Retirement Planning Part 5: Downside of CPF Life & Our Retirement Problem

Christopher Tan

In this fifth segment of our 7- parts series on Retirement planning, we share the downside of CPF Life and problems that may occur on our way to retirement planning.

You can find the link to the other parts here:

This event was conducted on 5th of May 2016 by Christopher Tan, CEO of Providend.


CPF LIFE is good. There is a maximum- $241,500 per person max at this moment. So, if you want more you cannot just depend on CPF LIFE alone.

Secondly, you have to accept there’s no flexibility. Once you put in, cannot come out. This is like joining the gangs you know. You put in money, you regret, too late already. Cannot come out already unless you go and… ok, not that cannot. You can appeal. Case by case they will let you take out but most of the time the case by case won’t be successful. You go in, cannot come out. So no flexibility. You cannot manage your money. You cannot have more money earlier, lesser money later. You cannot. There is no flexibility. You just got to accept it.

Also, at this moment, the downside of CPF LIFE is that it is not hedged against inflation. You get, let’s say $1,300 per month. It Is flat $1,300 per month. It doesn’t go up.

If you die later, it doesn’t leave behind a lot of bequests, if you die about 80 or 85. And if legacy planning is important, you want to leave something behind, CPF LIFE doesn’t really leave a lot behind.

So, if you think that this is important then you’ve got to plan beyond. Yes, make use of CPF LIFE to be the foundation then you build on it. So, our retirement problem if I may summarise it is- One, it’s inflation. We know it is a problem. Low-interest rate, it’s a problem and we all understand low-interest rate today. Market volatility is a problem because, in retirement, our ability to take that volatility is lower. Longevity risk is a problem. It’s not about dying too soon. It’s about living for too long. What if I run out of money? Fifth problem: Withdrawal risk. Meaning to say that what if I overspend the earlier years, leaving not enough behind? This is, in summary, the five problems of retirement. CPF LIFE can only solve part of it. It doesn’t solve all.


In the near two decades that we have worked with retirees, we understand one thing: Reliability of income is more important than return on investment at this phase of your life. As such, we have developed a proprietary methodology called RetireWell®, that can help you draw down strategically from your retirement nest egg.

Our Retirewell® methodology was featured in The Business Times every month for almost a year in 2017 and has 11 parts to it, namely:

• Part 1: Drawing Down Retirement Money
 Part 2: Offering Retirees Security and Peace of Mind
• Part 3: Low Cost, Consistent Results
• Part 4: Counting on low-cost Index Funds
• Part 5: Investment Philosophy for a Retiree Client
• Part 6: Ensuring a ‘Safe Retirement Income Floor’
• Part 7: Remain Invested Over the Long Haul
• Part 8: Purpose-Driven Retirement Planning
• Part 9: A Tale of Two Retirees And Their Fortunes
• Part 10: Stock Markets Always Rise Over The Long Term
• Part 11: Retirement – It’s About The Kind Of Life You Want To Lead

With Retirewell®, we will design a plan that will give you a safe and reliable stream of income for the rest of your life, with provisions for legacy in the event of demise, so that you can live up your retirement with peace of mind.

We do not charge a fee at the first consultation meeting. If you would like an honest second opinion on your current investment portfolio, financial and/or retirement plan, make an appointment with us today.

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