FRS or ERS?

[dork32]

If I can choose, I will rather have the old RSS.

Using the current CPF life payout amount, the old RSS is able to last until 95 years old.
Of course, RSS does not mean payout for life. However payout till 95 years old is good enough. And it will have even more bequest for nominee. Whatever interest generated is in the RA account. Straight forward and clean cut.

actually there is no harm to have a bit of insurance just in case you dont die.

again it is good to take a look at what this insurance cost instead of using sweeping statement like everyone needs longevity insurance gates buffet mask pm lee all need it. you also need it.

200k frs at 55 = 300k at 65. lets say 50k go to pool. 4% * 50K = 2K/year. expensive or not? you decide.

 

[polyglob]

when one has met FRS or ERS, can still opt for BRS?

IIUC, the process is RA gets formed with FRS first, you make property pledge for BRS, then can withdraw excess above BRS from RA

 

[a4973]

As of now, I am not convinced by escalating.

There are studies about retirement spending that show a decrease in spending over time.
(After an initial increase, presumably to do bucket list stuff.)
If we subscribe to that, no real need to have increasing payouts over time.
One might even say it is better to have higher payouts early so that you can enjoy yourself while you are still young and healthy and mobile.

If we don't subscribe to that but think that inflation protection is important, then escalating also doesn't seem to add up. 2% increase each year when FRS is increasing by 3.5%?
If FRS is increasing by 3.5%, then they are projecting inflation at about that number.
2% is hardly enough to offset this.

Either way, doesn't quite make sense to me.

Unless the 2% is nett of taking into account the inflation but at the same time the concept of less spending in later years .

 

[dantom04]

I'm still confused between a Basic and Standard ERS... Wat is the main difference beside u getting a lesser amount per mth if you choose Basic? So isn't it better to choose Standard ERS?

 

[dork32]

I'm still confused between a Basic and Standard ERS... Wat is the main difference beside u getting a lesser amount per mth if you choose Basic? So isn't it better to choose Standard ERS?

whatever scheme you choose there will be disadvantages and advantages. just choose the one tat suits you the most.

i am going to answer like wat our cpf does. basic you get a smaller payout but you bequest more to your loved ones. standard you get a larger payout but less bequest.

if you know how to analyze, the reply is totally useless to make a decision.

 

[sohguanh]

I'm still confused between a Basic and Standard ERS... Wat is the main difference beside u getting a lesser amount per mth if you choose Basic? So isn't it better to choose Standard ERS?

My layman understanding is Basic you only put a small amount of your monies into the pool. Then it draw from your own account first. Standard is all into the pool. If you die (depend what age) the Basic monies in account can give to beneficiaries. The Standard is get back your monies that is put into the pool but interest generated inside the pool give other ppl shiok. So means monies give beneficiaries lesser compared to Basic.

 

[semiret]

I only knows for BBFA should always goes for FRS standard as you don't have kids to handover the balance to. Try to get highest amounts payout every month you allows. Who you nominated will get the balance but it's not your child or wife loh.

 

[qhong61]

I'm still confused between a Basic and Standard ERS... Wat is the main difference beside u getting a lesser amount per mth if you choose Basic? So isn't it better to choose Standard ERS?

But u will get more than standard as yrs go.

 

[dantom04]

But u will get more than standard as yrs go.

Basic will give us more as years goes by?

 

[qhong61]

Basic will give us more as years goes by?

Will increase

 

[Okenba]

Basic will give us more as years goes by?

No. Payouts from basic don't increase over time. Someone's confusing basic plan with escalating plan.
The benefit of basic is that there's a higher chance of your beneficiaries getting more money if you die at a younger age.

 

[iceblendedchoc]

i picked up a book from lorna tan. This book was based on 2017. I have paraphrased some of it, as it is too long.

Q How long does it take for my payment under the CPF Life Escalating Plan to reach the same payout level as the CPF Life Basic and Standard plan?

" For a male member who has an RA balance of $166k at the age of 55 and starts his payouts at age 65, the CPF life Life Escalating take about 9 year and 13 years to reach the same payout level as basic and standard plan respectively"

Q How long does it take for the total payouts received under the CPF Life Escalating plan to break even with those of the Standard Plan?

It will take 25 years under the Escalating plan to receive the same amount of cumulative payouts compared to the Standard Plan.

If you start payout at 65 years old , you need to reach 90 years old to break even with those on Standard Plan , assuming you are still alive at 90.

 

[TehSi99]

No. Payouts from basic don't increase over time. Someone's confusing basic plan with escalating plan.
The benefit of basic is that there's a higher chance of your beneficiaries getting more money if you die at a younger age.

