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

[JuniorLion]

Your reading comprehension is seriously deficient, and that's just a fact, not an ad hominem attack. Here's one of the sentences I wrote, re-quoted:


Followed by an explanation of some notable (not all) exceptions to general advice.

No, not really. Your long story is veiled and designed to send a message, while appear to be seemingly open to alternatives. The message is loud and clear "Get Escalating Plan, start at 70".

If you had any intention to promote a 'Get Standard Plan, start at 65', you would say so. Instead, you began by saying "Get Escalating plan, start at 70". Your exceptions do not prescribe any other options, thus leaving TS none the wiser what he should have otherwise done.

 

[crimsontactics]

Depends on your financial situation at 65.

Choose standard if your beneficiaries are financial alright and you don't have much savings with you.

Choose basic if your beneficiaries are not financially alright.

Choose escalating if your beneficiaries are financially alright and you have savings.

Escalating plan provides the best peace of mind, but requires some sum of money at the start to buffer the lower payout.

Sent from . using GAGT

 

[chiapabuay]

Why did your father choose Basic instead of Standard last time? One way is to use those similar reasons to decide with " additional considerations"

Escalating plan is a variant of Standard Plan, gahmen trying to get those on Basic to convert to this Standard Plan variant.

If those currently under Basic converts to Escalating Plan, all their RA monies will be transferred to the CPF Life Pool, including their 2% extra interest, the rest me no need to explain. If u decide to pledge property to withdraw some monies in future, u no longer qualify.

He said at that time no Standard Plan and money no enough so Basic Plan. In fact CPF discontinued some other plan. They keep on changing hope it is for the better.

 

[dork32]

If you are poor, wish to retire early and have no other sources of income, then you should opt for the standard plan. You need the money NOW to sustain your life.

i suggest people watch the documentary on poor people on comcare last night.

you will really agree that their actions would be similar to what mike suggested.

 

[Mecisteus]

i suggest people watch the documentary on poor people on comcare last night.

you will really agree that their actions would be similar to what mike suggested.

I did not watch it. But it's quite logical.

Some people will need the extra $80 to go for 2 massages each month while they are still young. If not, they can die.

OK the above is just an example.

They don't want to wait many years later to receive more money.

 

[Opps-gal]

My father got CPF Life Basic plan --- now CPF say can convert to Escalating plan to take in inflation like 2% a year. I read CPF n forums n CPF Life Payout Estimator still undecided if Escalating is better or leave it at Basic. Must decide by 31 Dec 2018.

Escalating --- Bequest $0 at age 81

Basic --- Bequest still got $55,000 at age 81

Pluck figures from graph:

Monthly payout at 65 ----- $596 (Basic) -- $519 (Escalating)
Monthly payout at 81 ----- $596 (Basic) -- $713 (Escalating)
Monthly payout at 90 ----- $576 (Basic) -- $852 (Escalating)


Which one better Basic or Escalating ?

some infos:

RA $100k
Age 63
No mobility issue - Jog 3 times a week
No go check up

What it means by bequest $0 for escalating plan at age 81? If past away and amount not used up, cannot give to nominated person?

 

[Opps-gal]

i suggest people watch the documentary on poor people on comcare last night.

you will really agree that their actions would be similar to what mike suggested.

Which channel, and what documentary's name?

 

[maple96]

He said at that time no Standard Plan and money no enough so Basic Plan. In fact CPF discontinued some other plan. They keep on changing hope it is for the better.

Oops I forgot his cohort time the plans are different.

So money no enough then I suggest he should not convert to escalating plan because initial 10 years or so (need to check), his payout will drop alot under escalating plan.

My experience with old folks is they need more money when younger and less when older as they tend to eat less. Let them enjoy earlier when still mobile than later. That's how I provided for my mum.

How escalating plan works: it reduce your initial years of payout, then take those money to payout to u in later years to show increase in mthly payout

If u can do that yourself, it is the same. Eg he did not spend all the mthly payout, save it into RA. Or u can topup his RA so he can get more in future if inflation is really a concern. Self insure rather than depend on CPF Life totally as it will eat up some of your monies should he die earlier than expected. This is call hedging with the Basic Plan, get higher bequest if die earlier, still benefit from CPF LIfe lifetime payout should he live longer.

My other consideration why I will choose Basic Plan is if kena ci or tpd or ??, I can claim the bequest = that's my hedge

 

[ELKYme]

Want to leave some funds in CPF as a bequest? Perhaps this method will work if you’re younger:

1) Do transfers from OA to SA till FRS at the earliest possible age.
2) Be prudent when using OA for housing needs.
3) Do cash refunds used for property to payback into OA account if possible.
https://www.cpf.gov.sg/Assets/members/Documents/FORM_HSDVR.pdf

By doing the above, many at 65 will be able to just use the annual interest from both OA/SA together with CPF life (ERS) payouts to cover monthly expenses sufficiently.

