CPF Account Value Thread 2023

[BBCWatcher]

Royalmix missed one important point. Classic RSS yields can never exceed the RA interest rate (including bonus interest), and that's based on whole months on deposit. (Partial months earn 0%.) CPF LIFE yields can exceed the RA interest rate plus bonus interest. Simply live long enough and they surely will because then you win pool payouts that your RA never can pay. Since this particular individual has more insight into her health status than really every other CPF LIFE participant — as many as 15 years more insight — she's in the best possible position to win greater than RA yields if she chooses. In other words if anyone can win this bet she can, and the pool is a straight up fair bet. (The "house" is not taking a cut.) So when you have as many as 15 years more info the odds swing greatly in your favor.

If she doesn't need the money then in these circumstances the "correct" financial play is to take the bet. That's what I'd do. I'd go for the greater than RA yield if I'm in good health because on average I'm much more likely (since I have age 79 health knowledge) to win that bet than to "lose" it. But...up to her!

 

[royalmix]

So now who is gambling here? CPF Life is a lottery!

My decision will not be a bet, hoping to live beyond 95 to win more monies and live on other people's monies in the CPF Life Pool! I am happy to earn all my interest and bonus interest in the CPF RA is I have a choice and continue to invest more into the account to earn risk free high interest! Its my choice, what other people think is not important. It is good for me and my country too as I do not use their reserves in the CPF Life Pool meant for emergency purpose. We are true blue Singaporeans!

 

[BBCWatcher]

As a follow up I hope she doesn't participate in CPF LIFE. She's 79 years old, in good health, and knows she's in good health. That means she's much more likely to win a lot of money from the CPF LIFE pool. I would prefer that she not compete against me in this pool, because she's fierce competition. So if she decides to stay on classic RSS please thank her for me.

 

[BBCWatcher]

So now who is gambling here? CPF Life is a lottery!

No, it's not. In lotteries the house always wins, and the probability of payout is low and random chance. In these circumstances the house doesn't win (it's an actuarial fair bet, with no insurance company profits sucked from the pool), and the participant effectively has knowledge of one or two of the numbers that will be drawn because she's age 79 and knows her health status.

But like I said I hope she removes herself from this pool because I'd hate her competition for "my" pool dollars.

 

[royalmix]

No, it's not. In lotteries the house always wins, and the probability of payout is low and random chance. In these circumstances the house doesn't win (it's an actuarial fair bet, with no insurance company profits sucked from the pool), and the participant effectively has knowledge of one or two of the numbers that will be drawn because she's age 79 and knows her health status.

But like I said I hope she removes herself from this pool because I'd hate her competition for "my" pool dollars.

I bet you will leave sg for good before 70!

 

[tmkedmw]

Self rated health as a predictor of mortality in older adults

https://www.ncbi.nlm.nih.gov/pmc/articles/PMC10001164/

 

[BBCWatcher]

I bet you will leave sg for good before 70!

Look, I'm making a rational, logical, financial argument. I'm telling you what I would do in her circumstances — that I cannot hope to be in since I won't get the 10 more years of health insight she has. She has an amazing opportunity that virtually no one else has, and I'm slightly jealous actually. She's being offered an actuarially fair deal but when she has more health insight than everyone. (This is a bit like signing up for life insurance when you know you've been diagnosed with a terminal illness, without insurance fraud — you're allowed to have this extra knowledge and can still legally buy the policy. Except the insurance company is nonprofit. The odds are very much stacked in your favor in this situation, and situations like it.) Presumably her Retirement Account has had 10 more years to grow without any subtractions, so that's amazing too.

But it's her decision. We cannot make it for her. Let's just stick to the facts as best we understand them, OK?

 

[royalmix]

Look, I'm making a rational, logical, financial argument. I'm telling you what I would do in her circumstances — that I cannot hope to be in since I won't get the 10 more years of health insight she has. She has an amazing opportunity that virtually no one else has, and I'm slightly jealous actually. She's being offered an actuarially fair deal but when she has more health insight than everyone. (This is a bit like signing up for life insurance when you know you've been diagnosed with a terminal illness, without insurance fraud — you're allowed to have this extra knowledge and can still legally buy the policy. Except the insurance company is nonprofit. The odds are very much stacked in your favor in this situation, and situations like it.) Presumably her Retirement Account has had 10 more years to grow without any subtractions, so that's amazing too.

But it's her decision. We cannot make it for her. Let's just stick to the facts as best we understand them, OK?

Consider all the factors, not partially. But you are using psychologically attacks to influence his decision, which you always do, so stay clear of it yourself first! I will not waste my time with you, it is for him to decide, none of my business!

