Singapore-based financial blog that aims to educate people on personal finance, investments, retirement and their Central Provident Fund (CPF) matters.

Tuesday 28 January 2020

$20,000 Silver Housing Bonus: Should You Apply For It?

Source: HDB

Today we will be answering this question: is it advisable to put $60,000 into my Retirement Account (RA) to get the $20,000 Silver Housing Bonus?
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Answer:
When it comes to CPF, there is not really a one-size-fits-all solution.
There are some flexibility and restrictions that you will have to consider before making such an important decision.

Assuming you apply for the Silver Housing Bonus
If you sell your home, and your net proceeds from the sale is less than or equal $60,000, immediately all of the proceeds will go into your CPF RA.
Under this scenario, you get only $1 for every $3 you put back into your CPF RA.
Eg; if you put into your RA only $30,000, you only get $10,000 in Silver Housing Bonus instead of $20,000.
If your net proceeds exceed $60,000, the bonus will be capped at $20,000.
Below is an image from HDB on the calculations for SHB
Source: HDB

Recommended Read: 6 things to do with your CNY money

Conclusion
If your goal is to have cash after you downsize your home, then this might not be suitable for you because it is possible for you to end up with no cash if the net proceeds is less than $60,000 (Of course if you managed to exceed your cohort's CPF Retirement Sum after you topped up $60,000 + any SHB to your CPF, you will be able to withdraw the excess. So that's another consideration you can and need to consider).

But if your goal is to ensure you have enough for retirement (in terms of monthly payout from CPF), then SHB is a pretty good option for you because, by downsizing, you get an extra $20,000 from the government to support you during your retirement.
Our motto is always 'Free money just take'; but of course that is after you understand all the conditions attached to it.

So, it really depends on what is the end goal you want (immediate cash or monthly retirement income).
You could discuss further in details with an HDB officer or a financial adviser to assist you in making the decision.
Like we said, there is no one-size-fits-all solution, it really depends on what you want and what your circumstances are.

WSG can provide you with a career coach that is able to help you with that. 
And if you are looking for a free career coach, visit Workforce Singapore via the link below.
They can link you up with the career coach and you 
might be able to find new opportunities on their jobs portal.

Recommended Read: CPF LIFE in the Year 2020

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