I certainly hope life is so cut and dry. In fact, I have always hope that I know when my last day is so that I could plan my expenses till the last dollar a few seconds before I go.
FRS or ERS?
- Thread starter WeiHan
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Family history is one important criteria that should not be overlooked. Even doctor when diagnose your illness will also check if your family history got ppl also kena same. So for life expectancy of family history is same logic.
My father passed on early in life due to colon cancer and people at those time don't do a lot of preventive measures plus no money. I go for colonoscopy once every 5 to 7 years. I don't know if family history is a reliable factor especially if one take active steps to counter the risks.
If family history is not a reliable factor why does doctor take this into account when doing illness diagnosing? It does play a part obviously. Only diff is how much does it play a part. Hence I strongly believe life expectancy does have some shades of family history factor in it. If a lot of them all die around age 70 obviously something is going on that defy common science and logic I presume. Maybe in some faith it is called karma at work?
You believe what you believe. I wish you very good outcome planning your retirement based on your own projection of life span. Peace!
lets do a simple comparison before you decide. my comparison is going to be fair. it looks at the winners on both sides.
let me qualify this: bbc is right. if you are alone in this world and dont have even nephews and nieces to give you money, yes standard is your choice. he is also correct that as long as you are alive, basic will never beat standard, if you are the centre of the universe. it is only through bequest that basic can be better than standard.
my analysis is based on you and your kids as one entity. your kids getting your cpf is as good as you getting your cpf.
lets choose a ra of frs 200k at 55. at 65, you would probably have 300k .
at 65, standard gives about 1630 a month and basic gives 1490 a month . so standard is better.
standard earns no interest for yourself. basic earns 4% for maybe 250k, or 10k per year.
for the first few years, standard give you 140 a month extra and or 1.6k extra a year, but you lose 10k of interest.
from 65 to 80
because you are drawing down at a higher rate and you are not earning any interest, your cpf hits 0 at 80. the gap between basic and standard opens up at this stage to a max of 120k. in other words the value of basic is 120k more than that of standard at 80. this is the max. as bbc have rightly mentioned, you will never live to see this 120k
for 80 to 88
after 80, standard would have depleted its principal. but you are still drawing payout. you are drawing money from nothing. so standard starts to catch up with basic. at 88, the bequest amount of basic would have dwindled to the extent that the higher monthly payout of standard overtakes the bequest.
from 88 onwards, standard is better than basic. a point to note is that at 90, there would be nothing left to bequest for basic. the gap between standard and basic will open up from this point on till you die. the gap increases by 1.6k a year excluding interest. so if you live till 98, you would have gained 16k without interest. you want to include interest? tell me what your rate is and i can factor that in
based on this scenario, you go decide which is best for you
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bbc did not reccommend this. you choose brs and spend all your money. but you cannot die. you lived on for 20 more years. then how?
DevilPlate
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I think the main problem with Standard plan is the payout is only slightly higher than Basic plan.
I believe CPFL payout will be tweaked along the way but rn Basic plan js make more logical sense for the majority.
IF standard pays out 1.8k vs Basic 1.3k then, it might be better for those without dependents/surviving spouse.
I believe CPFL payout will be tweaked along the way but rn Basic plan js make more logical sense for the majority.
IF standard pays out 1.8k vs Basic 1.3k then, it might be better for those without dependents/surviving spouse.
BBCWatcher
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Gifts are clearly better than bequests. Is there anyone who prefers $1,000 years from now instead of $1,000 today?
Whatever your gift and bequest giving objectives are it makes absolutely no sense to treat CPF and CPF LIFE in isolation, separate from all other wealth and retirement income. A dollar is a dollar! Or the fancy way to say that is that money in hand is fungible. It doesn't matter if the gift or bequest dollar comes from CPF, some other pool of assets, or some combination. But this thread has lots of people suggesting that clinging to a slower declining (but still declining) residual — with permanently lower lifetime retirement income — in CPF LIFE is a sensible goal in and of itself. That's illogical! If you want to give gifts and bequests then all gifts and bequests count, not just the relatively small bequest that might speculatively come only from CPF LIFE if you happen to die early enough.
