CPF Easy Info Thread. :)

[dork32]

For own satisfaction, can do another chart for Bequest

i must agree with henry at this point.

the total value of the plan is not just the payout. it is payout + bequest.

if you choose andy's analysis, standard would be the obvious choice over basic because the payout is bigger.

 

[tangent314]

This is correct?
30000 in the account on 65.
1 year cpf pay me 3000.
Pass away on 7th year. My family will only get the balance of 9000.
Whatever interest earn in the First 7th year will remain in the pool.

Yes.
And based on your numbers if you pass away at age 85, you would have received $60000, which is double the amount that you initially put in. This extra money is made available from the interest earned in the pool.


Even if you die before you receive $30k, you still benefit from the interest going into the pool. If there is no interest going into the pool, then there is no way to sustain the life annuity scheme while maintaining the $30k guarantee, meaning your beneficiaries will always get nothing even if you die 1 day after you start. At the same time the monthly payouts will be much lower to sustain the scheme for everyone.

 

[Kaypohji]

I will have a look at the link.

Thanks !

If possible will be good to reach ERS but because government will change the ERS every now and then... I’m afraid 20 years later, the amount will be much higher. I can’t be guaranteed I can hit it myself... so decided to plan based on FRS instead

I did a simple comparison of ERS and FRS payout over 15 years (65 to 80 years old) using the CPF Life tool:

https://tinyurl.com/CPF-Life-Payout

Although the initial difference between the ERS and FRS is $90,500, over 15 years the difference in payout is $124,200. The longer one lives, the greater the difference.

 

[dork32]

Even if you die before you receive $30k, you still benefit from the interest going into the pool. If there is no interest going into the pool, then there is no way to sustain the life annuity scheme while maintaining the $30k guarantee, meaning your beneficiaries will always get nothing even if you die 1 day after you start. At the same time the monthly payouts will be much lower to sustain the scheme for everyone.

this is completely wrong. by making this statement you are assuming that cpf life standard and private life annuity are the only options.

cpf life basic is another option, ssb and other interest/dividend paying instruments are other options. you will benefit directly from the interest from these options. there will definitely be residual value should you not withdraw everything out.

 

[dork32]

Yes.
And based on your numbers if you pass away at age 85, you would have received $60000, which is double the amount that you initially put in. This extra money is made available from the interest earned in the pool.

you are right if the initial numbers are correct. doubling what you put in over the 20 years period is not too bad. but it is not. the numbers have been greatly inflated

for 30k at 65, you only receive 2300 per year. you will receive 46k of payout by the time you are 65. yes, you still make a gain of 16k. but if you consider the interest that you have lost over the 20 years, it is really nothing to shout about

 

[dork32]

Cpf life has a simple table. So if reach minimum of FRS, the standard plan will have at least 1.3. It is given as a range though. So I’m not sure what exact amount will give what exact amount of payout

cpf life payout is given in a range because cpf dares not confirm the 4% interest. the calculation is based on interest range from 3.75 to 4.25%.

The fact is cpf have maintained its interest at 4% for a long time already. one easy way to estimate the payout find the average of the two extreme end of the range.

 

[dork32]

By the way how to know what exact amount is needed in RA so that the cpf life escalating will give at least 1.2k?

the best way is to go the cpf life calculator and punch in some numbers.

frs of 181k at 55 will give you an initial payout of 1.2k on escalating. this sum increase by 2% every year.

 

[homedriver]

You're confusing interest with longevity insurance.

I'll repeat, for the umpteenth time -- and it is quite simple, really: interest is paid on all CPF dollars. That includes OA, MA, SA, RA, and the CPF Lifelong Income Fund. As long as you're alive, and for whole calendar months, all interest is paid per CPF's published interest rate schedule.

What your CPF Retirement Account buys is longevity insurance, a life annuity, called CPF LIFE. Whatever portion is allocated to the CPF Lifelong Income Fund still earns interest, and that interest is fully baked into your monthly payment for life. Your life annuity payout claim on the CPF Lifelong Income fund is fully interest inclusive.

