FRS vs ERS

[dork32]

The mean life expectancy at age 65 is 21.1, so the mean age of death of CPF Life members is about 86 years. Median would be about 87-88 years. Calculating by XIRR, breakeven for standard plan about 89 years, and standard plan beats basic plan at 88 years.

well done. i like your post. you give numbers for us to make decisions.

not like some people, ripe old age..

the fact that standard beats basic at 88 means there are break evens. the fact that the xirr is fluctuating means there are break evens. it also means the bbc cannot count.

 

[Merg91]

The CPF Advisory Panel was appointed by the Ministry of Manpower in September 2014.
The members are :
https://services.mom.gov.sg/cpfpanel/about.html
Most likely your dislike /others 'who can manage their own cpf' views would have been discussed.

You can't have your cake and eat it (too)
is a popular English idiomatic proverb or figure of speech.
The proverb literally means "you cannot simultaneously retain your cake and eat it".
Once the cake is eaten, it is gone.

I like cpf, I don't like cpf life.
Most people will not benefit from cpf life due to the high breakeven age, not unless the median life span increases 10 years and the payout per dollar of premium is maintained.

 

[dork32]

How old are you ?

The principal of my time is 80. he was already an ah pek when he took over.i cannot be older than that

 

[lifeafter41]

well done. i like your post. you give numbers for us to make decisions.

not like some people, ripe old age..

the fact that standard beats basic at 88 means there are break evens. the fact that the xirr is fluctuating means there are break evens. it also means the bbc cannot count.

BRS is the most worth it in the bequest, you lose out huge amount to bequest for ERS and FRS if you die between 65 to 78 iirc.

The correct way pointed out by one guy is to withdraw at BRS and take that monthly pay out.
Take the excess beyond BRS amount withdrawn out, top up to CPF for extra payout. This way the bequest lost is lesser, your payout is still good. You also enjoy the 4pct interest tru out.

Just saw this in another section........
Food for thought?

 

[romeo88]

What's your objective of looking for a private annuity? It it's to compare that LIFE is more efficient than a private annuity, then your comparison is missing by much wider than a mile.

Put it this way, why would I want to take out my SA money, earning a good 4% to buy an annuity? By the way, LIFE forces you to and does not generate close to 4%, unless you can live till perhaps 100 yo or whatever the plan chosen to break even.

By the way, CPF which was implemented by David Marshal back in 1955 is not the same as CPF LIFE in any shape and form.

Is there a private annuity product that:

1. Take in single premium at $264,000,
2. Accumulation period of 10 years,
3. Pay monthly between $1,819 - $2,017 for life?

 

[tangent314]

XIRR isn't the answer to all questions. It's useful as a returns on investment calculation, yes. But in reality, money received at different points of time has different values to a CPF Life member.

We need to remember that CPF Life needs to cater to the lowest common denominator - people that depend fully on their CPF Life as their retirement income, that may not even have met the FRS. Perhaps they have been low income all their working life or perhaps they have been scammed out of all their cash balances. If you are rich or middle income, you will probably have other source of retirement income outside of CPF Life, so you can afford to play around with various CPF Life options to try to maximize returns that leaves some residual amount behind as inheritance.

For those that have no other source of retirement income, however, they will need to prioritize themselves. The differences in payout between the various plans become more significant and leaving behind a residual becomes less important.

 

[BlueRobin]

What's your objective of looking for a private annuity? It it's to compare that LIFE is more efficient than a private annuity, then your comparison is missing by much wider than a mile.

Put it this way, why would I want to take out my SA money, earning a good 4% to buy an annuity? By the way, LIFE forces you to and does not generate close to 4%, unless you can live till perhaps 100 yo or whatever the plan chosen to break even.

By the way, CPF which was implemented by David Marshal back in 1955 is not the same as CPF LIFE in any shape and form.

Everyone is different and for me I would like to have an annuity plan that pays for life to serve as a base of my retirement income. CPF Life is one I am willing to go with. There are many forumers who think it is not good from breakeven/returns perspective, so, I am asking if there is another option which is better.

CPF as it was implemented has changed; of course it has. To keep up with the time and sometimes also give in to demand from citizen. You need examples? Use CPF OA for housing is one such change.

 

[maple96]

Everyone is different and for me I would like to have an annuity plan that pays for life to serve as a base of my retirement income. CPF Life is one I am willing to go with. There are many forumers who think it is not good from breakeven/returns perspective, so, I am asking if there is another option which is better.

CPF as it was implemented has changed; of course it has. To keep up with the time and sometimes also give in to demand from citizen. You need examples? Use CPF OA for housing is one such change.

Well, this is a forum, we all come here to share and debate the pros and cons of the 3 CPF Life Plans and various policies. Some come here for help/suggestions. By sharing different viewpoints, we hope people can better understand and make their own choice based on their own situations.

CPF Life is mandatory, so it is a no choice that we have to make a decision and choose the “best route to rome” for ourselves if we want to remain a Singaporean.

There is no pte annuity plan u can buy to replace CPF Life to opt out of it totally. Maybe u can find one for partial replacement or find some to supplement CPF Life. Those plans are called Retirement Income Plans, RIP, dun sound good right (someone joke about this on radio 958)

But my own research shows there is none worth the money to buy as the returns cannot beat the benefits of CPF Life. So I would suggest u explore other alternatives, unless u have no choice but to buy RIP.

 

[Merg91]

Agree.
This is a national scheme.
Some people here are not in this low end group & whatsoever they want are to priotise /advantages themselves first without the needed group considered.