That makes sense because the payout is lesser for Basic, so higher bequest.

They way I look at it is that you don't have to spend every single cents for Standard although the bequest is lower. What is left will also be passed down anyway, so why skimp (or continue) when you are near end of life.

 

[henrylbh]

I'm still confused between a Basic and Standard ERS... Wat is the main difference beside u getting a lesser amount per mth if you choose Basic? So isn't it better to choose Standard ERS?

No doubt it's too confusing to decide which plan to bet.

In short, BP pays lesser than SP as there is some bequest till age 90 whereas bequest is zero for SP from age 80.

At age 80, SP loses all the interest on the retirement sum used as annuity premium to join CPFL whereas BP only loses only the interest on the retirement sum (about 15%) used as annuity premium to join CPFL.

If alone with no dependents, go for SP.

Otherwise then guess or bet when you are expected to die.

If death before 90, go for BP. If death at 90, there is still a bequest based on unused annuity premium

If you bet wrongly and continue to live well above 90, then just your luck that you manage to live to recover all your rightful amount of CPF, albeit a slightly declining monthly amount compared SP. It's around this time that SP is also breaking even

 

[henrylbh]

Will increase

Don't anyhow say. Basic like Standard plan pays for life, the latter pays higher monthly payout. But Basic Plan, monthly payout will start decreasing slightly from age 90.

 

[dork32]

i picked up a book from lorna tan. This book was based on 2017. I have paraphrased some of it, as it is too long.

Q How long does it take for my payment under the CPF Life Escalating Plan to reach the same payout level as the CPF Life Basic and Standard plan?

" For a male member who has an RA balance of $166k at the age of 55 and starts his payouts at age 65, the CPF life Life Escalating take about 9 year and 13 years to reach the same payout level as basic and standard plan respectively"

Q How long does it take for the total payouts received under the CPF Life Escalating plan to break even with those of the Standard Plan?

It will take 25 years under the Escalating plan to receive the same amount of cumulative payouts compared to the Standard Plan.

If you start payout at 65 years old , you need to reach 90 years old to break even with those on Standard Plan , assuming you are still alive at 90.

lorna provided a very good reply. she put in numbers, not just grandma stories. she also did not say you need escalating, otherwise you will become destitute.

she lets you make a decision the number

also for Q2, if she uses some irr, then the breakeven is even later. standard would be much better because you are getting your money early

and for those that believe that acturial scientist can make good calculations and we should not worry think again. these guys will factor in safety factor due to uncertainty. the higher the uncertainty, the higher the safety factor. escalating has the highest uncertainty followed by standard then basic. you are paying for the uncertainty.

 

[dork32]

If you bet wrongly and continue to live well above 90, then just your luck that you manage to live to recover all your rightful amount of CPF, albeit a slightly declining monthly amount compared SP. It's around this time that SP is also breaking even

yes you have bet wrongly if you chose basic and you live beyond 90. but did you lose? no. this is because the return of basic is still very good. you can get an return of 5% or 6% depending on how long you live.

of course the return of standard is even better.

 

[Mephist0pheLes]

I'm still confused between a Basic and Standard ERS... Wat is the main difference beside u getting a lesser amount per mth if you choose Basic? So isn't it better to choose Standard ERS?

No need to confuse. If ur goal is to maximise payout, then ers and standard. If ur goal is bequest, then take out watever u can from cpf and choose basic plan.

All these discussion about breakeven is sibei bo liao and meaningless, trying to optimise with unknown variable lol.

 

[qhong61]

No need to confuse. If ur goal is to maximise payout, then ers and standard. If ur goal is bequest, then take out watever u can from cpf and choose basic plan.

All these discussion about breakeven is sibei bo liao and meaningless, trying to optimise with unknown variable lol.

We are not god

 

[iceblendedchoc]

lorna provided a very good reply. she put in numbers, not just grandma stories. she also did not say you need escalating, otherwise you will become destitute.

she lets you make a decision the number

also for Q2, if she uses some irr, then the breakeven is even later. standard would be much better because you are getting your money early

and for those that believe that acturial scientist can make good calculations and we should not worry think again. these guys will factor in safety factor due to uncertainty. the higher the uncertainty, the higher the safety factor. escalating has the highest uncertainty followed by standard then basic. you are paying for the uncertainty.

Escalating is really the worst choice. I dun see myself living until 90 years old as well.

BRS is really the best plan currently for me but won't suit me as i would be selling away my properties before i hit 55 and will be without a house for a few years so my minimum i can opt for is FRS although i am already above ERS right now at 36. But who knows, CPFB policies may still change before i hit 55.