OK, so that's what your RA principal and interest buys: a longevity insurance policy, a superb one -- the biggest monthly payout per premium dollar available in Singapore. Now, your longevity insurance policy (CPF LIFE) will then vary in how many months of retirement income it pays to you and how much residual is left (if any). That'll depend on when you start payouts and when you die.

You've repeatedly expressed that you're concerned about your heirs. That's great! It's wonderful you care about them so much. So let me offer some really important advice for how you can help your loved ones:

(a) Insofar as possible, avoid being a financial burden on them.

(b) Insofar as possible, financially help them as early as you can. Don't make them wait until you're gone, when investments in them would be ill-timed or even useless. If somebody needs help to pay a university tuition bill in 2022, don't make them wait until 2032 when they're 10 years older to pay for university. That'd be awful.

Do you know how you can solve both (a) and (b)? Buy at least enough longevity insurance, including especially the policy that provides the highest monthly payout per premium dollars: CPF LIFE. (You're required to buy a little if you can afford it and if you maintain a right of abode in Singapore.) With longevity insurance you are guaranteed you won't outlive your savings. You won't ever be a financial burden to your heirs as long as you can survive on your life annuity income, and you can give away up to every other dollar of wealth you have right now, to whomever you wish, without fear of falling below a certain standard of living. If you love your heirs, and I assume you do, then that's the very best way you can be more generous sooner.

So take the same example.
30000 in the account on 65.
1 year cpf pay me 3000 + $150 (assume this interest)
Pass away on 7th year. My family will get the balance of 9000.
I’m only enjoy the interest when I’m alive.

 

[homedriver]

Yes.
And based on your numbers if you pass away at age 85, you would have received $60000, which is double the amount that you initially put in. This extra money is made available from the interest earned in the pool.


Even if you die before you receive $30k, you still benefit from the interest going into the pool. If there is no interest going into the pool, then there is no way to sustain the life annuity scheme while maintaining the $30k guarantee, meaning your beneficiaries will always get nothing even if you die 1 day after you start. At the same time the monthly payouts will be much lower to sustain the scheme for everyone.

Thanks, you are clear my doubt. This make me not so keen to lock more money in the account. And the formula is assume we can live more than 80++.

 

[homedriver]

you are right if the initial numbers are correct. doubling what you put in over the 20 years period is not too bad. but it is not. the numbers have been greatly inflated

for 30k at 65, you only receive 2300 per year. you will receive 46k of payout by the time you are 65. yes, you still make a gain of 16k. but if you consider the interest that you have lost over the 20 years, it is really nothing to shout about

You mean by the time reach 85? Yes, not very attractive as the money is locked.

 

[tangent314]

Based on the latest Singapore life tables, the probability of dying before age 72 if you are alive at 65 is about 7.6%

The probability of living beyond age 85 is 57.3%

You're worrying about the wrong thing. If you are one an outmoded scheme like RSS, your money runs out when you hit a certain age and you don't get anymore. CPF Life ensures that you receive a payout for the rest of your life, even if you live beyond 90. And there's quite a decent chance of that: 35.9%

 

[crimsontactics]

Based on the latest Singapore life tables, the probability of dying before age 72 if you are alive at 65 is about 7.6%

The probability of living beyond age 85 is 57.3%

You're worrying about the wrong thing. If you are one an outmoded scheme like RSS, your money runs out when you hit a certain age and you don't get anymore. CPF Life ensures that you receive a payout for the rest of your life, even if you live beyond 90. And there's quite a decent chance of that: 35.9%

Bro tangent314, you hit FRS already?

Sent from Samsung SM-N960F using GAGT

 

[BBCWatcher]

You're worrying about the wrong thing.

And if you are worried about your heirs and their well being, take care of them! Give them money! CPF LIFE guarantees you a Singapore dollar retirement income for life, and it's the AAA-rated Government of Singapore (a very reliable payer) that's making that guarantee. If CPF LIFE provides enough retirement income to support your lifestyle -- especially the CPF LIFE Escalating Plan because that particular plan increases monthly nominal payouts every year to help you fight inflation -- then you're free to give all your other wealth to your heirs. They don't need to wait until you die, whenever that is. You can make them better off much, much sooner. And you can enjoy your gifts with them. You can spread happiness, and you can see it. That's really priceless, isn't it?