Unless you're practically broke, or plan to be practically broke. Then CPF LIFE is all you've got financially.
Actually, if anything, the government lately suggests members ought to consider the CPF LIFE Escalating Plan first. The government isn't wrong about the fact the CPF LIFE Escalating Plan is the only payout plan that can possibly support a stable real lifestyle for all of an individual's retirement years predominantly or exclusively from CPF LIFE income.
Well, "savvy" isn't the first word that comes to mind in this thread either.
But wouldn't it be even more wonderful if you hand them more money now, or sooner? Or at least invest more dollars sooner in prudent long-term vehicles that are better suited to the longer time horizons that your nieces and nephews have?
Get more money to younger generations sooner, working harder, and you turbocharge dynastic wealth accumulation. Stronger longevity insurance is a super useful tool to liberate you to do exactly that.
I don't think BBCWatcher has recommended any specific CPF LIFE payout plan in this thread. In specific individual circumstances BBCWatcher might recommend a particular payout plan. BBCWatcher and his spouse don't expect to choose their CPF LIFE payout plans until their respective age 69 years 10 months, and neither has reached that age yet. And neither has made any firm decision yet about which plan they'll choose. It'll depend on their respective health situations at that point in time.
Living in Singapore with a BRS-level CPF LIFE income stream as one's sole source of income (and no tappable wealth) would not be luxurious.
But that doesn't make any logical sense if you even think about it for a minute, does it?dork32 said:
CPF LIFE consists of only two parts: a monthly income for the life of the member and a possible residual when the member dies. These dollars are temporally distributed, and money has zero value (expires) to dead people. There's no logical reason to assume that $1,040 distributed to a CPF member's nominee 12 months from now has the same net present value as $1,000 distributed to the CPF member today, much less the same utility to anyone. For sure, guaranteed, money not paid to the CPF member him/herself has no value to the member him/herself. And there's also no logic in assuming that CPF LIFE is the only financial ingredient in gifts, bequests, and retirement income. Your predicates just don't make sense. They aren't general validity assumptions, not even close. Different individuals and families have different personal discount rates (that can diverge wildly from market and CPF interest rates), different liquidity constraints, different relationships (for example, greater or lesser difficulties requesting money either way), different actual money flows (both ways), different real lifestyle expectations and needs. It's all over the map. I don't know how to value the wonderful additional fancy buffet(s) a CPF member can enjoy with her grandchildren while she's still alive (!) that can she can better afford thanks to a CPF LIFE Standard Plan selection instead of a CPF LIFE Basic Plan selection (for example). Don't pretend you know either. You shouldn't even try. Those moments of extra joy together could be effectively priceless to that family. But apparently you want to assume you know the value of that joy, and the value is whatever your IRR calculator says it is. Sorry, that's just not a useful analysis when trying to shuffle dollars across the death of the CPF member. Death is a rather important event!
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If you have a choice to go for ERS, and you intend to use the amount for your retirement, then you should always go for ERS. There is simply no retirement product available that is better than CPF Life.
If you can predict exactly when you will die, then it is easier to choose between Basic, Standard and Escalating. However unless you are terminally ill, you probably don't know, and i think it is a bad idea to choose a plan based on guessing when you are going die, and getting yourself screwed if you guess wrong.
I don't trust anyone here making guesstimations of which plan pays out better, unless they are a fully qualified actuarial scientist with access to cohort life tables. Unless there is solid evidence otherwise, I'm going to trust that the actuarial scientists calculating the payouts know what they are doing and the payouts are fair across the plans.
So my advice is not to go with what others tell you to but what your concerns are.
1. If you are concerned about your beneficiaries and prefer to sacrifice your quality of life so that they have more, or the basic plan payout is enough for your needs, then go with the Basic Plan.
