CPF after 55

[dork32]

Try using the CPF Life estimator, enter same year and RA amount. Then try entering male, then try again entering female. You will see that payout is different.

As with any insurance, premium higher due to longer life expectancy of female.

actually, insurance is the other way around. the premium of female is lower coz they wont die so easily, they can continue to pay for the insurance.

for insurance, company dont want you to die so they dont have to pay you.

for annuity, company want you die so they dont have to pay you

 

[dork32]

Plenty of vehicles offer that. The relevant question here is whether you need the incremental liquidity CPF SA offers. If you already have plenty of liquid assets, no.

But the average risk of a female outliving her principal plus accrued interest less withdrawals is higher than it is for the average male.

this is typical of bbc, one solution for everything under the sun.

not everyone is as rich as you imagine.

I would choose sa over ra anytime. There is not only liquidity that is mentioned.

There is flexibility. if i dont need money, i can allow the sa to continue to roll in interest for me. cpf life force the payout onto you, whether you need it or not at 70.

then there is the premium to pay for the insurance, which lowers the return even more

but vsvs, please also take note of what bbc is saying. sa vs ra, of course i choose sa. but ra vs oa or cash, then the line is not so clear. ra gives a higher interest but lower liquidity. which is more important? only you can decide.

 

[BBCWatcher]

this is typical of bbc, one solution for everything under the sun.

An assertion without foundation.

not everyone is as rich as you imagine.

Some people are "rich," some people are "poor," and the fact is I can and do imagine both, plus scenarios in between. And the best decisions may vary.

I would choose sa over ra anytime. There is not only liquidity that is mentioned.

Well, that's you...one solution for everything under the sun, evidently. I keep an open mind on that particular question.

There is flexibility. if i dont need money, i can allow the sa to continue to roll in interest for me. cpf life force the payout onto you, whether you need it or not at 70.

That's correct, although you are allowed to plow dollars back into a CPF Retirement Account up to the current Enhanced Retirement Sum (based on principal only).

then there is the premium to pay for the insurance, which lowers the return even more

No, it doesn't. This life annuity is a fair actuarial bet as far as anyone can determine. In CPF LIFE you and your nominees collectively may do better than a Special Account, worse, or the same, but the longevity insurance will be actuarially fair and not-for-profit. Simply live long enough and you'll definitely do better.

but vsvs, please also take note of what bbc is saying. sa vs ra, of course i choose sa. but ra vs oa or cash, then the line is not so clear. ra gives a higher interest but lower liquidity. which is more important? only you can decide.

Yes, at least here we agree. It's common for someone age 55+ to have a bonus from work, a fixed deposit languishing at 0.5% interest, a couple Singapore Savings Bonds earning ~1.5% interest, an endowment plan that matures, a windfall from a departing elder, cash proceeds from home "rightsizing," Ordinary Account dollars that are available to tap during a 55th birthday "shielding" operation, or some other source of Singapore dollars. None of these dollars are earning 4.0% interest. It could be a really smart decision to inject such dollars into a CPF Retirement Account, or a couple CPF Retirement Accounts. There are also cross-spousal OA to RA transfer possibilities, another common scenario. I would not be in a rush to transfer 4.0% interest earning SA dollars into RA since there are usually lower yielding funding sources. But it's not a crazy idea either.

 

[Andrew833]

An assertion without foundation.

Some people are "rich," some people are "poor," and the fact is I can and do imagine both, plus scenarios in between. And the best decisions may vary.

Well, that's you...one solution for everything under the sun, evidently. I keep an open mind on that particular question.

That's correct, although you are allowed to plow dollars back into a CPF Retirement Account up to the current Enhanced Retirement Sum (based on principal only).

No, it doesn't. This life annuity is a fair actuarial bet as far as anyone can determine. In CPF LIFE you and your nominees collectively may do better than a Special Account, worse, or the same, but the longevity insurance will be actuarially fair and not-for-profit. Simply live long enough and you'll definitely do better.

Yes, at least here we agree. It's common for someone age 55+ to have a bonus from work, a fixed deposit languishing at 0.5% interest, a couple Singapore Savings Bonds earning ~1.5% interest, an endowment plan that matures, a windfall from a departing elder, cash proceeds from home "rightsizing," Ordinary Account dollars that are available to tap during a 55th birthday "shielding" operation, or some other source of Singapore dollars. None of these dollars are earning 4.0% interest. It could be a really smart decision to inject such dollars into a CPF Retirement Account, or a couple CPF Retirement Accounts. There are also cross-spousal OA to RA transfer possibilities, another common scenario. I would not be in a rush to transfer 4.0% interest earning SA dollars into RA since there are usually lower yielding funding sources. But it's not a crazy idea either.

"None of these dollars are earning 4.0% interest. It could be a really smart decision to inject such dollars into a CPF Retirement Account"
I will not opt for more money stuck in RA just for 4% interest.
SA after 55 is still liquidity.
RA after 55 is forever stuck, interest went to the "pool/insurance", payout start at 65. CPF is shifting it to 70 soon.

 

[yoongf]

Appreciate if anyone can clarify what happens to the interest in RA for those born after 1958 on CPF Life and payout age set at 65.