The principal amount in OA/SA can than be a bequest. (Best to only do annual interest drawdown 90~95% of to cater for inflation)

 

[maple96]

Want to leave some funds in CPF as a bequest? Perhaps this method will work if you’re younger:

1) Do transfers from OA to SA till FRS at the earliest possible age.
2) Be prudent when using OA for housing needs.
3) Do cash refunds used for property to payback into OA account if possible.
https://www.cpf.gov.sg/Assets/members/Documents/FORM_HSDVR.pdf

By doing the above, many at 65 will be able to just use the annual interest from both OA/SA together with CPF life (ERS) payouts to cover monthly expenses sufficiently.

The principal amount in OA/SA can than be a bequest. (Best to only do annual interest drawdown 90~95% of to cater for inflation)

Hello, u are not helping TS by changing topic of discussion, we are not talking about bequest, pls address TS concern

 

[chiapabuay]

Oops I forgot his cohort time the plans are different.

So money no enough then I suggest he should not convert to escalating plan because initial 10 years or so (need to check), his payout will drop alot under escalating plan.

My experience with old folks is they need more money when younger and less when older as they tend to eat less. Let them enjoy earlier when still mobile than later. That's how I provided for my mum.

How escalating plan works: it reduce your initial years of payout, then take those money to payout to u in later years to show increase in mthly payout

If u can do that yourself, it is the same. Eg he did not spend all the mthly payout, save it into RA. Or u can topup his RA so he can get more in future if inflation is really a concern. Self insure rather than depend on CPF Life totally as it will eat up some of your monies should he die earlier than expected. This is call hedging with the Basic Plan, get higher bequest if die earlier, still benefit from CPF LIfe lifetime payout should he live longer.

My other consideration why I will choose Basic Plan is if kena ci or tpd or ??, I can claim the bequest = that's my hedge

Very true if got long life Escalating plan make sense but no one can predict unfortunately.
Basic Plan was originally decided until my dad went CPF last month for some other matter when they suggest look into escalating plan due to inflation.

 

[BBCWatcher]

They don't want to wait many years later to receive more money.

Let's all be crystal clear on this.

All that matters is real buying power. Money is only ever useful to exchange for real goods and services. It has no value otherwise. One Singapore dollar three years from now will assuredly buy fewer goods and services than it can buy today. Inflation really exists. (MAS effectively "imports" inflation into Singapore dollars from several currencies weighted according to Singapore's trading relationships.)

A fixed nominal payout is a declining real payout, quite simply. You will be progressively poorer on a fixed nominal income.

My experience with old folks is they need more money when younger and less when older as they tend to eat less.

Let's suppose that's true. (I have my doubts, but let's go with it.) How much less? 1% per year? Well, if food inflation runs at 2% per year, the nominal price of food for that individual still increases.

And that's only one element. What's happening to the budget for these items, as examples?

* adult diapers
* canes, walkers, grab bars, and other assistive devices
* caregiver expenses (home health workers, maid, etc.)
* air conditioning (and the electric bill) for someone increasingly homebound

Inflation is real. Statistically there's some evidence that elder inflation, as actually experienced, is higher than for the general population, not lower.

Regardless of your views on the exact number, it is completely unreasonable to pretend that elder inflation doesn't exist, that the inflation number is going to be zero for decades. One of the terrific value propositions of the CPF LIFE Escalating Plan is that a CPF member can test retirement income adequacy very straightforwardly. It's a wonderful sanity check. If they look at the Escalating Plan payout amount at age 6X (or 70) and react with some version of "Oh s**t, that's too low!" then...they've financially missed. They simply don't have enough reliable income; the financial reality is stark, staring them right in the face. If, on the other hand, a CPF member can look at that Escalating Plan payout figure, reflect, and react with some variation of "Yep, that'll keeping me going," then for themselves anyway they're going to be OK and live the rest of their lives in dignity and financial security. (A spouse or partner might still be a point of concern, even major concern, since CPF LIFE is not a joint/survivor life annuity.)

 

[chiapabuay]

What it means by bequest $0 for escalating plan at age 81? If past away and amount not used up, cannot give to nominated person?

What it means if you have Escalating Plan and you passed on at age 81 ---- your nominated person got $0 because the moment you signed on Escalating plan - CPF Life move your money to a pool to give you higher monthly payout like 2% increase every year so by age 81 for my dad case $0 bequest. Sorry can't explain well I just learnt from this thread and bits and pieces eslewhere.

