How your plan uses your cash and assets

Once everything else is worked out (income, expenses, insurance, housing, CPF, goals), your plan moves money through the same steps every year. This “waterfall” flows down in order, one step at a time.

What is the money waterfall?

In order, every year:

Steps 4 and 5 are the two ways a year can end: spare cash to invest, or a shortfall covered by selling.

What counts as money in?

Your total money in each year is built from these.

Your CPF above the retirement sum isn’t paid out at 55. It stays in your OA, which your plan can draw on for a shortfall (see below). Everything else, like investment returns or a reinvested endowment or CPF LIFE payout, is handled later, not counted as money in here.

What counts as money out?

Your total cash expenses add up every outflow your plan has already worked out earlier in the sequence:

• Living expenses, inflated yearly, with step-ups on your promotion or job change cadence, capped by a ceiling that also inflates. After your freedom age, expenses just follow inflation.
• Insurance premiums, the part paid in cash. Premiums paid from MediSave are tracked separately.
• Loan and debt repayments.
• Child costs.
• Temporary expenses. Costs with an end date, like rent until your flat is ready, or childcare. Each is charged month by month until its end date, then drops off. A one-off item is charged once, in its month. If you leave its yearly increase blank, it follows your inflation rate.
• Housing’s cash payments. The cash part of your mortgage. The part paid from CPF isn’t a cash outflow.
• Goal and milestone spending.
• CPF cash overflow and ad hoc top-ups, covering costs a CPF account can’t fully pay.
• Income tax.

Like income, your first year’s living expenses are prorated by the months left in your plan date’s year.

How much cash does my plan keep?

Before anything is invested, the year’s ending cash is checked against a minimum cash floor. The floor is the sum of two things:

• Your emergency fund, a multiple of monthly expenses or income, or a fixed amount, as you’ve set it up. When it’s set against expenses, a temporary expense raises it while that expense is active. One-off temporary expenses are left out.
• Goal pre-saving. What your plan aims to have saved towards every upcoming one-off goal, plus next year’s goal cost. See Children and milestones.

Cash above this floor is available to invest. Below it, the gap is what your plan tries to withdraw from your other assets, covered next.

How much spare cash is invested?

Cash above your minimum buffer is available to invest. How much is actually invested depends on your setting:

• Auto: invest the whole surplus.
• Fixed: a set dollar amount a year, capped at the surplus.
• Percentage: a set share of that year’s total money in, also capped at the surplus.

Nothing is invested in a year where cash has already gone negative. Returns use your own expected return inputs, one rate before your freedom age and one after. They apply to the investment balance at the start of the year, with no market assumption added.

What happens when cash runs short?

When ending cash falls below your minimum buffer, your plan draws on or sells assets in a fixed order to cover the gap.

Before 55, the order is just ILP value, then investments. If a draw leaves your OA short for a later property payment, that payment moves to cash in that year.

Whatever is drawn or sold goes back into that year’s cash. If all three run out and a gap remains, it stays in the cash figure. Cash goes negative and shows as the red danger band on the pathway chart.

What does this feed?

The waterfall’s yearly figures are what the dashboard draws. The charts don’t recompute anything. They show these figures directly.

• The pathway chart’s stacked areas (cash, investments, CPF) read the figures on this page.
• The cash flow bars read the same figures from money in and money out above. Each bar is one projected year’s money in and total cash expenses.

See these charts in context on the plan dashboard.