CPF Life Plan - Standard, Basic, Escalating --- which one better ?

[JuniorLion]

A straw man is a common form of argument and is an informal fallacy based on giving the impression of refuting an opponent's argument, while actually refuting an argument that was not presented by that opponent. One who engages in this fallacy is said to be "attacking a straw man."




(No I won't support an escalating plan with that kind of numbers)

You feel good and superior after making those comments, I reckon.

At the current numbers, the Escalating Plan is a poor proposition.

I am very good at delaying gratification (yearly top ups to SA, SRS) but I will never ever select Escalating plan unless they improve it to something that makes financial sense

 

[BBCWatcher]

Lots of noise (squealing?), but still no answer to my question: what's the alternative retirement plan to combat inflation? Specific escalating life annuity product and some reasonably clear math, please.

Pretending inflation doesn't exist, or that it "won't be so bad," or to "die early" (as a general rule; ELKYme could be exceptional) is simply not credible. If not CPF LIFE Escalating, what's the realistic alternative plan?

 

[maple96]

Actually, CPF does allow you opt out of CPF LIFE if you have an alternative life annuity meeting certain basic standards. But that's a separate issue. I'm just asking an even easier question: what private escalating life annuity is available that only needs to plug the Standard Plan's inflation gap -- what the name of the product is, and what the math is for that product that makes it compelling/interesting to buy. You can still use the CPF LIFE Standard Plan as part of your inflation fighting plan (the part that doesn't fight inflation but, from a few of its dollars, could fund inflation fighting), as long as you've got something realistic, viable, and a comparatively better value to combat inflation if it isn't the CPF LIFE Escalating Plan. So...what's the plan? That's my question, and it's a simple one. Name the product, and sketch out the math.

Nobody has answered this simple question yet.

Lots of noise (squealing?), but still no answer to my question: what's the alternative retirement plan to combat inflation[/b]? Specific escalating life annuity product and some reasonably clear math, please.

Pretending inflation doesn't exist, or that it "won't be so bad," or to "die early" (as a general rule; ELKYme could be exceptional) is simply not credible. If not CPF LIFE Escalating, what's the realistic alternative plan?

Where the noise come from eh? Now u are asking for alternative retirement plan but earlier said it is a separate discussion when I ask u for one as alternative to CPF Life?

We dun have to share our other sources of wealth and income, to teach u so u can just copy and write the theory and replicate everywhere like what u did about SA shielding, now proven wrong/incorrect with missing facts

Nobody is pretending no flation, just noise u create

 

[maple96]

Every individual has different needs and wants, sources of wealth and income, standard of living, health conditions, healthy lifestyle, "projected lifespan based on family condition", not forgeting murphy's law, family and dependents.

So based on what had been shared, make your own decisions based on your own circumstances.

This is the fundamental basis. U dun have to copy other people's sources of income, look at your time horizon to 55, 65, retirement, etc, grow your wealth.

 

[dork32]

At the current numbers, the Escalating Plan is a poor proposition.

I am very good at delaying gratification (yearly top ups to SA, SRS) but I will never ever select Escalating plan unless they improve it to something that makes financial sense

you hit the nail. numbers are important. to you escalating is a poor proposition because you have done some calculations. you definitely would switch to it if they sweeten the deal.

this is what i have said again and again, you should not accept escalating because it gives 2% more, or you need longevity insurance, or it is the best in its class. you should accept it only if the cost is acceptable compared to its alternatives

 

[maple96]

you hit the nail. numbers are important. to you escalating is a poor proposition because you have done some calculations. you definitely would switch to it if they sweeten the deal.

this is what i have said again and again, you should not accept escalating because it gives 2% more, or you need longevity insurance, or it is the best in its class. you should accept it only if the cost is acceptable compared to its alternatives

Yes, I missed that point. Insurance is the transfer of risks, there is a cost to transfer risk = insurance cost/expense. The higher the sum assured, the higher the cost.

Insurance plays with your fear and greed, u have to manage it. If u can self insure, u can reduce the cost of insurance. By the time u retire, u should be able to self insure, if u are isavvy here.

WL have an initial cost, but over the long term, the returns catches up, and I made a gain Just an example. I still live to see and enjoy the gain. Standard/Escalating Plan have a higher cost compared to Basic, but over the long term, if u live long enough, u make a gain I am not looking to make gain from CPF Life, I want to reduce my cost/loss.

 

[dork32]

Lots of noise (squealing?), but still no answer to my question: what's the alternative retirement plan to combat inflation? Specific escalating life annuity product and some reasonably clear math, please.

Pretending inflation doesn't exist, or that it "won't be so bad," or to "die early" (as a general rule; ELKYme could be exceptional) is simply not credible. If not CPF LIFE Escalating, what's the realistic alternative plan?

the weapon to combat inflation is the pile of wealth that i am sitting on. eg if i have 2 mil now, do i have to depend of the 200k cpf life to combat inflation

lion, maple and myself are all aware of inflation and know it is going to affect us. we also know that escalating helps to combat inflation. we are just no willing to pay the high cost in getting the plan.

