Singaporeans' Roadmap For Accumulating $4 Million Like a Couple Using CPF By Age 65 (4M65)

Since 2021, I have been sharing with fellow Singaporeans an easy but powerful financial strategy how they are able to retire like a millionaire couple in Singapore by leveraging on their own CPF Special Account (SA) and MediSave Account (MA).

It has since been widely referred to through the catchy acronym: 1M65.

The 1M65 financial strategy is conceptually quite simple:

At around 30 years old, both husband and wife puts $130,000 each to their CPF SA and MA. The current CPF SA and MA interest rate of 4% compounded over time will grow the couple's combined CPF balances to over $1 million when they retire at 65 years of age.

This was precisely what we did to make sure that our CPF retirement nest egg could be a minimum of $1 million when we retire.

This 1M65 strategy has produced lots of interest among Singaporeans. It's been covered widely by The Straits Times and other news media platforms. I've been invited repeatedly to give talks at various personal finance events to share about 1M65. I actually have a few hundred passionate 1M65 enthusiasts in a 1M65 Telegram Group, who regularly exchange ideas while helping share the 1M65 concept with other people.

Personally, my wife and I haven't only achieved 1M65, we've exceeded it. Through sheer effort hard and also the prudent deployment of our CPF monies at the start of life, i was able to hit a combined CPF savings of $1 million at 45 years of age (1M45), which is living proof to sceptics that 1M65 is not only possible, but very achievable.

Having reached our goal nearly Two decades early, we naturally come to the issue: “What would our combined savings be when we eventually reach 65 years of age?”

Projecting Our CPF Balances At 65

Due towards the complexity from the CPF system, predicting our CPF savings at 65 years of age isn't a simple punching of calculator buttons.

We will have to consider salary caps, bonus interest, contribution limits, as well as varying CPF contribution rates and CPF interest rates for various ages groups. Many of these factors would modify the final figure.

Thus, modelling our CPF balances at 65 years of age would certainly be considered a challenging and time-consuming feat, given my rudimentary excel skills. What about a silver-lining to the current COVID-19 situation is the fact that my usual departure date were shelved. With my newfound free time, I spent a long time doing a forecast in our CPF balances at 65 years old using Microsoft Excel.

When I saw the final result, I was shocked and filled with disbelief-

If the calculations were correct, our combined CPF at 65years old would be a whopping $4 million!

How could it be? I doubted my own number-crunching skills, so I enlisted the aid of volunteers from the 1M65 community. A team of 12 Microsoft Excel experts stepped up to help me refine and audit my initial mathematical model for predicting our CPF balances. They used actual numbers within our current CPF accounts, including our CPF Investment Scheme (CPFIS) holdings, and extrapolated our CPF contributions till age 65.

And what were their results? Most of their results gravitated towards $4 million – plus some, even higher.

Having confirmed that we would indeed end up having at least $4 million within our combined CPF accounts by age 65, I dubbed my financial strategy as 4M65.

If you're curious to learn just how can a Singaporean couple achieve 4M65 by simply leveraging on their own CPF, read on.

High-Level Summary of The 4M65 Financial Strategy

To be clear: 4M65 will not be a walk in the park.

Few Singaporeans will be able to do it because it requires gutsy and significant top-ups for SA and MA by one's late 20s or early 30s.

It would also require both husband and wife to work and also have CPF contributions until 65 years of age. In my case, we both love our work, so it's very probable that both our careers would last well into our 65 years old and beyond.

Recognising that interest earned on our CPF savings are extremely high in accordance with housing loans from banks, we have opted to pay our housing mortgages using cash rather than our CPF contributions. This isn't a stretch for us given our frugality cheap we still live in an HDB flat. After all these years, our outstanding mortgage balance can also be not significant.

In addition, about 10% of our CPF is in equities underneath the CPFIS, which we can realistically expect to grow by 6 to 7% annually typically within the long-term.

With these simple (although not necessarily easy) steps, our combined CPF balances should reach a high of about $4 million at 65 years old.

I'd like to reiterate that this strategy requires us to complete NOTHING except continue working and making CPF contributions until we're 65 years old to be able to attain $4 million! The strategy simply harnesses the CPF contribution from your salaries and the power of compounding.

Prerequisites For Using the 4M65 Strategy

Of course, there are a few prerequisites for achieving 4M65 in reality. For example, it's easier on hardworking and frugal couples who're early starters within the working world.

HDB dwellers who don't have private property aspirations would find 4M65 easier to achieve as well.

Most importantly, aspiring 4M65 practitioners must make the gutsy move of topping their SA and MA heavily while young.

4M65 And Beyond

What if we invest all of our OA into an S&P500 index fund or an equivalent global fund that yields a 6 to 7% return per year over the long-term? Our CPF balance would then explode to in excess of $5 million!

A few of our 1M65 fans also suggested more innovative ideas to grow one's combined CPF using the spouse. Included in this are taking on another job, giving back the CPF withdrawals and accrued interest that we have taken for our housing mortgages, and the infamous CPF SA Shielding technique at 55.

While we did not model these stretchy scenarios, these add-ons could easily give a few hundred thousand dollars to our CPF balances at retirement.

Over my next few articles on DollarsAndSense, I will deep dive into various 4M65 execution strategies. Hopefully eventually, you and your spouse may also be in a position to achieve the amazing 4M65.

Loo Cheng Chuan, may be the Founding father of the 1M65 Movement. He developed the 1M65 ($1 Million By 65 Years of age) CPF investment strategy that is helping many Singaporean couples being millionaires at retirement. He was mostly of the non-civil servants to become awarded the Public Sector Transformation award in 2021 for his 1M65 efforts. He runs a 1M65 Telegram Chat Group where he regularly coaches passionate 1M65 enthusiasts on good personal finance virtues.