RA funds earn the 4% between 55 to 65, credited into the RA acct.
When payout begins at 65, the RA interest stops being credited to the RA acct? Is this how it works?

 

[zoneguard]

When payout begins at 65, the RA interest stops being credited to the RA acct? Is this how it works?

Depends on the LIFE plan selected. For Standard and Escalating, entire RA balance is deducted as LIFE premium.
For Basic, 10%-20% is deducted as LIFE premium and RA 4% interest (and the extra interest 5-6%) continues to be earned.

 

[BBCWatcher]

Interest is always computed monthly and tracked for you (and your nominees). Interest accrues within your individual accounts and/or as part of your individual life annuity claim on the CPF Lifelong Income Fund.

Interest doesn't suddenly stop when you enter CPF LIFE. Your CPF LIFE monthly payouts are computed based on full interest computation. If interest did hypothetically stop your CPF LIFE monthly payout would be a lot lower no matter what payout plan you choose.

 

[Okenba]

"None of these dollars are earning 4.0% interest. It could be a really smart decision to inject such dollars into a CPF Retirement Account"
I will not opt for more money stuck in RA just for 4% interest.
SA after 55 is still liquidity.
RA after 55 is forever stuck, interest went to the "pool/insurance", payout start at 65. CPF is shifting it to 70 soon.

I don't think ppl opt for money in RA for 4% interest.
I think the reason for more money in RA is peace of mind.

If I can get CPFlife to payout to an extent where I will only need CPF life, then I am completely free to manage the rest of my money in any way I like.
I can give it all away to my kids or favourite charity.
I can dump it all in 100% equities even at age 80.
I don't need to worry about anything like safe withdrawal rate, or if the market crashes.

I'm not advocating for one or the other. Personal finance is personal.
But there are good reasons for pumping up RA. Though not everyone will value that equally.

 

[Andrew833]

Depends on the LIFE plan selected. For Standard and Escalating, entire RA balance is deducted as LIFE premium.
For Basic, 10%-20% is deducted as LIFE premium and RA 4% interest (and the extra interest 5-6%) continues to be earned.

CPF LIFE Standard Plan

If you are willing to cope with rising prices over the years by buying less and living a more modest lifestyle, the CPF LIFE Standard Plan provides stable and level payouts.
Payouts start higher than the Escalating Plan if you join with the same CPF LIFE premium but will remain the same for the rest of your life and will eventually be lower than Escalating Plan payouts.

CPF LIFE Basic Plan​

If you do not mind starting with lower monthly payouts which will get progressively lower later on, then the CPF LIFE Basic Plan is good enough for you.

The Basic Plan is a legacy plan carried over from the time CPF LIFE was introduced in 2009. Unlike the Standard Plan that gives higher and stable monthly payouts, the payouts under the Basic Plan are lower and will get progressively lower when your combined CPF balances eventually fall below $60,000. This is because the extra interest earned on the first $60,000 of your combined CPF balances are credited to your Retirement Account (RA) and paid as part of your monthly payouts. As balances fall due to payouts, the extra interest earned and subsequent payouts will decline as well.

In all three plans, you will enjoy payouts for as long as you live, and any remaining CPF LIFE premium balance will be given to your beneficiaries — together with your remaining CPF savings — upon death.

At 65, we can withdraw an amount from RA.
So if want to withdraw, Basic plan still good to choose? Or Standard plan better?

 

[BBCWatcher]

I don't think ppl opt for money in RA for 4% interest.
I think the reason for more money in RA is peace of mind.

It's both. CPF RAs earn 4.0% interest (plus bonus interest). CPF LIFE monthly payouts are computed and paid based on 4.0+% interest pre- and post-CPF LIFE entry. That's an extraordinary value, especially in the current long running low interest rate environment.

If I can get CPFlife to payout to an extent where I will only need CPF life, then I am completely free to manage the rest of my money in any way I like.

Bingo. If you have the Government of Singapore basically guaranteeing a certain base lifestyle for the rest of your entire life, you effectively increase the practical liquidity of all your other accumulated wealth. You don't have to hoard assets, and you can redeploy them toward much more effective pursuits, including the examples you provided.

 

[BBCWatcher]

At 65, we can withdraw an amount from RA.

Up to 20% inclusive of the up to $5,000 withdrawal available from age 55. Possibly more with a property pledge/charge in place.

So if want to withdraw, Basic plan still good to choose? Or Standard plan better?

If you're withdrawing any dollars from your CPF Retirement Account at age 65 in a lump sum you're most probably doing it because you're gasping for air, financially speaking. Oversimplifying only slightly, you're basically broke. And if that's the case you'd probably choose the CPF LIFE Standard Plan and pray for low inflation for your remaining days on Planet Earth. The Standard Plan offers the highest CPF LIFE monthly payout at payout start, and it's permanently higher than the CPF LIFE Basic Plan's monthly payout.

It would not be a good situation, though -- not the situation you would aspire to be in.