It's great that you care about your heirs, so why don't you actually take care of them well? Give the more money, and give it to them earlier. CPF LIFE gives you the financial power and freedom to do exactly that.

 

[dork32]

You mean by the time reach 85? Yes, not very attractive as the money is locked.

your are right. it is by the time i reach 85. my typing just cannot make it

at least we have the same opinion that the return is not fantastic

 

[dork32]

So take the same example.
30000 in the account on 65.
1 year cpf pay me 3000 + $150 (assume this interest)
Pass away on 7th year. My family will get the balance of 9000.
I’m only enjoy the interest when I’m alive.

first point is you are describing the cpf life standard. There is the cpf life basic that earns interest into own private, personal retirement account. so please dont curse cpf too much.

second point is some people argue it this way. whether cpf pay interest or not, you will never see this interest as cold hard cash when you are alive. so might as well as go for the one that gives the biggest payout. i beg to differ. i view value my money as much as my kid's money. if i dont get to see it but my kids get to see it, it is fine.

 

[dork32]

Based on the latest Singapore life tables, the probability of dying before age 72 if you are alive at 65 is about 7.6%

The probability of living beyond age 85 is 57.3%

You're worrying about the wrong thing. If you are one an outmoded scheme like RSS, your money runs out when you hit a certain age and you don't get anymore. CPF Life ensures that you receive a payout for the rest of your life, even if you live beyond 90. And there's quite a decent chance of that: 35.9%

you have a point here.

agree that payout for life is attractive. but it is also very sucky if interest does not go into your own account.

this is why i think cpf life basic is not bad
1. It takes out just 20% to buy the cpf life
2, the other 80% continues to earn interest which is what we like.
3. It also gives a payout for life.
4. its payout is $135 less compared to cpf life standard if you are on frs at 55. not too bad

 

[dork32]

And if you are worried about your heirs and their well being, take care of them! Give them money! CPF LIFE guarantees you a Singapore dollar retirement income for life, and it's the AAA-rated Government of Singapore (a very reliable payer) that's making that guarantee. If CPF LIFE provides enough retirement income to support your lifestyle -- especially the CPF LIFE Escalating Plan because that particular plan increases monthly nominal payouts every year to help you fight inflation -- then you're free to give all your other wealth to your heirs. They don't need to wait until you die, whenever that is. You can make them better off much, much sooner. And you can enjoy your gifts with them. You can spread happiness, and you can see it. That's really priceless, isn't it?

It's great that you care about your heirs, so why don't you actually take care of them well? Give the more money, and give it to them earlier. CPF LIFE gives you the financial power and freedom to do exactly that.

name me one sg guy that will do this

 

[homedriver]

And if you are worried about your heirs and their well being, take care of them! Give them money! CPF LIFE guarantees you a Singapore dollar retirement income for life, and it's the AAA-rated Government of Singapore (a very reliable payer) that's making that guarantee. If CPF LIFE provides enough retirement income to support your lifestyle -- especially the CPF LIFE Escalating Plan because that particular plan increases monthly nominal payouts every year to help you fight inflation -- then you're free to give all your other wealth to your heirs. They don't need to wait until you die, whenever that is. You can make them better off much, much sooner. And you can enjoy your gifts with them. You can spread happiness, and you can see it. That's really priceless, isn't it?

It's great that you care about your heirs, so why don't you actually take care of them well? Give the more money, and give it to them earlier. CPF LIFE gives you the financial power and freedom to do exactly that.

So the option isleave minimum amount in CPF on 65 and withdraw the rest as cash.

 

[homedriver]

your are right. it is by the time i reach 85. my typing just cannot make it

at least we have the same opinion that the return is not fantastic

Yes, because all my money is lock inside till I die.

 

[homedriver]

first point is you are describing the cpf life standard. There is the cpf life basic that earns interest into own private, personal retirement account. so please dont curse cpf too much.

second point is some people argue it this way. whether cpf pay interest or not, you will never see this interest as cold hard cash when you are alive. so might as well as go for the one that gives the biggest payout. i beg to differ. i view value my money as much as my kid's money. if i dont get to see it but my kids get to see it, it is fine.

COF life basic earn interest will be pass to my family. The only difference is monthly payout is lesser compare to other plan.