This is going to be short blog in reply to a reader’s question.
It is a question I get asked somewhat often.
Sharing the reply as a blog is probably a good idea as it would give me a blog to point to in future.
So, the reader wants to know why Top Up my Medisave Account (MA) when the money cannot be withdrawn?
The reader is probably referring to the Basic Healthcare Sum (BHS) which has to be maintained in the MA once we turn 65.
Otherwise, of course, the BHS can be drawn upon for specific purposes.
For me, the objective of the MA is to have funds for medical expenses in case of hard times.
To be honest, I hope I don’t ever have to do a withdrawal.
If I must draw upon the money in my MA, it means that I am very sick and experiencing financial hardship.
Anyway, the next thing I am going to say is something I have blogged about before.
Having a maxed out MA also means that I get free medical insurance.
Want to know how?
Since the reader’s focus seems to be on CPF funds withdrawal at age 55, it should be interesting to note that any excess interest income generated by our MA will flow into our Special Account (SA) or into our Ordinary Account (OA) if our SA has hit the Full Retirement Sum (FRS.)
For me, it flows into my OA.
Since the MA has the same interest rate of 4% as the SA, this mechanism makes it attractive as an additional income generator since money in the OA and SA can be withdrawn once we have set aside the FRS in our Retirement Account (RA) at age 55.
Some readers might also be interested in this blog:
If we can afford to do so, I believe that maxing out our MA is a good idea.
Max it out and let compound interest do its magic.
As usual, this is just me talking to myself, of course.