Thumb up. Finally I understand CPF Life better.
What’s you thought for which plan to take?
Please not East Coast Plan
hello, i east coast guy. dont insult the pm to be which i will vote against.
CPF SA
- Thread starter omgwtflol
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hello, i east coast guy. dont insult the pm to be which i will vote against.
BBCWatcher
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You do have this very backwards.
None of the CPF LIFE payout plans guarantee any bequest. Simply live long enough, and the residual falls to zero. Moreover, the timing of any residual is largely unknown and unknowable. Those are gambles.
All the CPF LIFE payout plans can do to counteract gambling is assure particular baseline lifestyles for the member who is living. The Escalating Plan does that best, because it's the only one that fights inflation, a key real lifestyle reducer.
By your standard of "gambling" you'd never buy any insurance -- no longevity insurance, no disability insurance, no life insurance, no nothing. And that's...gambling.
You can choose whichever payout plan you wish, but let's not apply labels that don't fit.
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just in case you dont understand the word standard deviation, maple used the word non-guaranteed.
the smaller the non-guaranteed, the smaller the risk. gamblers go for high non guaranteed, eg toto. this is a fact.
if you chose escalating and die at 80, you would have lost more that 100k in bequest. this is gambling.
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i already mentioned. my concept of insurance is this. i put in a small sum eg $9 a month. if i die suddenly, the insurance will pay me 60k. i do not mind losing a small sum.
cpf life , you spend tens or even hundreds of thousands to buy insurance. i will not want to buy insurance that cost that much.
thanks maple, you have done some calculations to so how much the effects of deduction is
maybe the hardsell gambler and the unfair mod and thats about it
BBCWatcher
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Yes, there you go, you’ve got it! The bequest (residual) is never guaranteed — it’s the only major aspect of CPF LIFE that isn’t guaranteed — but you can try (gamble) to make the bequest as large as possible by selecting the Basic Plan.
who ever says anything is guaranteed? do you understand the term guaranteed.
guaranteed refers to the portion that you will receive + the portion that you have alredy received.
lifeafter41
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Assuming reaching 55 at 2020 and have ERS of 271.5k
What would be the amount 10 years later, assuming no top up?
Not sure how the compound interest works with the +1%, +1%......
What would be the amount 10 years later, assuming no top up?
Not sure how the compound interest works with the +1%, +1%......
just for your info,
to those that died at 90 and felt very aggrieved that the have lost the 150k of bequest in you have died in 80, the bequest is not gone. it has been paid out to you as part of the monthly payout. you add up the monthly payout, it will be equal to the lost 150k+ interest.
do not be fooled by people that say that you have lost your bequest to your kids.
this is one portion of cpf that i like. you spend it when you are old. if you die before you finish your money, you kids help to finish it for you.
to those that died at 90 and felt very aggrieved that the have lost the 150k of bequest in you have died in 80, the bequest is not gone. it has been paid out to you as part of the monthly payout. you add up the monthly payout, it will be equal to the lost 150k+ interest.
do not be fooled by people that say that you have lost your bequest to your kids.
this is one portion of cpf that i like. you spend it when you are old. if you die before you finish your money, you kids help to finish it for you.
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lifeafter41
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Thanks dork......
Not sure if it’s correct, the numbers I got is 537,285.
Anyway, dork, let’s say one wants to top up to the prevailing ERS, assuming it’s 7,000 every year, how to put it in?
Meanwhile just thinking at 65, if one were to choose Basic, annuity insurance payable is 20% of 537k, that’s 107k deducted......a very big sum imho.
one way to measure deviation is to analyze your losses/gain throughout the period for basic vs standard
from 65 to 80
the losses widens rapidly for standard. the irr for standard remains at 0 during this period. irr for basic is 3++%. you multiply the irr over the 15 years, losses becomes significant
from 80 to 88
the irr of standard starts to become +ve. it increases quickly and starts to catch up with basic. basic continues to give an irr of 3++%. at 88 (or something like that) standard overtakes basic, though basic still have some bequest value.
from 90 onwards. irr of both standard and basic also rises. standard will rise at a faster rate than basic.
from these comparison, you can see that irr of basic is more or less constant at 3++%. the standard deviation is very low.
for standard, the irr varies from 0 to a high of 5+% if you live long enough. there is much greater variation in the irr which translate to a bigger standard deviation.
anyone that knows a bit about financial maths will tell you the bigger the deviation, the bigger the risk
from 65 to 80
the losses widens rapidly for standard. the irr for standard remains at 0 during this period. irr for basic is 3++%. you multiply the irr over the 15 years, losses becomes significant
from 80 to 88
the irr of standard starts to become +ve. it increases quickly and starts to catch up with basic. basic continues to give an irr of 3++%. at 88 (or something like that) standard overtakes basic, though basic still have some bequest value.
from 90 onwards. irr of both standard and basic also rises. standard will rise at a faster rate than basic.
from these comparison, you can see that irr of basic is more or less constant at 3++%. the standard deviation is very low.
for standard, the irr varies from 0 to a high of 5+% if you live long enough. there is much greater variation in the irr which translate to a bigger standard deviation.
anyone that knows a bit about financial maths will tell you the bigger the deviation, the bigger the risk
actually i get only 412k. i forget to put find fv
you can use the following forms to topup
https://www.cpf.gov.sg/Members/Schemes/schemes/retirement/retirement-sum-topping-up-scheme
why top up 7k per year? top up to ers cannot run tax. might as well one shot make it ers. but one time top up so much can be very xiong. i will top up any amount i feel comfortable with, not restricted to 7k.
the high insurance premium is what i have been saying all the while. some like it, others dont. to me, i tend to agree with bbc on this point. it may be good to have a bit of insurance, just in case i dont die.
lifeafter41
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Yes dork. It’s 412k.
On the period, I put in 120 months, instead of 10 years.
But the difference is huge between the monthly compound and annually compound.....lol.
Anyway, even at 412k, the annuity premium is 82.4k at 20%.
Assuming one lives till 80.
The interest on this 82.4k for the next 15 years is 68k.
Though I understand on maple note, the principal, aka 82k will be paid out as bequest upon on demise at age 80.
The interest forgo or goes into the CPF pool is very substantial at 68k.
My thoughts is to top up to prevailing FRS every year for tax relief if gsvevthe money.
FRS in 2019 is 176k
FRS in 2020 is 181k
Top up 5k into RA, beginning of the Jan month of 2020 for tax relief purpose.
Is that correct?
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I thought u guys were sayings it’s 20% of the frs amount? As the premium for the annuity
It’s the same for FRS or ERS, still 20% for basic plan.
How about standard plan?
our collective understanding is this:
they take away 20%. but this 20% is still yours. if you die, the amount can be bequested. but this 20% would not be earning interest for your ra. it earns interest for a common pool, which some funny people feel that it is still their. this common pool is used to provide the payouts for the immortals. you will first draw from your ra, then the pool.
the thing is we could be entirely wrong.
the other thing is it cannot be 20% of frs. it is 20% of what you have in your ra.
maple already said. 100% goes to the annuity.
the 100% earns interest only for the pool and not your ra.this is why the bequest hit 0 so quickly.
also this 100% is still yours. should you die the next day, the 100% will be given to your kids.
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actually the large difference is not due compound interest. it is due to the pmt of 900 every year(+1% +1%)
10 years have 10 x 900 = 9000
120 months have 120 x 900 = 108000
difference already 100k without interest
cpf only compounds your interest yearly and not monthly
before i claim anymore credit, i would like to say that this method of calculation was taught by yywin.
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