Most Younger Singaporeans Would Likely be CPF Millionaires Even after BTO HDB Mortgage Payments

Ok after the Election post, let us get back to something proper.

In the last article, I reflected upon how likely many of us can eventually be CPF Millionaire and I shared some of my numbers based on our in-house calculations. Read Yes, Diligent Singaporeans with Modest Salaries Can Become CPF Millionaires — If…

I said in my article that the CPF of a couple who typically needs to service their mortgage might look very different.

I thought perhaps lets take a look at the numbers and see whether I am right.

Setting the Stage

I want to take a look at the accumulated CPF of individuals at age 55 and 65 if they service the mortgage of a property for 25 years.

We will zoom into the male side of the equation. We start tracking the male at 25 years old till 65 years old and see how much in each of the accounts can he accumulate to.

In this I am interested in a few things:

1. The couple will purchase a BTO property. If it is other property like Sales of balance, resale, condo, landed, I am sorry I am keeping this out.
2. The couple will go for a 25-year HDB loan. There is the option for bank loan and typically folks prefer bank loans because the interest rate is much lower than the 2.6% in the past. There is also variability in bank loans, all of which will complicate things. You can borrow a longer 30-year bank loan as well.

Now, I might want to make sure that my data is kind of adjusted to the graduates today. In the table below, I shared the recent BTO projects announced in the Feb 2025 exercise:

We got some standard projects but also some prime projects but I think we can regroup the projects this way:

They are grouped based on the property value selling price if we exclude grants. Now there is a possibility if you stay close to your parents and has income within range, the value would be lower but lets handicap our CPF calculation a little by not factor in the grants. This means we would need to pay more out of our CPF which makes it harder to accumulate $1 million in our CPF.

Since MoneyOwl gave us the salary of an ITE, Poly and University graduate to be $2,500, $2,900 and $4,000 monthly respectively, let us use these salary for our test.

I don’t want to complicate things so I will simulate three situations:

1. The ITE graduate who opt for a $300,000 BTO.
2. The Poly graduate who opt for a $400,000 BTO.
3. The Uni graduate who opt for a $530,000 BTO.

Can an ITE graduate opt for a flat that has higher dollar value? They could if they meet all the Mortgage Servicing Ratio and all the other requirements. But let us keep to this.

I am going to assume the 25 year old tries with the spouse to get a flat and finally able to pay the first down payment at age 28 and then the flat takes 3 years to complete where they will pay the residual down payment at age 31.

One of the unique observation is that while the flats look expensive on paper, if you divide the down payment into two tranches, then divide the amount by two spouse, the down payment becomes so much more manageable with only the ITE, poly and university graduate’s CPF.

So this is how things will lay out:

For each flat value range, you can see the 1st downpayment for one side of the spouse, stamp duty for one side of the spouse, the 2nd downpayment, and the annual mortgage borne by one of the spouse over the 25 year period.

We are also going to assume some salary growth:

For the first 10 years, we assume the salary growth, which includes any jump in jobs, promotion, will average to 6%. The next 10 years which is from 36 to 45 will be 4% p.a. and then the subsequent income growth is 3% p.a.

Note that this is not the growth of your CPF contribution but the growth in your gross salary that attracts CPF contribution. How much is eventually contributed, to which account, is computed based on your age, salary, maximum contribution rate, the split between ordinary wages or additional wages.

Okay, with that said, let us look at the ITE who opts for a $300,000 BTO flat.

The ITE Graduate Opting for a $300,000 BTO HDB Flat

The chart below shows the ITE graduate’s contribution to the CPF from 25 years old to 65 years old:

This includes the contribution from the employer as well. The contribution will typically peak at 33,000.

The chart below shows his corresponding take-home salary:

This is how much he has to work with to make life work.

He probably is able to crack the 100k take home pay only at 53 years old.

We want to take a look at how this ITE graduate could accumulate his CPF if there is no BTO purchase:

He can accumulate to $1.2 million at 55 years old and $2 million at 65 years old. If you see there are money in the OA at 55, it means that the ITE graduate also achieves full retirement sum (FRS) at that age.

Now, if he makes the down payments and service the property, this is how his CPF would look instead:

He would accumulate $951k at 55 years old and $1.66 million at 65 years old. He still reached CPF Full Retirement Sum (FRS) with a mortgage.

Obviously less than if he didn’t service the mortgage, but still a millionaire. The ITE graduate never did accumulate more than the FRS in his CPF SA before 55 years old.

The OA at 55 is much less compare to if he does not have a mortgage.

To give you a sensing, at age 45, his CPF has a net addition of roughly $41k yearly, net of the mortgage.

The table below shows the profile of his CPF LIFE:

Since he reach CPF FRS, he has an income equivalent of this purchasing power in today’s terms.

Now let’s take a look at the poly grad.

