As you progress steadily in your career in your 30s and 40s, retirement might seem like a faraway thought to put off until much later. While it's true you still have plenty of time ahead of you, this longer runway is actually an opportunity to start early. Meanwhile, as retirement has now become a reality for your parents, you should consider how you can within the next few years. Can you do anything to support them in their golden years?
Here's 3 things you should do in your 30s and 40s to make your CPF savings work harder for you and your loved ones in retirement.
1. Transfer any unused Ordinary Account (OA) savings to your Special Account (SA)
Do you have any savings in your OA that you are not using to pay for your home or investments? Savings in your OA earn up to 3.5% interest p.a. while that in your SA earn up to 5%. Take advantage of this higher interest rate and transfer any unused savings to your SA! You'll be surprised at the difference 1.5% makes over time.
Use our Ordinary Account-Special Account Savings Transfer calculator to help you estimate the additional interest you might earn when you transfer your savings from OA to SA.
2. Make a cash top-up to your own SA to grow your retirement savings
Does getting rewarded for saving sound too good to be true? You can enjoy dollar-for-dollar tax relief up to $7,000 per year when you make a cash top-up to your own SA up to the current Full Retirement Sum! This grows your retirement savings while helping to reduce your income tax. Remember to top up early each year to start earning interest as soon as possible.
3. Make a cash top-up to your parents' Retirement Account (RA) to grow their retirement savings
Don't forget about the retirement needs of your parents as well! If they have turned 55 already, you can top up their RA up to the current Enhanced Retirement Sum and enjoy additional dollar-for-dollar tax relief* of up to another $7,000 per year.
Read up on the Retirement Sum Topping-Up Scheme to find out more.
*Tax relief will only be given for cash top-ups to your recipient's Retirement Account up to the current Full Retirement Sum. Cash top-ups beyond the current Full Retirement Sum will not be eligible for tax relief.