Turning 55 is a key milestone for CPF members. At this age, the Retirement Account (RA) is created. Savings from your Ordinary Account (OA) and Special Account (SA) are automatically transferred into the RA to form your retirement sum. This ensures you have enough funds set aside to provide monthly payouts from age 65 onwards through CPF LIFE.
Unconditional Withdrawal of S$5,000
Regardless of your CPF balance, every member is entitled to withdraw up to S$5,000 once they reach 55. This provides some liquidity for immediate needs without compromising retirement adequacy.
Retirement Sums: BRS, FRS and ERS
At 55, CPF requires you to set aside one of three retirement sums in your RA:
- Basic Retirement Sum (BRS) – the minimum required, if you own a property with a lease lasting to age 95.
- Full Retirement Sum (FRS) – the default requirement, which provides higher payouts.
- Enhanced Retirement Sum (ERS) – the maximum you can top up to, giving the largest monthly payouts.
These retirement sums increase annually to keep pace with inflation and rising costs of living.
It is worth noting that while some may view the transfer of savings into the RA as a restriction, it is designed to safeguard long-term retirement needs rather than short-term spending.
Example of RA Creation
Calculating Your FRS and Excess Savings
Your maximum withdrawal at 55 equals your total CPF balance in OA and SA minus the FRS.
Withdrawal = (OA balance + SA balance) – FRS
Example: Mr. Lim’s CPF Balances at Age 55
| Account | Balance (S$) |
|---|---|
| OA | 60,000 |
| SA | 180,000 |
| Total | 240,000 |
- FRS: S$213,000
- Excess Savings: S$240,000 – S$213,000 = S$27,000
Mr. Lim can withdraw up to S$27,000 at age 55.
For more details on how retirement sums are determined, refer to the CPF contribution and allocation rates page.
Withdrawal Options Beyond the First S$5,000
After setting aside the required retirement sum in your Retirement Account, you may be able to withdraw additional savings from age 55. The exact amount depends on your CPF balances and whether you make a property pledge.
Withdrawing Savings Above the Full Retirement Sum (FRS)
If you have more than the prevailing FRS in your CPF savings at 55, you can withdraw the excess above the FRSimmediately. This gives flexibility while ensuring that enough remains to provide sustainable payouts from 65.
Using a Property Pledge to Meet the Basic Retirement Sum (BRS)
Homeowners can choose to set aside only the BRS in their RA instead of the FRS, provided they make a property pledge. The pledge acts as a commitment that the value of your property can be used to support retirement needs if required. This allows you to withdraw more savings at 55 while still keeping a safety net in place.
One implication is that while a property pledge gives you more cash upfront, it may reduce your financial flexibility in later years if housing wealth is already heavily tied up.
Phased Withdrawals vs. Lump Sum
CPF members can choose how they withdraw their eligible savings:
- Lump Sum Withdrawal: Take out the available balance at one go.
- Phased Withdrawals: Opt for partial withdrawals over time, giving more control in managing expenses.
Example of Excess Withdrawal
- Ms Tan turns 55 with S$210,000 in OA and SA combined.
- The prevailing FRS is S$198,800.
- S$198,800 is transferred into her RA.
- The remaining S$11,200 can be withdrawn anytime.
This balances liquidity with retirement adequacy, ensuring Ms Tan retains both flexibility and long-term security.
Planning Considerations and Common Misconceptions
Turning 55 and accessing your CPF savings is often seen as a milestone that grants “full access” to your money. In reality, CPF has structured rules to strike a balance between providing liquidity and ensuring retirement adequacy.
Common Misconceptions
- “I can withdraw all my CPF at 55.”
- False. You can only withdraw S$5,000 unconditionally, and any excess above your required retirement sum. The bulk is set aside in your RA to fund payouts from 65.
- “Using a property pledge means I don’t need to worry about retirement.”
- A property pledge simply allows you to set aside the BRS instead of the FRS. It does not free you from the need to plan for daily expenses or cover inflation.
- “I should always withdraw as much as possible at 55.”
- Not necessarily. While early withdrawals provide flexibility, keeping funds in CPF allows them to earn attractive risk-free interest of up to 6% per year.
A possible drawback is that some retirees prioritise immediate liquidity, only to face tighter cash flow later in life. Balancing today’s needs with tomorrow’s security is crucial.
Planning Ahead
- Review your retirement income needs: Estimate monthly expenses for your lifestyle at 65 and beyond.
- Decide between BRS, FRS, and ERS: Choose based on your housing situation and desired payout levels.
- Consider leaving funds in CPF: Higher interest rates make CPF one of the safest ways to grow savings.
- Check with CPF tools: Use the official CPF Retirement Calculator to project payouts.
Conclusion
CPF withdrawals at 55 are designed with flexibility, allowing members to access part of their savings while safeguarding future income through CPF LIFE. Whether you choose to withdraw only the basic amount or more by pledging property, the key is to plan carefully around long-term needs.
By understanding the rules and options, you can strike the right balance between financial freedom today and retirement security tomorrow.