 

[crimsontactics]

Eh, don't edit my post leh.

Post your own opinion under your own name.

Sent from . using GAGT

 

[Papermate]

Actually many people here missed the point of Standard Vs Escalating.

The main problem isn't financial, but habit formation.

With Escalating Plan, you know that you will be financially secured for life since if you can survive on Year 1's payout, you definitely can survive the subsequent years.

Viewing things from a money perspective solely is wrong, especially since we can't have an accurate grasp of our life expectancy.

Sent from . using GAGT

In fact, the whole debate is merely academic. The choice of plan should only be made when we are about to hit "55" because only then, do we have a clearer picture of things as to what we might need in future.

If we are say 45 years old now, how do we really know what surprises, pleasant or nasty, life has in store for us in the next ten years?

Many a time, I planned one thing for next month, and come next month, I had to cancel the plan. Try doing that ten years ahead...well nigh impossible.

Another way of putting it is, it's like planning what we do, how we are going to invest the salary we "might" earn in the years 2030 to 2035, when we haven't reach there.

 

[Papermate]

Actually, CPF does allow you opt out of CPF LIFE if you have an alternative life annuity meeting certain basic standards. But that's a separate issue. I'm just asking an even easier question: what private escalating life annuity is available that only needs to plug the Standard Plan's inflation gap -- what the name of the product is, and what the math is for that product that makes it compelling/interesting to buy. You can still use the CPF LIFE Standard Plan as part of your inflation fighting plan (the part that doesn't fight inflation but, from a few of its dollars, could fund inflation fighting), as long as you've got something realistic, viable, and a comparatively better value to combat inflation if it isn't the CPF LIFE Escalating Plan. So...what's the plan? That's my question, and it's a simple one. Name the product, and sketch out the math.

Nobody has answered this simple question yet.

For an answer, you'll need to speak to some financial advisors from the big insurance companies.

Have you done that?

 

[maple96]

In fact, the whole debate is merely academic. The choice of plan should only be made when we are about to hit "55" because only then, do we have a clearer picture of things as to what we might need in future.

If we are say 45 years old now, how do we really know what surprises, pleasant or nasty, life has in store for us in the next ten years?

Many a time, I planned one thing for next month, and come next month, I had to cancel the plan. Try doing that ten years ahead...well nigh impossible.

Another way of putting it is, it's like planning what we do, how we are going to invest the salary we "might" earn in the years 2030 to 2035, when we haven't reach there.

wah u young guys/gals are lucky we are sharing knowledge and experience on retirement planning with you here, if u think is academic, die liao.

U should use the info here to start your retirement planning, what BBCW is suggesting is that if u have a pte escalating annuity plan which can plug the gap between Standard and Escalating, go get one.

If u understand how annuity plans work, u have to start early so your premiums roll for a long period of years to give u better returns = that's my understanding but I am not suggesting u go get it hor.

What the other people and myself suggest is self insure, make sure u have other sources of wealth and income to last u for retirement until u die. Dun depend solely on CPF Life. There is a cost to CPF Life insurance.

Just a quick/brief summary

 

[bobobob]

Lots of noise (squealing?), but still no answer to my question: what's the alternative retirement plan to combat inflation? Specific escalating life annuity product and some reasonably clear math, please.

Pretending inflation doesn't exist, or that it "won't be so bad," or to "die early" (as a general rule; ELKYme could be exceptional) is simply not credible. If not CPF LIFE Escalating, what's the realistic alternative plan?

Holding some equity?

I have another question, what's a reasonable payout on an inflation protected annuity? It seems the main cause of disagreement here is that some feel the escalating plan's payout is too low.

 

[Papermate]

Either U failed probability badly or u not live in Singapore.

I don't know how to put without sounding like a primary school math teacher.

In order to have 6 people living beyond 75, you need to have say 10 people living from 65 up to 75.

If you only have 4 people managing to live from 65 to 75, where do you find 6 people to live beyond 75? The most you have is 4.

People who lived beyond 75 also lived from 65 to 75....logically. But people who lived to 75 may not continue to live for much longer.

If the below probability does not make sense, then what makes (sense)?

The probability of people living from 65 to 75 is higher than the probability of people living beyond 75.

 

[Papermate]

wah u young guys/gals are lucky we are sharing knowledge and experience on retirement planning with you here, if u think is academic, die liao.

U should use the info here to start your retirement planning, what BBCW is suggesting is that if u have a pte escalating annuity plan which can plug the gap between Standard and Escalating, go get one.

If u understand how annuity plans work, u have to start early so your premiums roll for a long period of years to give u better returns = that's my understanding but I am not suggesting u go get it hor.

What the other people and myself suggest is self insure, make sure u have other sources of wealth and income to last u for retirement until u die. Dun depend solely on CPF Life. There is a cost to CPF Life insurance.

