CPF after 55

[henrylbh]

so sad... both for his demise and the loss of opportunity for you to milk the system

Also sad that my aunty 3 months to 100 died last year. But I inherited half share of her 2 room flat at Tanglin Halt with new replacement flat at Dawson. Also sad that I am not eligible as I am under MOP. So I take money about 140k

 

[henrylbh]

Whatever you believe.

Actuarial model is actuarial model.

layman term is layman term.

i will not argue further.

Misinformation. Saying actuarial model does not validate or substantiate what you said about life payout, premium and interest.

It's not what I said that matters. But I am saying is what CPF said

 

[henrylbh]

That would be 84.6 for males, 88.2 for females.
Definitely not the same 81.5 / 86.1

Also these numbers are mean. Median will be higher and mode even higher, because of the known skews in mortality rates

Does not matter much whether it's 84.6 or 81.5. You will be screwed by the system at those ages. If that is the median age, most get screwed?

 

[zoneguard]

It's not what I said that matters. But I am saying is what CPF said

https://www.cpf.gov.sg/member/faq/r...my-cpf-life-premium-continue-to-earn-interest
This is what CPF said:

Does my CPF LIFE premium continue to earn interest?​

Your CPF LIFE premium will continue to earn 4% base interest and up to 2% extra interest (on the first $60,000 of your combined CPF balances) like the Retirement Account savings of all other CPF members. The interest earned is factored into the higher monthly payout which you will enjoy.

 

[henrylbh]

https://www.cpf.gov.sg/member/faq/r...my-cpf-life-premium-continue-to-earn-interest
This is what CPF said:

Does my CPF LIFE premium continue to earn interest?​

Your CPF LIFE premium will continue to earn 4% base interest and up to 2% extra interest (on the first $60,000 of your combined CPF balances) like the Retirement Account savings of all other CPF members. The interest earned is factored into the higher monthly payout which you will enjoy.

I have completely no disagreement with the above as it's not misleading - that interest earned is factored into higher monthly payout which you will enjoy. How else can payout be when the premium and interest in the pool has to be disbursed to the members eventually?

But It is important to note that the payout is premium first. If kaput at any time (before member starts to recover accrued interest), where is the interest accrued from 65 or 70? If you believe that the interest is in the payout till then, that's sad and self con.

 

[andyhtc]

Since it is getting interesting, I tried the CPF Estimator and guessed that the trick of how the older members can still enjoy the payout beyond the $0 balance at about 80 years old for the standard plan lies in the age the bequest falls to $0.

The actual age that the bequest falls to $0 for the standard plan is about 87 years old if we crunch the numbers strictly using the Excel function. It means if one passes away at 80 years old, the bequest is $0 and the rest of the money in the CPF Life goes to fund the older members who live beyond 87 years old.

Hence, CPF Life payout artificially forces the bequest to become $0 at age 80 instead of 87 for the standard plan. A similar method could be applied to the basic and escalating plans. That could the reason the bequest charts were removed from the CPF website as they could be sensitive.

I welcome other views

Note: To arrive at the numbers, I added a simplified 4% interest on the CPF Life.

 

[aeng]

have you guys seen this?
I found it quite informative

 

[BBCWatcher]

Hence, CPF Life payout artificially forces the bequest to become $0 at age 80 instead of 87 for the standard plan.

There's nothing "artificial" about it. The CPF LIFE Standard and Escalating Plans guarantee at least return of the principal at entry. The monthly payout and residual calculations simply flow naturally from that design feature. Cumulative monthly payouts + residual >= RA balance at entry.

Maybe you're looking for the word "arbitrary"? That principal return design feature is fairly arbitrary. As one example, the residual could be fixed for life at 5% of the principal at entry. Or the residual could be zero. (CPF used to offer a zero residual CPF LIFE payout plan with a monthly payout figure naturally higher than the Standard Plan's.)

 

[dork32]

The actual age that the bequest falls to $0 for the standard plan is about 87 years old if we crunch the numbers strictly using the Excel function. It means if one passes away at 80 years old, the bequest is $0 and the rest of the money in the CPF Life goes to fund the older members who live beyond 87 years old.

this statement is completely wrong. you have used the wrong interest rate. the correct interest rate to use is 0%. this is because the 4% that you earn goes to pool, not to your own account. and if you used this interest rate, the bequest will hit 0 at 80 years old

to think that so many people still believe that the pool money it theirs. the maths here show that it isnt

 

[dork32]

There's nothing "artificial" about it. The CPF LIFE Standard and Escalating Plans guarantee at least return of the principal at entry. The monthly payout and residual calculations simply flow naturally from that design feature. Cumulative monthly payouts + residual >= RA balance at entry.

