What if CPF minimum sum continues to increase at its current rate

The CPF minimum sum has been increasing for the past 8-9 years. Back in Jul 2003, the minimum sum was 80k. In Jul 2011, it became 131k. This works out to be a 6.35% per annum. 

Extracted from CPF website:

 

So, what if the minimum sum continues to increase at this 6.35% per year for the next 30-40 years? 

Below is a projection of the CPF minimum sum based on this rate. Based on this projection, by Jul 2042 (30.5 years from now), we will be looking at a minimum sum of more than 880k !!

Year	Projected CPF minimum sum	Actual CPF minimum sum
2003	80,000.00	80,000.00
2004	85,080.00	84,500.00
2005	90,482.58	90,000.00
2006	96,228.22	94,600.00
2007	102,338.72	99,600.00
2008	108,837.22	106,000.00
2009	115,748.39	117,000.00
2010	123,098.41	123,000.00
2011	130,915.16	131,000.00
2012	139,228.27
2013	148,069.27
2014	157,471.67
2015	167,471.12
2016	178,105.53
2017	189,415.23
2018	201,443.10
2019	214,234.74
2020	227,838.64
2021	242,306.40
2022	257,692.86
2023	274,056.35
2024	291,458.93
2025	309,966.57
2026	329,649.45
2027	350,582.19
2028	372,844.16
2029	396,519.76
2030	421,698.77
2031	448,476.64
2032	476,954.91
2033	507,241.54
2034	539,451.38
2035	573,706.54
2036	610,136.91
2037	648,880.60
2038	690,084.52
2039	733,904.89
2040	780,507.85
2041	830,070.10
2042	882,779.55

The CPF board said that the minimum sum will be "raised gradually" until it reaches 120k (in 2003 dollars) in 2013. These amounts will be adjusted yearly for inflation. I suspect that the 6.35% increase per year we have observed was for both the target minimum sum of 120k (in 2003 dollars), along with the inflation. After 2013, the rate of increase should be lower as it is based on inflation only. 

The inflation rate in Singapore is about 2-3% per year. Using an inflation rate of 3% per year after 2013, the minimum sum projection will be something like this:

Year	Projected CPF minimum sum  (based on 3% inflation only after 2013)	Actual CPF minimum sum
2003	80,000.00	80,000.00
2004	85,080.00	84,500.00
2005	90,482.58	90,000.00
2006	96,228.22	94,600.00
2007	102,338.72	99,600.00
2008	108,837.22	106,000.00
2009	115,748.39	117,000.00
2010	123,098.41	123,000.00
2011	130,915.16	131,000.00
2012	139,228.27
2013	148,069.27
2014	152,511.35
2015	157,086.69
2016	161,799.29
2017	166,653.27
2018	171,652.86
2019	176,802.45
2020	182,106.52
2021	187,569.72
2022	193,196.81
2023	198,992.71
2024	204,962.50
2025	211,111.37
2026	217,444.71
2027	223,968.05
2028	230,687.09
2029	237,607.71
2030	244,735.94
2031	252,078.02
2032	259,640.36
2033	267,429.57
2034	275,452.46
2035	283,716.03
2036	292,227.51
2037	300,994.34
2038	310,024.17
2039	319,324.89
2040	328,904.64
2041	338,771.78
2042	348,934.93

What should you do to ensure that you fulfill the minimum sum when you retire?

Different people have different needs. Young couples who are planning to purchase a new flat may find it difficult to attain the minimum sum with a 30 year loan to worry about. 

For people who have repaid their HDB loans fully, they may want to transfer some balances from their ordinary account (OA) to their special account (SA) to earn a higher interest rate. However, do note that this process is irreversible. Which is why this option should not be considered if you still have an outstanding HDB loan which can only be paid from your OA.

For people who will not be purchasing their HDB in the next few years may want to consider investing using their CPF-OA. The CPF OA interest rate is currently at 2.5%. Many local blue chips, preference shares or reits gives a yield of 5% or more, beating  the CPF-OA's interest easily.

One should assess his/her own situation and take into consideration of any plans for the next few years before deciding the course of action to take. 

Invest wisely. Plan Early. Retire Early. =)