Also Standard Plan at age 81 bequest also $0.

Go see the calculator below filled up RA $100k age 62 not 63 then click Bequest dot:


https://www.cpf.gov.sg/eSvc/Web/Schemes/LifePayoutEstimator/LifePayoutEstimator

 

[maple96]

Let's all be crystal clear on this.

All that matters is real buying power. Money is only ever useful to exchange for real goods and services. It has no value otherwise. One Singapore dollar three years from now will assuredly buy fewer goods and services than it can buy today. Inflation really exists. (MAS effectively "imports" inflation into Singapore dollars from several currencies weighted according to Singapore's trading relationships.)

A fixed nominal payout is a declining real payout, quite simply. You will be progressively poorer on a fixed nominal income.


Let's suppose that's true. (I have my doubts, but let's go with it.) How much less? 1% per year? Well, if food inflation runs at 2% per year, the nominal price of food for that individual still increases.

And that's only one element. What's happening to the budget for these items, as examples?

* adult diapers
* canes, walkers, grab bars, and other assistive devices
* caregiver expenses (home health workers, maid, etc.)
* air conditioning (and the electric bill) for someone increasingly homebound

Inflation is real. Statistically there's some evidence that elder inflation, as actually experienced, is higher than for the general population, not lower.

Regardless of your views on the exact number, it is completely unreasonable to pretend that elder inflation doesn't exist, that the inflation number is going to be zero for decades. One of the terrific value propositions of the CPF LIFE Escalating Plan is that a CPF member can test retirement income adequacy very straightforwardly. It's a wonderful sanity check. If they look at the Escalating Plan payout amount at age 6X (or 70) and react with some version of "Oh s**t, that's too low!" then...they've financially missed. They simply don't have enough reliable income; the financial reality is stark, staring them right in the face. If, on the other hand, a CPF member can look at that Escalating Plan payout figure, reflect, and react with some variation of "Yep, that'll keeping me going," then for themselves anyway they're going to be OK and live the rest of their lives in dignity and financial security. (A spouse or partner might still be a point of concern, even major concern, since CPF LIFE is not a joint/survivor life annuity.)

what are your major assumptions? U only rely on CPF Life for your living U still want to live in luxury or same standard of living? U have no parents or children to take care of u?

I took care of my mum for her final 10 years until she pass away at 91. Luckily dun need much of those eldercare needs u listed. Even hospitalisation and medical cost dun eat much into my medisave. I took good care of her.

Most important is remember to self insure, u have medisave, medishield life/ISP, eldershield, you have other insurance u buy? My mum had none of these. I am her insurance

 

[Toni90]

what are your major assumptions? U only rely on CPF Life for your living U still want to live in luxury or same standard of living? U have no parents to take care of u?

I took care of my mum for her final 10 years until she pass away at 91. Luckily dun need much of those eldercare needs u listed. Even hospitalisation and medical cost dun eat much into my medisave. I took good care of her.

Most important is remember to self insure, u have medisave, medishield life/ISP, eldershield, you have other insurance u buy? My mum had none of these. I am her insurance

How old are you now?

 

[BBCWatcher]

Want to leave some funds in CPF as a bequest? Perhaps this method will work if you’re younger....

That's a reasonable recipe, but I'd add these important points:

1. Don't delay bequests! Lifetime gifts are far more valuable, quite often, because they can be time sensitive investments like university educations, down payments on first homes, business start-up capital, and priceless family moments while grandmother/grandfather is still living. It's tremendously easier to make more and bigger lifetime gifts when you have assured real income for life (CPF LIFE Escalating Plan, preferably from age 70 and/or at ERS level).

There's something downright macabre about sitting on a pile of wealth and waiting to die. I don't recommend that. Enjoy some, together, and be generous while you're still around. Don't make the kids, grandkids, nieces, nephews, charities, etc. wait even a second longer. Giving is fun!

By the way, there's a somewhat fancy construction called a "charitable remainder trust" that's fairly popular in certain countries. One simple way to think about the basic concept is using a home. Let's suppose you donate your home to a charity with the stipulation that you and your spouse/partner are allowed to live in the home for the rest of your lives, rent free (plus a few other conditions, such as maintenance/upkeep). The charity takes immediate title to the property and can even monetize it if desired (through a reverse mortgage). You get a real life annuity (a real roof over your heads in this case). Everybody wins, and the charity is happier and contributing to the betterment of humankind that much sooner.

If you care about something or someone, why not care NOW?

