CPF Easy Info Thread. :)

[Okenba]

Just needed a place to talk to myself.

I think in essence, for me:

ERS is good to have if it doesn't stretch one too much financially.
Escalating takes far too long to kick in. Standard seems more likely as a partial insurance against longevity.

Waiting for 70 seems rather late. I'd rather enjoy my retirement money while I am young. And if I can't spend it all, AMP is always an option.

Everyone has their own considerations.

I have previously considered Escalating for the wife, but I think Standard with a long term AMP (getting kids to RSTU into her RA) would also work fine. And has the added tax benefits with a larger payout at an earlier stage.

I think Standard is a good balance. AMP according to your needs.

 

[BBCWatcher]

Until the median life expectancy of Singaporeans increases to touch this break even age for Escalating plan, mathematically, it is a bad deal. And it is bad advice to dispense to anybody to take up this plan.

Where did I say "You must pick the Escalating Plan?" I explicitly, carefully explained that optimal plan choice varies. Obviously! Go read what I just wrote.

Equally, I disagree with your blanket, universal dismissal of the Escalating Plan. That's the bad advice. Let's suppose (as one example) a widow or widower with no children, grandchildren, or other heirs is making a plan selection, is concerned (rightly) about inflation and its effects on his/her lifestyle, and is also concerned about possible loss of mental capacity or otherwise concerned about financial acumen. Perhaps this individual has a family history of dementia, but it's hit or miss -- might or might not happen. This person has plenty of liquidity and at least a decent amount of wealth, today anyway. Which plan is best for this individual? Well, the Escalating Plan would be/should be seriously considered. It's definitely not crazy, far from it.

 

[streetfighter]

You have any calc of escalating vs standard vs basic to share? Interested to see the figures

Where did I say "You must pick the Escalating Plan?" I explicitly, carefully explained that optimal plan choice varies. Obviously! Go read what I just wrote.

Equally, I disagree with your blanket, universal dismissal of the Escalating Plan. That's the bad advice. Let's suppose (as one example) a widow or widower with no children, grandchildren, or other heirs is making a plan selection, is concerned (rightly) about inflation and its effects on his/her lifestyle, and is also concerned about possible loss of mental capacity or otherwise concerned about financial acumen. Perhaps this individual has a family history of dementia, but it's hit or miss -- might or might not happen. This person has plenty of liquidity and at least a decent amount of wealth, today anyway. Which plan is best for this individual? Well, the Escalating Plan would be/should be seriously considered. It's definitely not crazy, far from it.

 

[streetfighter]

I prefer to keep cash on hand for emergency. Put into CPF can't touch

Exactly right. That Bogle guy was wise. We should all aspire to be at least wealthy enough that funding our CPF Retirement Accounts (self and spouse/partner, if you have one) to the Enhanced Retirement Sum at age 55 (and pegged thereafter if you're able) isn't even worth a second thought. ("Four percent interest on Singapore dollars feeding into a low priced, government managed life annuity? Sign me up!")

As for the payout plan decision, I don't plan to make that decision until age 69.9. Today I expect I'll choose the Escalating Plan, but the future is in the future. For example, if unfortunately I'm in poor health at age 69.9, I'm very unlikely to choose the Escalating Plan.


Yes, absolutely.

 

[dork32]

if i am stupid and i have 1.4k vs 1.8k a month, it makes no difference to me.

if people were to swindle my cash hoard of a few hundred k, what makes you think, they will not come in for my monthly payout

 

[dork32]

I prefer to keep cash on hand for emergency. Put into CPF can't touch

cpf after 55 can withdraw

 

[dork32]

You have any calc of escalating vs standard vs basic to share? Interested to see the figures

yes we have done it many times.

we have done it on many aspect as well.

 

[dork32]

Until the median life expectancy of Singaporeans increases to touch this break even age for Escalating plan, mathematically, it is a bad deal. And it is bad advice to dispense to anybody to take up this plan.

i agree with this point. many of us are engineering trained. we use maths to make our decisions.

but bbc is also partially correct in that basic is a bad deal if you have no one to bequest to

but even if i have no one to bequest to, i will choose standard instead of escalating.

 

[dork32]

Just needed a place to talk to myself.

I think in essence, for me:

ERS is good to have if it doesn't stretch one too much financially.
Escalating takes far too long to kick in. Standard seems more likely as a partial insurance against longevity.

Waiting for 70 seems rather late. I'd rather enjoy my retirement money while I am young. And if I can't spend it all, AMP is always an option.

Everyone has their own considerations.