A good govt would try to benefit > lower end but not
hurting too much to middle /high end.
And some modifications are needed at times.

We need to remember that CPF Life needs to cater to the lowest common denominator - people that depend fully on their CPF Life as their retirement income, that may not even have met the FRS. Perhaps they have been low income all their working life or perhaps they have been scammed out of all their cash balances. If you are rich or middle income, you will probably have other source of retirement income outside of CPF Life, so you can afford to play around with various CPF Life options to try to maximize returns that leaves some residual amount behind as inheritance.

 

[angtc11]

How do u get this median age 10 years increase?

I recall there were some calculations in this forum that the breakeven age is 90+ minus the life expectancy of 85 ~10

 

[angtc11]

The mean life expectancy at age 65 is 21.1, so the mean age of death of CPF Life members is about 86 years. Median would be about 87-88 years. Calculating by XIRR, breakeven for standard plan about 89 years, and standard plan beats basic plan at 88 years.

You calculated the breakeven to be below 90? Can share the calculations?

 

[romeo88]

You nailed it. I started out trying to find out and discover the rules of LIFE but end up with people who would not tolerate any criticism of LIFE, not even pointing out it is not what it is advertised and publicised to be, and who would use irrelevant comparison to distract and confuse, in the name of we know best and limpeh say so.

If it's a indeed an all-inclusive and fair system, why not be transparent about it and lay down all the pros and cons upfront, rather than obscuring all the rules and usually end up with partisan divide.

Well, this is a forum, we all come here to share and debate the pros and cons of the 3 CPF Life Plans and various policies. Some come here for help/suggestions. By sharing different viewpoints, we hope people can better understand and make their own choice based on their own situations.

CPF Life is mandatory, so it is a no choice that we have to make a decision and choose the “best route to rome” for ourselves if we want to remain a Singaporean.

There is no pte annuity plan u can buy to replace CPF Life to opt out of it totally. Maybe u can find one for partial replacement or find some to supplement CPF Life. Those plans are called Retirement Income Plans, RIP, dun sound good right (someone joke about this on radio 958)

But my own research shows there is none worth the money to buy as the returns cannot beat the benefits of CPF Life. So I would suggest u explore other alternatives, unless u have no choice but to buy RIP.

 

[romeo88]

It might be useful to know (if you've missed it) that based on historical data which shows life expectancy climbing up in the past (iirc at a rate of 0.3 year per year, and for male < 90 yo in 2017) that people draw a straight line and extrapolate it upwards and concluded that we are all going to live till 100 yo very soon and in time to come 200 yo.

I like cpf, I don't like cpf life.
Most people will not benefit from cpf life due to the high breakeven age, not unless the median life span increases 10 years and the payout per dollar of premium is maintained.

You haven't shared what you think about your interest on 385k balance between 70 and 85 (or whatever age you expire) going to the pool.

 

[Merg91]

This reminds me of the puzzles in the back
pages of my Reader's Digest readings.

Usually friends all start dying in Singapore should
be 60s - 70s.......

The principal of my time is 80. he was already an ah pek when he took over.i cannot be older than that

 

[Merg91]

Many may not want it.... no money, 99 years old hdb/condo lease expire & returned..... day & nite kbkp..at least still have CPF Life.

Don't laugh but it is coming.
But sooner or later most cancers are not deadly but
like diabetes /hypertension /HIV, become chronic diseases.
Dementia may be controlled /treated.

....... concluded that we are all going to live till 100 yo....

 

[romeo88]

And you think the expectancy is going to be 100 yo? Enlighten what has changed that we can now live much longer than 1 generation before us? The food we eat, the air we breath, the water we drink? Cancer drugs?

What is it so we can look at them one by one.

Edit additing below...

Just to add, could the graph be climbing up, and then taper off and stay flat at may be 85 yo, for the next few decades at least, or even starts to dip?

Many may not want it.... no money, 99 years old hdb/condo lease expire & returned..... day & nite kbkp..at least still have CPF Life.

Don't laugh but it is coming.
But sooner or later most cancers are not deadly but
like diabetes /hypertension /HIV, become chronic diseases.
Dementia may be controlled /treated.

 

[Merg91]

Everything helps in prolonging the life, with knowledge (vaccinations, healthy lifestyle, well controlled chronic medicines even for cancers).

We are not at war, India slum or Africa.
Some like SARS, ebola or 'super dengue' may kill some but that's it.

And you think the expectancy is going to be 100 yo? Enlighten what has changed that we can now live much longer than 1 generation before us? The food we eat, the air we breath, the water we drink? Cancer drugs?

 

[romeo88]

You're not answering... ignoring statistics for now, do you think you'll live till 100 yo? If you could share what is it that makes it a possibility ?

What you said below is what brought the graph to what it is, male just <80 as of 2017. What's the enabler from there on that the expectancy will be 100 very very soon ?

Everything helps in prolonging the life, with knowledge (vaccinations, healthy lifestyle, well controlled chronic medicines even for cancers).

We are not at war, India slum or Africa.
Some like SARS, ebola or 'super dengue' may kill some but that's it.

 

[dork32]

You calculated the breakeven to be below 90? Can share the calculations?

tangent's calculation is real, good and accurate. he uses xirr which is a good method of calculation.

other method that we used are to use an interest rate of 4% and estimate the real time value of the money, which bbc shoots down. according to him this 4% does not exists, though cpf life basic still gives 4%.

 

[dork32]

merg is like bbc.

grandmother story jit tua too. no numbers to back them up

but bbc is improving, he is putting more and more numbers into his arguments.