 

[BBCWatcher]

Self rated health as a predictor of mortality in older adults

Yeah, if you have 10+ more years of health insight it's a pretty big deal. That's why there's a maximum entry age to CPF LIFE. Too much insight and it's too unfair. But 79+ years of insight is a lot.

Other studies have shown that self-assessments of health tend to skew toward the pessimistic side. If she considers herself healthy at 79 that counts for a lot for these purposes. There also seems to be the fact she's wealthy (or at least relatively so), and wealthy people tend to live longer.

However, we should congratulate her if she decides not to take this offer. She'll be doing her part to serve the nation by keeping one more healthy 79 year old out of the CPF LIFE risk pool. (I'm only half joking.)

 

[henrylbh]

Parent age79, cpf RA = $166k, under older cpf cohorts, RSS scheme.
Never opt for a single payout, until recent yr2023 budget cpf changes and will auto force to receive payout once parent's birthdate reached this year.

Since my parent got a choice to join in cpf life before she turns 80 but to stay at old RSS scheme payout, looks to be a better take. Any advise on my thought and calculation below?

1) RSS, estimate monthly payout for 5yrs = $3000 ($3000x12x5 = total payout received = $180k, at age 85)
2 CPFL Basic plan, estimate monthly payout for life time = $1000 ($1000x12x15yrs = $180k, at age 95?)

Thanks in advance for all your inputs.

Fortunately, my parent is still in good health. Every day is a good new day. RSS will force in monthly $3000 payout which she does not need to have that much sum to spend at current state. We might plow partially received sum back into her RA to prolong her RSS payout date further, hopefully can stretch the payout beyond her 90. Under RSS, CPF RA balance is transparent updated and belong to the cpf holder too.

Strictly based on the estimated payouts I will go for RSS without further thoughts. At age 79, a person may be still in good health but status can change each passing years and the status may accelerate at later stage. Even if she can live to age 95, I will go for RSS, simply because it makes more financial sense since you said she doesn't need that much money. VC has the advantage that money in SA and OA can be withdrawn when needed. No money will flow in MA, if it's maxed and never used, except may be for Medisave Life premium when annual interest in MA is not enough to cover MLP..

The difference between the 2 schemes is 120,00 to age 85. If the difference is not needed, it can be redeposited into RA (or VC to 3 accounts) . If the difference is redeposited RA, it will last about another 12 years with interest, to age 97 at $1000 monthly.

But, based on CPF current practice, each time you redeposit the excess payout (3000 under RSS and 1000 under CPFL or 24,000 annually), the following month's payout will increase, calculated to exhaust RA by about age 85. So no chance to lengthen the payout. But I believe, request (for a good cause) can be arranged with CPFBto hold payout constant at 3000.

If she opts for CPFL, there is no bequest if she passed out by about 82. Under RSS, she would have a bequest of about $60,000 not to count that she got 2k more each month to age 82. That's a huge amount to forgo in opting for CPFL. But unlikely she would uplorry by 82 since you said she is in good health. But who knows, events can change rapidly any time at such age. I definitely would not bet on CPFL and hope to gain from it when the loss of bequest is mind-boggling. I rather get what is mine, no more, no less, especially if I am financially ok.

PS - last para to be edited due to glaring error.

 

[henrylbh]

Consider all the factors, not partially. But you are using psychologically attacks to influence his decision, which you always do, so stay clear of it yourself first! I will not waste my time with you, it is for him to decide, none of my business!

To him, it's a sure win case all the time

 

[toBfair]

Some heat up argument in between and is common individual don't share same views always. Stay cool and I really gain lot of 'pro' and 'con' on RSS vs CPFL topics from your inputs. Thank you everyone

Frankly speaking, my parent's RA had been benefited from the past for not opting in either RSS or CPFL payout when she is at 65 that time, until recent yr2023 budget cpf changes kicked in. It's really a good investment vehicle then, which we can top in for our tax reliefs purposes and getting zero risk fixed deposit at near 5% rate for years. The principal can double over time. I believed not many under same older cpf rss cohorts do that.

The yr2023 budget cpf changes could come at the right time and my parent still eligible to choose for CPFL before her 80. Our objective for my parent's Cpf RA is near accomplished and we need not to provide further monthly allowance to her as the CPF RSS or CPFL payout will take over soon. Our financial burden got relieved a bit and we also not sure how far we will still in the work force.

Once again, and appreciate all your truthfully sharing

 

[henrylbh]

a change was introduced in 2018 where members who reached the age of 70 (i.e. cohorts born on or after 1948) would automatically receive payouts. Your mum was in that generation before 1948. That generation was allowed to keep CPF as bequest, if money is not needed. But the rules has changed again this year, to make everyone who is 70 and above this year to start monthly payout, like it or not

You have missed all those years of topping up RA from the time she reached age 55. If topped up to max each year, her monthly payout would easily be to 5k or more.

