 in 2025? No worries. There’s the Matched Retirement Savings Scheme, which got itself a nifty upgrade starting January 1, 2025.

This scheme is designed to help Singapore citizens 55 and over with less retirement savings bulk up their funds. How? The government matches your cash top-ups to your Retirement Account—up to $2,000 a year, which is a huge jump from the old cap of $600. And it’s not just free money—it’s like doubling your efforts each year till you retire.

Mr. Tang gave a clear example: If you manage to top up $2,000 annually from age 55 for 10 years, and the government matches that same amount each year, you could have an additional $48,000 by age 65 (including CPF interest). That translates to an extra $260 a month for life after you retire. Not bad for some consistent top-ups, right?

Just a heads up: To enjoy the matching grants, remember to make your cash top-ups before the end of each calendar year. The government will then pay the matching grants the following year, which for 2025’s top-ups, means the grant will arrive in 2026.

At the end of the day, topping up your CPF is like planting seeds for your golden years. It’s not as glamorous as owning rental property or stocks, but it’s a reliable, low-stress way of securing a seamless income flow when you need it most. Plus, with the government’s matching scheme and options to defer payouts, you have flexibility and boosts that make your retirement money work harder for you.

So whether you’re just starting your career or at that stage where retirement feels close, keep in mind the benefits of bolstering your CPF savings. It’s a simple, smart way to set yourself up for peace of mind and financial comfort today—and every month after.

Don’t wait till tomorrow. Start topping up your CPF today and let your future self thank you!