 

[vsvs24]

Another thing to note, while your withdrawal SA is as it is, CPF life payout :

Central Provident Fund Board (CPFB) https://www.cpf.gov.sg/member/faq/retirement-income/monthly-payouts/are-cpf-life-payouts-guaranteed-

Are CPF LIFE payouts guaranteed?
CPF LIFE payouts are not guaranteed, but they are designed to be stable. Any adjustments to CPF LIFE payouts are expected to be small and gradual. CPF LIFE is a self-sustaining insurance scheme where payouts are matched to premiums. Guaranteeing a minimum payout would require higher premiums.

https://www.cpf.gov.sg/member/faq/r...e-premium-and-payout-for-each-plan-calculated

How are the CPF LIFE premium and payout for each plan calculated?​

The CPF LIFE premium and payout levels are determined by an independent actuarial consultant. They are dependent on factors such as:

1. Gender;
2. Age;
3. CPF interest rates; and
4. Mortality rates

 

[Andrew833]

Up to 20% inclusive of the up to $5,000 withdrawal available from age 55. Possibly more with a property pledge/charge in place.

If you're withdrawing any dollars from your CPF Retirement Account at age 65 in a lump sum you're most probably doing it because you're gasping for air, financially speaking. Oversimplifying only slightly, you're basically broke. And if that's the case you'd probably choose the CPF LIFE Standard Plan and pray for low inflation for your remaining days on Planet Earth. The Standard Plan offers the highest CPF LIFE monthly payout at payout start, and it's permanently higher than the CPF LIFE Basic Plan's monthly payout.

It would not be a good situation, though -- not the situation you would aspire to be in.

Heng ah, I'm still not that broke

 

[Andrew833]

Another thing to note, while your withdrawal SA is as it is, CPF payout :

Central Provident Fund Board (CPFB) https://www.cpf.gov.sg/member/faq/retirement-income/monthly-payouts/are-cpf-life-payouts-guaranteed-

Are CPF LIFE payouts guaranteed?
CPF LIFE payouts are not guaranteed, but they are designed to be stable. Any adjustments to CPF LIFE payouts are expected to be small and gradual. CPF LIFE is a self-sustaining insurance scheme where payouts are matched to premiums. Guaranteeing a minimum payout would require higher premiums.

https://www.cpf.gov.sg/member/faq/r...e-premium-and-payout-for-each-plan-calculated

How are the CPF LIFE premium and payout for each plan calculated?​

The CPF LIFE premium and payout levels are determined by an independent actuarial consultant. They are dependent on factors such as:

1. Gender;
2. Age;
3. CPF interest rates; and
4. Mortality rates

"Another thing to note, while your withdrawal SA is as it is, CPF payout :"
It's RA not SA

 

[vsvs24]

Anyone knows how often CPF review the CPF life payout amounts ?

Eg if I use CPF life estimator to check payout now, will it show a different estimated payout when I check back say 3 years later ?

 

[vsvs24]

"Another thing to note, while your withdrawal SA is as it is, CPF payout :"
It's RA not SA

Still on the topic topup RA from SA at 65 vs keeping in SA

 

[Andrew833]

Still on the topic topup RA from SA at 65 vs keeping in SA

This is my point.
SA after 55 is still liquidity.
RA after 55 is forever stuck, interest went to the "pool/insurance", payout start at 65. CPF is shifting it to 70 soon.

Money inside SA after 55, you can choose to collect yearly interest or let it compound first.
Example $100k inside SA, if collect yearly interest is about $4k per year. The 100k is still there.
Example $100k inside SA, if let it compound then start collecting interest at 65. The $100k become $148K, interest per year to collect is $5,920.

 

[zoneguard]

Eg if I use CPF life estimator to check payout now, will it show a different estimated payout when I check back say 3 years later ?

According to this blog, there was already a drop in payout affecting all cohorts.

The LIFE estimator regression to remove the bequest and payout chart means also it is not possible for an actuary trained academia to now scrutinize the LIFE actuarial model and examine the payout levels in detail. Previously there were 2 papers published by different authors on the LIFE actuarial model.

The mortality rates were never published and the academia used the previous LIFE estimator to estimate these. For RA, the interest computation is straightforward and transparent.
For LIFE, unless you are an actuary and have all the data, you cannot calculate the payout yourself.

Anyway the LIFE payout is always benchmarked against their own figures for opting out of LIFE and full withdrawal of RA so that's the minimum.

 

[vsvs24]

This is my point.
SA after 55 is still liquidity.
RA after 55 is forever stuck, interest went to the "pool/insurance", payout start at 65. CPF is shifting it to 70 soon.

Money inside SA after 55, you can choose to collect yearly interest or let it compound first.
Example $100k inside SA, if collect yearly interest is about $4k per year. The 100k is still there.
Example $100k inside SA, if let it compound then start collecting interest at 65. The $100k become $148K, interest per year to collect is $5,920.

Noted.

Btw, how do you know CPF payout start shifting to 70 soon ? Did not see anything on this.

 

[BBCWatcher]

CPF is shifting it to 70 soon.

Do you have any evidence supporting your assertion?

Personally I would be very happy if your assertion were true, specifically if the CPF Board would raise the maximum age of payout start above age 70.