2. One's CPF MediSave Account is actually a nice little bequest vehicle. All you have to do is try to avoid dipping into it for medical expenses when you have cash available instead. (You're not required to dip into MediSave.) MediSave earns 4%, it's government guaranteed and shielded, and it transfers to your nominated heirs upon your demise. Since it is a reasonable form of life insurance, because the funds can be useful at any age (for medical expenses), and because of "spillover" effects when MediSave has reached the Basic Healthcare Sum (and for a few other reasons) there's a lot to like about topping up MediSave early in a working career.

 

[maple96]

That's a reasonable recipe, but I'd add these important points:

1. Don't delay bequests! Lifetime gifts are far more valuable, quite often, because they can be time sensitive investments like university educations, down payments on first homes, business start-up capital, and priceless family moments while grandmother/grandfather is still living. It's tremendously easier to make more and bigger lifetime gifts when you have assured real income for life (CPF LIFE Escalating Plan, preferably from age 70 and/or at ERS level).

There's something downright macabre about sitting on a pile of wealth and waiting to die. I don't recommend that. Enjoy some, together, and be generous while you're still around. Don't make the kids, grandkids, nieces, nephews, charities, etc. wait even a second longer. Giving is fun!

By the way, there's a somewhat fancy construction called a "charitable remainder trust" that's fairly popular in certain countries. One simple way to think about the basic concept is using a home. Let's suppose you donate your home to a charity with the stipulation that you and your spouse/partner are allowed to live in the home for the rest of your lives, rent free (plus a few other conditions, such as maintenance/upkeep). The charity takes immediate title to the property and can even monetize it if desired (through a reverse mortgage). You get a real life annuity (a real roof over your heads in this case). Everybody wins, and the charity is happier and contributing to the betterment of humankind that much sooner.

If you care about something or someone, why not care NOW?

2. One's CPF MediSave Account is actually a nice little bequest vehicle. All you have to do is try to avoid dipping into it for medical expenses when you have cash available instead. (You're not required to dip into MediSave.) MediSave earns 4%, it's government guaranteed and shielded, and it transfers to your nominated heirs upon your demise. Since it is a reasonable form of life insurance, because the funds can be useful at any age (for medical expenses), and because of "spillover" effects when MediSave has reached the Basic Healthcare Sum (and for a few other reasons) there's a lot to like about topping up MediSave early in a working career.

another out of scope post writing to impress but does not address TS concerns

 

[BBCWatcher]

I took care of my mum for her final 10 years until she pass away at 91. Luckily dun need much of those eldercare needs u listed. Even hospitalisation and medical cost dun eat much into my medisave. I took good care of her.

Most important is remember to self insure, u have medisave, medishield life/ISP, eldershield, you have other insurance u buy? My mum had none of these. I am her insurance

Yes, you've illustrated the point. Your mother was not able to pass the "CPF LIFE Escalating Plan sanity check," and she came up financially short. That happens, too often unfortunately. She was financially dependent on you.

Most parents and grandparents don't aspire to be financially dependent on their children and/or grandchildren. I certainly don't. So if your goal is to be financially secure for life, then all you need to do is to look at the CPF LIFE Escalating Plan payout amount and decide whether you can live on that number for the rest of your life, and given the totality of your situation (e.g. whether you have a primary residence with plenty of remaining leasehold). If the answer is, "Yes, that'll keep me going well enough to get by," then you've "arrived," you're good. If the answer is, "Oh, s**t! That's not going to work!" then you've missed your financial security goal.

 

[maple96]

Yes, you've illustrated the point. Your mother was not able to pass the "CPF LIFE Escalating Plan sanity check," and she came up financially short. That happens, too often unfortunately. She was financially dependent on you.

Most parents and grandparents don't aspire to be financially dependent on their children and/or grandchildren. I certainly don't. So if your goal is to be financially secure for life, then all you need to do is to look at the CPF LIFE Escalating Plan payout amount and decide whether you can live on that number for the rest of your life, and given the totality of your situation (e.g. whether you have a primary residence with plenty of remaining leasehold). If the answer is, "Yes, that'll keep me going well enough to get by," then you've "arrived," you're good. If the answer is, "Oh, s**t! That's not going to work!" then you've missed your financial security goal.

u always like to dog eye see people down to up yourself

We show gratitude to our parents by offering to take care of them using me and my sibling's own monies to support them. My mum is not financially dependent on us, we need to give her care and support, take good care of her in her final years. What she needs is care and support, people insurance, not money insurance which she has plenty. My parents are smart savers

I have their genes, so I planned for retirement, all ready, better than your nonsense

 

[dork32]

Which channel, and what documentary's name?

i saw it at why it matters at channelnews asia