The Basic Healthcare Sum (BHS) which was known as the Medisave Contribution Ceiling (MCC) in the past has been raised from $49,800 to $52,000 in 2017. This means that we can voluntarily contribute $2,200 now. Of course, for those who are gainfully employed, this contribution will enjoy income tax relief.
For people like me whose CPF-SA has already hit or exceeded the prevailing Minimum Sum or Full Retirement Sum, this is about the only avenue we have to pump more money into our CPF to earn a 4 percent interest.
Of course, for those of us whose mandatory contributions (from earned income) are lower than the CPF Annual Limit ($37,740), we can also do regular voluntary contributions for the difference, maxing out the CPF Annual Limit. The CPFB will apportion the contribution to our OA, SA and MA. How much goes into each account will depend on our age group.
I am so glad to be promoted to the next age bracket which means more of my regular voluntary contributions will go to my CPF-SA which is paid a higher interest. One of the reasons for me to be happy with ageing.
We can do a contribution to our CPF-MA online. Here is how to do it:
I contributed only $2,000 because that is the daily limit for me.
How much interest will $2,200 earn in a year? At 4 percent, that is $88.
Some people might say $88 is not a lot of money. What will AK say? It is still money and good money from the government too.
How do we build wealth through saving money? Slowly and steadily, every dollar adds up.
Don’t underestimate the power of saving a few dollars a day, every day. Don’t underestimate the power of compound interest.
What? Don’t have $2,200 to contribute to your CPF-MA? Oh, you need the money buy your daily cup of Starbucks coffee? OK lor. You are free to choose.
I choose to have free medical insurance. It is such a no brainer.
I forgot to mention that 88 is such an auspicious number too. Huat, huat ah!