I have previously considered Escalating for the wife, but I think Standard with a long term AMP (getting kids to RSTU into her RA) would also work fine. And has the added tax benefits with a larger payout at an earlier stage.

I think Standard is a good balance. AMP according to your needs.

you are definitely not engineering, accounting or science trained. probably a arts type of person. you make decision based on feelings rather than maths. your perceived balance is not balance.

if you are on frs and you die at 80, your difference of cpf life value for standard vs basic is 120k

 

[Okenba]

you are definitely not engineering, accounting or science trained. probably a arts type of person. you make decision based on feelings rather than maths. your perceived balance is not balance.

if you are on frs and you die at 80, your difference of cpf life value for standard vs basic is 120k

You are so wrong it is laughable. Seriously. I should show this to ppl who know me in RL and every single one would laugh their heads off.

You also may want to read up on the economic concept of utility. That might actually help you to understand people and not just numbers.

 

[celtosaxon]

i agree with this point. many of us are engineering trained. we use maths to make our decisions.

but bbc is also partially correct in that basic is a bad deal if you have no one to bequest to

but even if i have no one to bequest to, i will choose standard instead of escalating.

From a pure math perspective, there really isn’t a huge difference between Standard and Escalating. Up to age 80 the two are almost the same. By age 85 you might see 0.5% higher IRR with Standard, but then that difference slowly fades away and disappears into your 90’s.

Put another way, I would not choose Standard over Escalating just because one beats the other by 0.5% during a few years of my life. Instead, I would choose based on how valuable that inflation protection is to me.

 

[BBCWatcher]

but bbc is also partially correct in that basic is a bad deal if you have no one to bequest to

We should keep in mind that Singapore's total fertility rate is globally low at about 1.14 (last I checked). It's rather common for elder CPF members not to have any heirs, and it's getting more common given demographic realities and trends. If you don't have at least one CPF nominee you care about (an individual or a charity), you definitely don't want the CPF LIFE Basic Plan.

....But that's as far as it goes. If you have (or reasonably expect to have) at least one CPF nominee you care about, then "it depends."

 

[streetfighter]

I don't think we should care about leaving behind money, so Standard for me, take highest payout first.

We should keep in mind that Singapore's total fertility rate is globally low at about 1.14 (last I checked). It's rather common for elder CPF members not to have any heirs, and it's getting more common given demographic realities and trends. If you don't have at least one CPF nominee you care about (an individual or a charity), you definitely don't want the CPF LIFE Basic Plan.

....But that's as far as it goes. If you have (or reasonably expect to have) at least one CPF nominee you care about, then "it depends."

 

[reddevil0728]

I don't think we should care about leaving behind money, so Standard for me, take highest payout first.

Diff people got diff view about leaving money behind

 

[celtosaxon]

Diff people got diff view about leaving money behind

BBCWatcher has made the point many times that if your goal is to leave money behind, CPFL a lousy bequest vehicle - live too long and your beneficiaries get $0. In many cases your beneficiaries could be better off if you leverage CPFL for it’s optimal use, lifelong income. Having that income secured can allow you to step further out on the risk spectrum and reap higher long-term investment returns outside of CPF. By doing so, your beneficiaries end up with “more and more” instead of “less and less” the longer you live.

Does this apply to everyone in all circumstances? No, but it is definitely one of the many considerations one should consider before making their choice.

 

[BBCWatcher]

BBCWatcher has made the point many times that if your goal is to leave money behind, CPFL a lousy bequest vehicle - live too long and your beneficiaries get $0....

I question the whole premise of bequests in certain respects. I want to do much, much better than leave a mere bequest.

Here's the big problem with bequests: neither you nor the recipients control their timing. And timing can be incredibly important. Let's suppose your grandchild or grandniece is admitted to a top, expensive university. What's the financial solution? "Oh, sorry, you have to wait until I die, which might be when you're 32 years old"? That's absurd! What I really want -- indeed, what I'm already doing, right now -- is to be extremely generous at any/every time.

OK, so how can you afford to be generous whenever you wish, to have full flexibility in sharing wealth? Answer: to have a secure lifestyle for the rest of your life, no matter what. And you can see where this is going, right?

In a certain sense a sizable bequest represents a financial failure, or at least a financial shortcoming. A sizable bequest means you didn't have as much fun as you could have had while you were alive, and/or you delayed someone else's enjoyment longer than necessary because you didn't give away as much of your wealth as quickly as you should have. Fortunately a very wise family member taught me this important lesson through his actions. He had a trio of inflation-indexed, government-sponsored retirement income streams that supported a wonderful retirement lifestyle, and then he was very educationally generous precisely when that generosity was most needed. Timing is often absolutely critical, and it certainly was in my case.

