Should I take my CPF out at age 55?

At our recent FSM Global Exchange event, a client pulled me aside with a question I have heard increasingly. He turns 55 soon, and an agent (not going to name the company) had shown him a plan: withdraw his CPF savings, put them into an investment-linked policy (ILP), and collect around 7% a year from day one. On top of that, his family would get at least 101% of what he put in when he passes.

Higher income now, a guaranteed bequest later. He wanted to know: What's the catch? Is it too good to be true?

My honest answer: Plenty. And for most people turning 55, CPF LIFE is always the better deal.

Why I back MoneyOwl on this

On 23 Oct 2026, CPF Board published a piece by MoneyOwl's Chuin Ting Weber and Ernest Tham that takes this exact pitch apart. I agree with it, and every client approaching 55, or with parents or relatives nearing that age, should read it.

As the General Manager of FSM Global, a wealth platform offering a wide range of investment products and do-it-yourself insurance, you might expect me to tell you to take all your CPF money out and invest it. I WON'T. Clients who have been with us for years know we care about your long-term well-being, not short-term transactions. We'd rather you keep your retirement safety net intact and invest what's truly surplus than swap a lifetime income for a product, like an ILP, that can quietly run dry.

That's also why we don't offer ILPs at FSM Global. We believe investment and insurance are best kept separate.

Why CPF LIFE matters

CPF LIFE isn't an investment. It's longevity insurance: a monthly paycheque that keeps coming for as long as you live, backed by a AAA-rated government.

That matters more than ever. A 55-year-old today can expect to live to about 85, and more than a third will pass 90. The biggest retirement risk isn't low returns. It's running out of money while you're still alive.

CPF LIFE handles that risk for you:

•         Stable payouts for life, untouched by market crashes

•         Payout rate of about 6.3% to 6.7% of your Retirement Account balance at 65, based on MoneyOwl's calculations

•         No agent commissions or marketing costs eating into your money

•         Your family still gets something: unused premium and remaining CPF balances go to your beneficiaries

RA savings at 55	Monthly payout at 65	Annual payout rate
$110,200	$950	6.7%
$220,400	$1,780	6.5%
$440,800	$3,440	6.3%

Figures for a male member on the CPF LIFE Standard Plan, per CPF Board; payout rates calculated by MoneyOwl.

Secret tip: Want to get even more out of CPF LIFE? Live longer. The longer you live, the more payouts you collect. So look after yourself starting from today (regardless of how old you are now): eat well, sleep enough, exercise regularly and make time to unwind, whether through meditation or listening to your favourite music. Aim for 90 years old, or even 100 years old.

Where the ILP pitch falls apart

1. A 7% dividend is not a 7% return. If a fund pays out more than it earns, it's handing you back your own capital. MoneyOwl cites a popular ILP sub-fund paying over 7% whose Net Asset Value (NAV) slid from $10 at launch in 2013 to $7.58 by September 2026. Its annualised return since inception: 6.58%, below its payout rate. For context, global equities returned 7.81% a year over 20 years, before fees.

2. Your income shrinks when markets fall. 7% of $100,000 is $7,000. 7% of $50,000 is half that. Keep withdrawing in a bad year and you're selling low, leaving less to recover. Hit a crash early in retirement and the damage compounds.

3. Fees chip away every year. Fund charges, distribution costs, insurance charges. MAS lists nine types of fees and costs that can apply to these products.

4. The "101% bequest" gets very expensive with age. Cost of insurance rises sharply as you get older: from roughly 1.1% to 1.8% of the sum at risk at 65, to between 11.6% and 16% at 90 across four popular ILPs. As your account falls, the sum at risk rises, so you pay more, so your account falls further.

5. The policy can lapse. If your remaining value can't cover insurance charges, the policy ends. You lose the income and the death benefit. The thing you were sold on disappears just when you're most likely to need it.

And no, the 101% death benefit is not "capital guaranteed".

CPF LIFE vs high-dividend ILP at a glance

	CPF LIFE	High-dividend 101 ILP
What it is	National longevity annuity	Insurance plus unit trust investment
Market risk	None	Yes, income falls with fund value
Income lasts	For life	Until capital runs low or policy lapses
Payout	About 6.3% to 6.7% a year, stable	Around 7%, not guaranteed
Costs	Minimal, no commissions	Fund fees, distribution, rising insurance costs
For your family	Unused premium plus CPF balances	101% of premium, only if policy is still in force

What I Advocate Personally

Keep your retirement income safe first. Invest the rest.

CPF LIFE is your floor: income you can't outlive and can't lose in a market crash. Once that's secure, you can invest your genuine surplus for growth, in low-cost, transparent funds you understand and control.

If someone pitches you a "higher payout" plan for your CPF, ask three questions:

1. Is this payout coming from returns, or from my own capital?
2. What happens to my income and death benefit if markets fall 30% at age 70?
3. What will the cost of insurance be at 85 and 90?

If you don't get clear answers, walk away.

Want to talk through your CPF LIFE options, or how to put your spare cash to work for retirement? Email our non-commission advisory team at advisory@fsmglobal.sg.

Agents earn commissions on what they sell. Our advisers don't. At FSM Global, we care about your financial well-being, and our costs are a fraction of what you'd pay for an ILP. Be an informed investor, and make sure your money is working in the right place.

Disclaimer: The views expressed above are my own and do not necessarily reflect those of FSM Global.