2. If you are concerned about inflation and the rising cost of living as you grow older into your retirement years, then go with the Escalating Plan.
3. Otherwise take the Standard Plan
If you can predict exactly when you will die, then it is easier to choose between Basic, Standard and Escalating. However unless you are terminally ill, you probably don't know, and i think it is a bad idea to choose a plan based on guessing when you are going die, and getting yourself screwed if you guess wrong.
I don't trust anyone here making guesstimations of which plan pays out better, unless they are a fully qualified actuarial scientist with access to cohort life tables. Unless there is solid evidence otherwise, I'm going to trust that the actuarial scientists calculating the payouts know what they are doing and the payouts are fair across the plans.
So my advice is not to go with what others tell you to but what your concerns are.
1. If you are concerned about your beneficiaries and prefer to sacrifice your quality of life so that they have more, or the basic plan payout is enough for your needs, then go with the Basic Plan.
2. If you are concerned about inflation and the rising cost of living as you grow older into your retirement years, then go with the Escalating Plan.
3. Otherwise take the Standard Plan
you are so right man. decisions are not because of just some sweeping words. eg, basic gives a higher bequest. how much higher? standard gives a better payout, how much better?
if you say the standard gives 1.8k and basic 1.3k, i will choose standard even though i have people to bequest to
you are so wrong here. yes, you are right. the dead man does not have any use for the bequest. but it real money to the people alive. if this is the case we should not be buying life insurance. because you will never get to see the money alive. so why buy it? it is because it is of value .
second if you know the way i do my calculations, i compare the irr. irr takes care of the time value of money.
we have been through these. you have always come in with this sort of warp logic. i give you a better suggestion. when you die, remember to throw all your money into the sea. you are dead. the money is of no use to you. so just throw it away.
no matter how long i live, i will never exhaust what i have accumulated. cpf life is not my only asset. since i am going to leave at least something to my kids, why not optimize it? why not optimize the total value.
and the most important look at your entire argument, there is not even a single number in it. you people want to make decisions based on just grandmother stories, then it is really up to you. i will make my decisions based on numbers.
bbc just dont get it. your payout is 140 more because you have chosen standard. how much do you want to give your nephews? so you nephew get that 140. what long term investment is he going to make with $140? talk numbers, not grandmother stories.
also notice there is no reccomendation of what investment tool mentioned. for most, it is probably going to sit in their dbs savings
this is so government. what if i say my quality of life will not be affected, regardless the plans i chose? and seriously i am also not so concerned about how much my beneficiaries will get. i should not choose basic then?
chong made a wonderful statement here. he rather give the money to nephew rather than some random strangers. same here, i rather give it to my kids than some random strangers
Always treat today ur last day
no, this thread has lots of people that do not want to see their hard earned money given to strangers. they rather give it to their kids. permanently lower lifetime retirement income: $140 per month.
i speak for sinkies here. there used to be another income plan. you get even a higher payout than standard. but if you die 65 years and 1 month. you leave 0 bequest. you know why this plan is no longer around?
you follow my concept. i dont need to know when i die. if i die tomorrow, i just leave everytning i have to my kids. if i dont die, i continue to spend. no matter how i spend, i know i cannot finish spending when i die. as such, i am never under pressure to spend. i am also never under pressure that i finish spending my money before i die
look here, i am never against escalating or standard plan. i am also not desperate to bequest to my kids.
if escalating plan give s 4% increase, i will jump into it.
if the standard payout is $200 more, i wil go for standard
if the bequest at 80 for basic is 20k, i will jump out of basic.
ok, you have the right to disagree that numbers are not everything. but this is the way i do things
if escalating plan give s 4% increase, i will jump into it.
if the standard payout is $200 more, i wil go for standard
if the bequest at 80 for basic is 20k, i will jump out of basic.
ok, you have the right to disagree that numbers are not everything. but this is the way i do things
this one chialat. based on his concept, if today is his last day, he spend everything. tomorrow wake up got no money left
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