 

[reddevil0728]

I question the whole premise of bequests in certain respects. I want to do much, much better than leave a mere bequest.

Here's the big problem with bequests: neither you nor the recipients control their timing. And timing can be incredibly important. Let's suppose your grandchild or grandniece is admitted to a top, expensive university. What's the financial solution? "Oh, sorry, you have to wait until I die, which might be when you're 32 years old"? That's absurd! What I really want -- indeed, what I'm already doing, right now -- is to be extremely generous at any/every time.

OK, so how can you afford to be generous whenever you wish, to have full flexibility in sharing wealth? Answer: to have a secure lifestyle for the rest of your life, no matter what. And you can see where this is going, right?

In a certain sense a sizable bequest represents a financial failure, or at least a financial shortcoming. A sizable bequest means you didn't have as much fun as you could have had while you were alive, and/or you delayed someone else's enjoyment longer than necessary because you didn't give away as much of your wealth as quickly as you should have. Fortunately a very wise family member taught me this important lesson through his actions. He had a trio of inflation-indexed, government-sponsored retirement income streams that supported a wonderful retirement lifestyle, and then he was very educationally generous precisely when that generosity was most needed. Timing is often absolutely critical, and it certainly was in my case.

some people just want to do ok. don't need to do much or much better.

 

[chrisloh65]

Between having bequest and no bequest, all else being equal, who don't want to leave behind a bequest? At least there is money left behind for somebody to hold a luxury funeral for you right?

I question the whole premise of bequests in certain respects. I want to do much, much better than leave a mere bequest.

Here's the big problem with bequests: neither you nor the recipients control their timing. And timing can be incredibly important. Let's suppose your grandchild or grandniece is admitted to a top, expensive university. What's the financial solution? "Oh, sorry, you have to wait until I die, which might be when you're 32 years old"? That's absurd! What I really want -- indeed, what I'm already doing, right now -- is to be extremely generous at any/every time.

OK, so how can you afford to be generous whenever you wish, to have full flexibility in sharing wealth? Answer: to have a secure lifestyle for the rest of your life, no matter what. And you can see where this is going, right?

In a certain sense a sizable bequest represents a financial failure, or at least a financial shortcoming. A sizable bequest means you didn't have as much fun as you could have had while you were alive, and/or you delayed someone else's enjoyment longer than necessary because you didn't give away as much of your wealth as quickly as you should have. Fortunately a very wise family member taught me this important lesson through his actions. He had a trio of inflation-indexed, government-sponsored retirement income streams that supported a wonderful retirement lifestyle, and then he was very educationally generous precisely when that generosity was most needed. Timing is often absolutely critical, and it certainly was in my case.

 

[highsulphur]

I question the whole premise of bequests in certain respects. I want to do much, much better than leave a mere bequest.

Here's the big problem with bequests: neither you nor the recipients control their timing. And timing can be incredibly important. Let's suppose your grandchild or grandniece is admitted to a top, expensive university. What's the financial solution? "Oh, sorry, you have to wait until I die, which might be when you're 32 years old"? That's absurd! What I really want -- indeed, what I'm already doing, right now -- is to be extremely generous at any/every time.

OK, so how can you afford to be generous whenever you wish, to have full flexibility in sharing wealth? Answer: to have a secure lifestyle for the rest of your life, no matter what. And you can see where this is going, right?

In a certain sense a sizable bequest represents a financial failure, or at least a financial shortcoming. A sizable bequest means you didn't have as much fun as you could have had while you were alive, and/or you delayed someone else's enjoyment longer than necessary because you didn't give away as much of your wealth as quickly as you should have. Fortunately a very wise family member taught me this important lesson through his actions. He had a trio of inflation-indexed, government-sponsored retirement income streams that supported a wonderful retirement lifestyle, and then he was very educationally generous precisely when that generosity was most needed. Timing is often absolutely critical, and it certainly was in my case.

Your last paragraph is enlightening for me. Thanks

 

[dork32]

You are so wrong it is laughable. Seriously. I should show this to ppl who know me in RL and every single one would laugh their heads off.

You also may want to read up on the economic concept of utility. That might actually help you to understand people and not just numbers.

whatever your background is not very important. the way you post here is laughable. you say you want to choose a middle ground, but you did not mathematically assess the all the options.

economics is an arts subject.

you do no get much utility if you get 120 per month more.

utility is a lot if it is 120k