Maybe you're looking for the word "arbitrary"? That principal return design feature is fairly arbitrary. As one example, the residual could be fixed for life at 5% of the principal at entry. Or the residual could be zero. (CPF used to offer a zero residual CPF LIFE payout plan with a monthly payout figure naturally higher than the Standard Plan's.)

so much talk but did not hit the crucial point. the crucial point is the interest is 0 and not 4

another typical way of that bbc answers question. beat about the bush and do not get to the point. maybe it hurts too much to admit that the interest is 0

 

[andyhtc]

this statement is completely wrong. you have used the wrong interest rate. the correct interest rate to use is 0%. this is because the 4% that you earn goes to pool, not to your own account. and if you used this interest rate, the bequest will hit 0 at 80 years old

to think that so many people still believe that the pool money it theirs. the maths here show that it isnt

It is definitely not 0% interest, as when I keyed in 0% into my Excel, I got a much lower payout from CPF Life Estimator

For reference, if you key in FRS at age 55 into the CPF Estimator, you can see the balance inside at age 65 equals about 4% interest per year, and that is the money already in the CPF Life that belongs to you.

I'm quite lost at the great discussion above as CPF is a very complicated and obscured system. Hence, I'm starting fresh using my Excel to figure out how it works.

 

[BBCWatcher]

Guaranteed lifetime income <> savings account withdrawals !

 

[dork32]

It is definitely not 0% interest, as when I keyed in 0% into my Excel, I got a much lower payout from CPF Life Estimator

For reference, if you key in FRS at age 55 into the CPF Estimator, you can see the balance inside at age 65 equals about 4% interest per year, and that is the money already in the CPF Life that belongs to you.

I'm quite lost at the great discussion above as CPF is a very complicated and obscured system. Hence, I'm starting fresh using my Excel to figure out how it works.

you are new here. you are still not sure how this stupid thing works. we have done a lot of work on it. similar to what you have done. we took the numbers extrapolate, interpolate, dissect.... We have analyzed almost everything there is to analyze, except the one we mentioned yesterday: to stay in basic and switch to standard at 80.

you are right in that the interest is 4% + 600 from 55 to 65. but when you switch to cpf life standard, the interest suddenly hits 0.

i just use the estimator, i keyed
born in 1957 (65 this year)
200k in ra
draw at 65
payout = 1120
since there is no interest, no complex financial calculator or excel is needed. $200k/$1120/month = 178.6 months = 14.88 years
14.88 + 65 = 79.88 years. this is why the bequest hits 0 at 79.88 or easier, 80.

i have done this exercise many times. i did not try to extract the numbers because i am confident that the interest is 0

 

[dork32]

Guaranteed lifetime income <> savings account withdrawals !

Guaranteed lifetime income <> savings account withdrawals !

just say it!! the interest is 0 and cut the crab

 

[dork32]

I'm quite lost at the great discussion above as CPF is a very complicated and obscured system. Hence, I'm starting fresh using my Excel to figure out how it works.

no where in cpf does it say directly that the interest is 0. because if it does, people will start to rebel. like bbc, they phrase in a very funny way to obscure the truth.

 

[dork32]

Whatever you believe.

Actuarial model is actuarial model.

layman term is layman term.

i will not argue further.

i will tell you why you are so wrong.

you used the wrong example to compare with. you used home loan. it home loan, it is not important to differentiate interest and principal. the bank is just interested in the total amount you owed to them. whether it is (interest 100k principal 400k) or (interest 300k principal 200k), to the bank it is just you owe them 500k.

in cpf life standard, it is very different. principal is your money, interest is not. when you die, you get back your principal, you do not get back the interest. hence it is very important to differentiate principal and interest. cpf is smart, they make you draw down the principal first so that they can pay you less if you die. it is only when your principal is depleted that you draw on interest. and when your interest runs out, you draw other people's interest.

anyway, people like freedom will always feel that he is right.

vsvs has admited his mistake. i have admitted mine. no one can be forever correct.

 

[dork32]

Also sad that my aunty 3 months to 100 died last year. But I inherited half share of her 2 room flat at Tanglin Halt with new replacement flat at Dawson. Also sad that I am not eligible as I am under MOP. So I take money about 140k

wow, really a lot of money.

but seriously, i am not very eager for this type of money. i rather my loved one live on

 

[Battery Operator]

You may be able to get a clearer understanding after watching this:

 

[dork32]

You may be able to get a clearer understanding after watching this:

not a bad video but there is one point that i do not like. it say it is free money when you principal runs out. i disagree. it is free money only when the principal and interest runs out

 

[beautyseek]

Any comment or sharing of experience on whether it is difficult to get exemption from CPF Life totally with a private annuity? I cannot seem to find much published criteria on what may constitute an approved private annuity such that one may withdraw all of own savings from CPF system (other than Medisave which cannot be taken out until death). It seems that a key criteria may be it has to be *lifelong* annuity and this is what is probably hard to find in private at competitive rates? Please correct me if wrong. Thank you.