 

[dork32]

CPF LIFE yields can exceed the RA interest rate plus bonus interest. Simply live long enough and they surely will because then you win pool payouts that your RA never can pay. Since this particular individual has more insight into her health status than really every other CPF LIFE participant — as many as 15 years more insight — she's in the best possible position to win greater than RA yields if she chooses. In other words if anyone can win this bet she can, and the pool is a straight up fair bet. (The "house" is not taking a cut.) So when you have as many as 15 years more info the odds swing greatly in your favor.

what a one sided argument again. cpf life yields can be below ra interest rates + bonus interest. simply die fast and you lose.

 

[dork32]

Some heat up argument in between and is common individual don't share same views always. Stay cool and I really gain lot of 'pro' and 'con' on RSS vs CPFL topics from your inputs. Thank you everyone

Frankly speaking, my parent's RA had been benefited from the past for not opting in either RSS or CPFL payout when she is at 65 that time, until recent yr2023 budget cpf changes kicked in. It's really a good investment vehicle then, which we can top in for our tax reliefs purposes and getting zero risk fixed deposit at near 5% rate for years. The principal can double over time. I believed not many under same older cpf rss cohorts do that.

The yr2023 budget cpf changes could come at the right time and my parent still eligible to choose for CPFL before her 80. Our objective for my parent's Cpf RA is near accomplished and we need not to provide further monthly allowance to her as the CPF RSS or CPFL payout will take over soon. Our financial burden got relieved a bit and we also not sure how far we will still in the work force.

Once again, and appreciate all your truthfully sharing

choosing cpf life could be a good decision for you and your parent if you enjoy the ra rates.

cpf does not cheat your money. a lower payout would mean you are withdrawing less from your principal. if you enjoy the ra rates, it would mean that you will enjoy it over a longer period. your parents do not get to see this money, you will.

for your parents, it will ensure tat they have a lifelong payment even if they lived till 200 years old.

the way you talked about it, it is like you do not need the payout. dont need it, might as well as leave it in the ra to roll if you do not invest outside

 

[henrylbh]

Just realised my mistake. Nobody is pointing out or shooting me for a glaring error in my para of post #367

 

[royalmix]

Some heat up argument in between and is common individual don't share same views always. Stay cool and I really gain lot of 'pro' and 'con' on RSS vs CPFL topics from your inputs. Thank you everyone

Frankly speaking, my parent's RA had been benefited from the past for not opting in either RSS or CPFL payout when she is at 65 that time, until recent yr2023 budget cpf changes kicked in. It's really a good investment vehicle then, which we can top in for our tax reliefs purposes and getting zero risk fixed deposit at near 5% rate for years. The principal can double over time. I believed not many under same older cpf rss cohorts do that.

The yr2023 budget cpf changes could come at the right time and my parent still eligible to choose for CPFL before her 80. Our objective for my parent's Cpf RA is near accomplished and we need not to provide further monthly allowance to her as the CPF RSS or CPFL payout will take over soon. Our financial burden got relieved a bit and we also not sure how far we will still in the work force.

Once again, and appreciate all your truthfully sharing

I will not kill the golden goose that lays the golden egg, but I no longer have the golden goose. We were able to continue to support our parents till their last day, so no need for insurance.

I originally plan to make RA/CPFL basic (we have no choice but to join when our time comes) my golden goose but the govt continued to change rules every year and finally kill my "golden goose" plan! So, I have to change plans. Change is a constant, so we just need to be prepared for it when it comes.

Good luck to you!

 

[henrylbh]

the way you talked about it, it is like you do not need the payout. dont need it, might as well as leave it in the ra to roll if you do not invest outside

Even if do need the payout, you no longer allowed to leave it in the ra to roll. Before the rule changed this year, those born before 1948 were allowed to defer payout indefinitely.

 

[henrylbh]

I will not kill the golden goose that lays the golden egg, but I no longer have the golden goose. We were able to continue to support our parents till their last day, so no need for insurance.

I originally plan to make RA/CPFL basic (we have no choice but to join when our time comes) my golden goose but the govt continued to change rules every year and finally kill my "golden goose" plan! So, I have to change plans. Change is a constant, so we just need to be prepared for it when it comes.

Good luck to you!

For those born before 1948, RA was the real golden goose until CPFB changed the rule for no real good reason.

 

[dork32]

Even if do need the payout, you no longer allowed to leave it in the ra to roll. Before the rule changed this year, those born before 1948 were allowed to defer payout indefinitely.

if you have 170k and you draw 1k a month, a large principal will continue to roll for a long time

if you have 170k and you draw 3k a month, your principal will be depleted very quickly. nothing left to roll