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Singaporeans’ Roadmap For Accumulating $4 Million As A Couple Using CPF By Age 65 (4M65)

You may have heard of 1M65. But, have you heard of 4M65?


This article was contributed to us by Loo Cheng Chuan.

Since 2015, I have been sharing with fellow Singaporeans a simple but powerful financial strategy on how they can retire as a millionaire couple in Singapore by leveraging on their CPF Special Account (SA) and MediSave Account (MA).

It has since been widely referred to by 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 into their CPF SA and MA. The prevailing 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 old.

This was exactly what my wife and I did to ensure that our CPF retirement nest egg would be at least $1 million when we retire.

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

Personally, my wife and I have not only achieved 1M65, we have exceeded it. Through sheer hard work hard and the prudent deployment of our CPF monies early in life, we were able to hit a combined CPF savings of $1 million at 45 years old (1M45), which is living proof to sceptics that 1M65 is not only possible, but very achievable.

Having reached our goal nearly 20 years early, we naturally come to the question: “What would our combined savings be when we  eventually reach 65 years old?”

Read Also: 1M45: Reaching $1 Million In Our CPF By Age 45 – This Is How We Did It

Projecting Our CPF Balances At Age 65

Due to the complexity of the CPF system, predicting our CPF savings at 65 years old is not a simple punching of calculator buttons.

We would need to consider salary caps, bonus interest, contribution limits, as well as varying CPF contribution rates and CPF interest rates for different ages groups. All of these factors would affect the final figure.

Thus, modelling our CPF balances at 65 years old would certainly be a challenging and time-consuming feat, given my rudimentary excel skills. Perhaps a silver-lining to the current COVID-19 situation is that my usual travel plans were shelved. With my newfound free time, I spent a long time doing a forecast of 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 help of volunteers of 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 in 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 – and some, even higher.

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

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

Read Also: Why Are Many Singaporeans Still Poor – Despite Working Hard And Saving Diligently?

High-Level Overview 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 as 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 have CPF contributions until 65 years of age. In my case, my wife and I both love our work, so it is very probable that both our careers would last well into our 65 years of age and beyond.

Recognising that interest earned on our CPF savings are very high relative to housing loans from banks, we have opted to pay our housing mortgages using cash rather than our CPF contributions. This is not a stretch for us given our frugality and the fact that we still live in an HDB flat. After all these years, our outstanding mortgage balance is also not significant.

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

With these simple (but 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 do NOTHING except continue working and making CPF contributions until we’re 65 years old in order to attain $4 million! The strategy simply harnesses the CPF contribution from our salaries and the power of compounding.

Read Also: Kiasu Singaporeans’ Guide For Improving Luck In Investing

Prerequisites For Applying The 4M65 Strategy

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

HDB dwellers who do not 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.

Read Also: Retirement Sum Topping-Up Scheme (RSTU) VS CPF Voluntary Contributions: What’s The Difference?

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 annum over the long-term? Our CPF balance would then explode to over $5 million!

A few of our 1M65 fans also suggested more innovative ideas to grow one’s combined CPF with the spouse. These include taking on a second job, returning the CPF withdrawals and accrued interest that we have taken for our housing mortgages, and the infamous CPF SA Shielding technique at age 55.

While we did not model these stretchy scenarios, these add-ons could easily add 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. I hope that one day, you and your spouse will also be able to achieve the amazing 4M65.

Loo Cheng Chuan, is the Founder of the 1M65 Movement. He developed the 1M65 ($1 Million By 65 Years Old) CPF investment strategy that is helping many Singaporean couples to become millionaires at retirement. He was one of the few non-civil servants to be awarded the Public Sector Transformation award in 2018 for his 1M65 efforts. He runs a 1M65 Telegram Chat Group where he regularly coaches passionate 1M65 enthusiasts on good personal finance virtues.