CPF reform

[tiny]

sorry. you must live till 88 then break even.

You counted it based on principal value? Won't the dollar gets weaker by a certain percent over the years?

 

[dork32]

You counted it based on principal value? Won't the dollar gets weaker by a certain percent over the years?

included 4% ra interest in the calculation.

 

[anfielder]

With the new recommendations, it seems like they may be removing the ceiling...

No, only increasing the ceiling.

 

[anfielder]

sorry. you must live till 88 then break even.

Does this calculation take the bequeathed amount into consideration?

 

[dork32]

Does this calculation take the bequeathed amount into consideration?

yes ..........

 

[dork32]

for the bequeath amount, it is definitely 0 at the break even point.. Before 0, you will rugi

 

[henrylbh]

yes ..........

Not really. Bequest is the leftover after calculating the payout. It is not taken into account in calculating the payout.

 

[dork32]

Not really. Bequest is the leftover after calculating the payout. It is not taken into account in calculating the payout.

my comparison is the new cpf standard vs the old min sum scheme.

the bequest amount would hit 0 very quickly for cpf standard.

the two scheme will break even after the old min sum scheme runs out.

this occurs at about 88 years old for guys

 

[tiny]

included 4% ra interest in the calculation.

Sorry, let me clarify my earlier question... Your calculation had factored the monthly payouts (fixed value) being drawn down from a lump sum (consistently growing at 4% PA) and therefore the "breakeven" age is 88?

Thanks.

 

[dork32]

Sorry, let me clarify my earlier question... Your calculation had factored the monthly payouts (fixed value) being drawn down from a lump sum (consistently growing at 4% PA) and therefore the "breakeven" age is 88?

Thanks.

my calculation is very simple.

according to cpf life calculator,
150k in retirement account at 65 will give a payout of 820/mth for a male

for the old min sum scheme. this 150k will earn an interest of 4%. if you continue to draw it down at 820 a month, it will last for 23 years, 88 years old

if you die before 88, the bequest amount of the min sum scheme is definitely higher than the cpf life standard (which is a joke).

if you die at 88, both schemes also 0 bequest, so break even.

if you die after 88, both scheme also 0 bequest, but cpf life will continue to give a payout whereas min sum dont. so you tan teo

 

[henrylbh]

Sorry, let me clarify my earlier question... Your calculation had factored the monthly payouts (fixed value) being drawn down from a lump sum (consistently growing at 4% PA) and therefore the "breakeven" age is 88?

Thanks.

I believe he needs to take a constant interest of 4% and assume it never change in order to do a projection. CPF Life pays a lower amount compare to CPF MSS and the former needs more years to get the same amount as the latter even if interest rate drops. The former will get a smaller payout and the latter a shorter payout period.

 

[tiny]

my calculation is very simple.

according to cpf life calculator,
150k in retirement account at 65 will give a payout of 820/mth for a male

for the old min sum scheme. this 150k will earn an interest of 4%. if you continue to draw it down at 820 a month, it will last for 23 years, 88 years old

if you die before 88, the bequest amount of the min sum scheme is definitely higher than the cpf life standard (which is a joke).

if you die at 88, both schemes also 0 bequest, so break even.

if you die after 88, both scheme also 0 bequest, but cpf life will continue to give a payout whereas min sum dont. so you tan teo

Dork32, thanks for taking time to type the lengthy reply.

 

[tiny]

I believe he needs to take a constant interest of 4% and assume it never change in order to do a projection. CPF Life pays a lower amount compare to CPF MSS and the former needs more years to get the same amount as the latter even if interest rate drops. The former will get a smaller payout and the latter a shorter payout period.

Thanks henry.

 

[havetheveryfun]

i see. using cpf life payout estimator using $80500, from age 65 monthly payout ~448-474. means this amount ~last for 14 years

if i live till 80++ means tan dio so good meh

that's how annuities work in a nutshell, they take the money from the ppl who lugi to pay the ppl who tan tio

 

[whitesand]

that's how annuities work in a nutshell, they take the money from the ppl who lugi to pay the ppl who tan tio

You forget to add:

"after deducting whatever overhead/profit (black box model)."

 

[dork32]

You forget to add:

"after deducting whatever overhead/profit (black box model)."

you are very right. it is the black box model and the lack of choice that i hate.

 

[lzydata]

The main changes are out. The term Minimum Sum has been retired. Ok, bad pun.

Here are the quoted retirement sums and CPF LIFE monthly payouts for the 2016 cohort (those who turn 55 in 2016):

Your monthly payout for life* from 65
Retirement Account Savings required at age 55

If you own a property and have sufficient charge/pledge on the property.
$660 - $720
Basic Retirement Sum (BRS)
($80,500 in 2016)

If you do not own a property or choose not to pledge your property.
$1,220 - $1,320
Full Retirement Sum (FRS)
($161,000 in 2016)

The FRS is 2 × BRS

If you wish to put more savings in CPF LIFE.
$1,770 - $1,920
Enhanced Retirement Sum (ERS)
($241,500 in 2016)

The ERS is 3 × BRS.

And the retirement sums up to 2020, increasing by 3% per year.

Basic Retirement Sum
Age 55 in 2016 $80,500
Age 55 in 2017 $83,000
Age 55 in 2018 $85,500
Age 55 in 2019 $88,000
Age 55 in 2020 $90,500

- http://mycpf.cpf.gov.sg/Members/Gen-Info/CPFChanges/COS2015_CPF.htm

Before the usual suspects show up to despair about how the retirement sum will keep increasing forever and ever , 3% a year is less than the current SMRA rate, so those who already have $80,500 or thereabouts are already set.

 

[Perisher]

The main changes are out. The term Minimum Sum has been retired. Ok, bad pun.

Here are the quoted retirement sums and CPF LIFE monthly payouts for the 2016 cohort (those who turn 55 in 2016):



And the retirement sums up to 2020, increasing by 3% per year.



- http://mycpf.cpf.gov.sg/Members/Gen-Info/CPFChanges/COS2015_CPF.htm

Before the usual suspects show up to despair about how the retirement sum will keep increasing forever and ever , 3% a year is less than the current SMRA rate, so those who already have $80,500 or thereabouts are already set.

Only for the next 5 years... Before next next election, dunno what pattern again.

 

[peacefulday]

any idea when we need to make the choice of BRS, FRS or ERS? at age55?

they changed the minimum sum to retirement sum, make me feel my cpf unsecure, which's mean anytime they suka suka extended our retirement working age and the draw out of cpf retirement sum also extended beyond 65?

 

[Perisher]

any idea when we need to make the choice of BRS, FRS or ERS? at age55?

they changed the minimum sum to retirement sum, make me feel my cpf unsecure, which's mean anytime they suka suka extended our retirement working age and the draw out of cpf retirement sum also extended beyond 65?

Your cpf has always been suka suka can change anything de. It's up to the government at the time to decide how to use cpf. Not only that, taxes, cpf contribution rate, cpf interest rate, a lot of things is out of your control de. Just plan for the next 5 year since the policy is out. After that is anything goes.