Just a quick/brief summary

I know insurance annuities should be started early.

How do you start early when you are still way below CPFLife payout year, and meanwhile, all your CPF monies are locked up?

Correct me if I am wrong, but you can only make your choice of CPF Plans a few months before you turn 55, and then you sit back and wait till you are 65 for the payouts. Right?

It's not an easy task, trying to decide on a plan, at age 55, doing your best to predict if it is going to suit you when you are 65. But you take the plunge. However, if you are 45 this year, then talking about this is seriously academic. At 45, you want to tell what is good for you when you are 65? But doing it at 55, as you must by law, you are a little closer to the tail end of your life which is what I wrote earlier.

 

[maple96]

I know insurance annuities should be started early.

How do you start early when you are still way below CPFLife payout year, and meanwhile, all your CPF monies are locked up?

U need plan for retirement means make sure u have multiple sources of income for retirement, one way is to buy a pte annuity with your own cash.

Correct me if I am wrong, but you can only make your choice of CPF Plans a few months before you turn 55, and then you sit back and wait till you are 65 for the payouts. Right?

U only need to choose at 65 or defer to 70, but u need to know how and what to choose to compliment what u already have. If u are only 45, just learn/know what is available, considerations to make the choice, have your own other sources income, dun just depend on CPF life.

It's not an easy task, trying to decide on a plan, at age 55, doing your best to predict if it is going to suit you when you are 65. But you take the plunge. However, if you are 45 this year, then talking about this is seriously academic. At 45, you want to tell what is good for you when you are 65? But doing it at 55, as you must by law, you are a little closer to the tail end of your life which is what I wrote earlier.

Learn and Plan your retirement, if u think is too early for u, just do what u are doing to grow your wealth and income.

 

[Tiger9119]

I know insurance annuities should be started early.

How do you start early when you are still way below CPFLife payout year, and meanwhile, all your CPF monies are locked up?

Correct me if I am wrong, but you can only make your choice of CPF Plans a few months before you turn 55, and then you sit back and wait till you are 65 for the payouts. Right?

It's not an easy task, trying to decide on a plan, at age 55, doing your best to predict if it is going to suit you when you are 65. But you take the plunge. However, if you are 45 this year, then talking about this is seriously academic. At 45, you want to tell what is good for you when you are 65? But doing it at 55, as you must by law, you are a little closer to the tail end of your life which is what I wrote earlier.

If i am not wrong, you make the decision to go with which plan before 65 not 55.

 

[ELKYme]

Maybe opt to place FRS into RA first when you’re 55 if you’re not sure?
When things are more certain on your end, than RSTU more into the RA account.
https://www.cpf.gov.sg/Members/Schemes/schemes/retirement/retirement-sum-topping-up-scheme

It's not an easy task, trying to decide on a plan, at age 55, doing your best to predict if it is going to suit you when you are 65. But you take the plunge. However, if you are 45 this year, then talking about this is seriously academic. At 45, you want to tell what is good for you when you are 65? But doing it at 55, as you must by law, you are a little closer to the tail end of your life which is what I wrote earlier.

 

[BlueRobin]

I was wondering if I were to compare the total payout for each plan; here the total is defined as the cumulative monthly payout + bequest received when one passed on for each year after payout started.

So I used the CPF estimator with the amount of $264K in RA at age 55, start receiving payout at 65, use the lower of the payout range for both monthly amount and bequest, here is the chart I produced:

At the end of age 65 (received payout for 1 year), the person passed on, the respective amounts are:

Escalating: $18,852 + $381,826 = $400,678
Basic: $21,900 + $381,394 = $403,475
Standard: $24,036 + $381,572 = $405,430

The point when all three plans are about the same amount, it is actually at the end of 89 years old, after receiving payout for 24 years.

Escalating: $603,696 + $0 = $603,696
Basic: $547,500 + $57,682 = $605,182
Standard: $600,900 + $0 = $600,900

Both escalating and standard no longer has bequest that is why it is $0.

Since we do not know when we will die, for current cohort, the estimated life-span is 85 years old, Basic would be the best plan since one is likely to receive the most cumulative amount?

Just thinking aloud. Should my method is wrong, please point out for me. Thanks.

The assumptions are that we all know the effect of inflation, CPF Life is not the only source of retirement income, we just want to see which one has the best "value" based on current regime.

 

[maple96]

Maybe opt to place FRS into RA first when you’re 55 if you’re not sure?
When things are more certain on your end, than RSTU more into the RA account.
https://www.cpf.gov.sg/Members/Schemes/schemes/retirement/retirement-sum-topping-up-scheme

It is mandatory to transfer FRS from OA/SA to RA at 55, CPF will do it for u!

 

[ELKYme]

First off, FRS isn’t mandatory as it is also possible to opt for BRS and pledge your property.

ERS too, is optional, believe papermate’s question is whether to place FRS or ERS into RA account.

It is mandatory to transfer FRS from OA/SA to RA at 55, CPF will do it for u!