The Poly Graduate Opting for a $400,000 BTO HDB Flat

The chart below shows the Poly graduate’s contribution to the CPF from 25 years old to 65 years old:

This includes the contribution from the employer as well. The contribution will typically peak at 33,000.

The chart below shows his corresponding take-home salary:

He probably can reach a $100,000 take home pay slightly faster at 48 years old.

We want to take a look at how this Poly graduate could accumulate his CPF if there is no BTO purchase:

He can accumulate to $1.36 million at 55 years old and $2.2 million at 65 years old. If you see there are money in the OA at 55, it means that the Poly graduate also achieves full retirement sum (FRS) at that age.

This is just slightly more than the ITE graduate. Why is this so? Go compare the amount they contribute to the CPF from 25 to 65 years old and tell me if there is a big difference.

Now, if he makes the down payments and service the property, this is how his CPF would look instead:

He would accumulate $975k at 55 years old and $1.70 million at 65 years old. He still reached CPF Full Retirement Sum (FRS) with a mortgage. This is almost the same as the ITE graduate.

The OA at 55 is much less compare to if he does not have a mortgage.

To give you a sensing, at age 45, his CPF has a net addition of roughly $40k yearly, net of the mortgage. This is slightly less than the ITE graduate.

The table below shows the profile of his CPF LIFE:

Since he reach CPF FRS, he has an income equivalent of this purchasing power in today’s terms.

Now let’s take a look at the Uni grad.

The Degree Graduate Opting for a $530,000 BTO HDB Flat

The chart below shows the University graduate’s contribution to the CPF from 25 years old to 65 years old:

This includes the contribution from the employer as well. The contribution will typically peak at 37,000. This is more than the ITE and Poly graduate.

The chart below shows his corresponding take-home salary:

He probably can reach a $100,000 take home pay slightly faster at 39 years old.

We want to take a look at how this University graduate could accumulate his CPF if there is no BTO purchase:

He can accumulate to $1.6 million at 55 years old and $2.5 million at 65 years old. If you see there are money in the OA at 55, it means that the university graduate also achieves full retirement sum (FRS) at that age.

The accumulation is more than the ITE and poly graduate and while the absolute amount is significant, visually it is not that big of a difference.

Now, if he makes the down payments and service the property, this is how his CPF would look instead:

He would accumulate $1.08k at 55 years old and $1.86 million at 65 years old. He still reached CPF Full Retirement Sum (FRS) with a mortgage.

The OA at 55 is much less compare to if he does not have a mortgage.

To give you a sensing, at age 45, his CPF has a net addition of roughly $43k yearly, net of the mortgage. This is slightly more than the ITE and poly graduate.

The table below shows the profile of his CPF LIFE:

Since he reach CPF FRS, he has an income equivalent of this purchasing power in today’s terms.

Explaining What We Observe and Some Takeaways.

I summarized the value of the CPF accounts that you reviewed previously here so that we can observe and reflect upon them:

The first thing that you might notice is how similar the values are and there can be some explanation:

1. The CPF contributions are capped which means though the university graduate earn more eventually the difference is less. It will be different for those who have greater ability to top up.
2. The one that earns more bought a relatively dearer flat, which contributes to equalizing the numbers.
3. The salary growth of all three are pretty decent.

So they all have $1 million, reached full retirement sum and the highest basic healthcare sum (BHS) in their Medisave as they can be. They all enjoy the same CPF LIFE Standard income.

Most of the money is in their CPF SA and MA.

Due to their mortgage contribution their mortgage is much less than their peers who did not have to contribute the mortgage.

What makes the biggest difference?

1. The law of compounding over a 40 year time period.
2. Prudence not to overspend.
3. Being gainfully employed and doing decently well.
4. Salary growth rates.

The harshest criticism is how realistic is the growth rate? I leave it up to you. I think if you argue that you can’t climb up to reach the kind of salary growth I assume, then perhaps it is a fair statement. I think whichever way, there will be people saying this is less realistic and enough that says it is.

I think you could feel disappointed that you won’t have much cash in your CPF OA than someone without a mortgage. But I think what we may not realize is

1. The sum that you could accumulate after you paid off your mortgage in your CPF OA may be bigger than you think.
2. The money in your SA and MA can be pretty substantial. The problem is it is likely they are not available to you easily.
3. How money can compound.
4. You could service your mortgage without a single cent coming from your cash.
5. Singapore BTO are affordable.

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Kyith is the Owner and Sole Writer behind Investment Moats. Readers tune in to Investment Moats to learn and build stronger, firmer wealth foundations, how to have a Passive investment strategy, know more about investing in REITs and the nuts and bolts of Active Investing.

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Kyith worked as an IT operations engineer from 2004 to 2019. Currently, he works as a Senior Solutions Specialist in Insurance Start-up Havend. All opinions on Investment Moats are his own and does not represent the views of Providend.

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