Lifetime annunity plans

[athletic91]

Like China taiping infinite harvest. Pays a constant monthly income for life.
where the competing products from other Brand’s ?
Possible to opt out of cpf life as it’s a lifetime annunity ?

 

[boredboiboi]

Like China taiping infinite harvest. Pays a constant monthly income for life.
where the competing products from other Brand’s ?
Possible to opt out of cpf life as it’s a lifetime annunity ?

Most company have similar plan. Previously check manulife retireready plus allow you to replace cpf life but the return will not be as good as cpf life. Cpf life has the best return

similar example
Manulife - signature income, income start as early as 37th month

aviva- mylifeincome , income from end of year 5

i would say use it to compliment instead if replace.

 

[reddevil0728]

can consider premium financing for better returns

 

[BBCWatcher]

I haven't updated the informal list I've been keeping since 2019, but you can find a 2019 blog article about it here. At some point I'll probably go update my list, when I get around to it.

I completely agree with BoredBoiBoi: you shouldn't buy a life annuity in order to opt out of CPF LIFE. That's just not financially smart. And if you think you can buy a life annuity in order to opt out of CPF LIFE and keep your dollars in your CPF Retirement Account, no, sorry, that's not allowed. Opting out of CPF LIFE means you must withdraw your funds from your RA, and thus they won't earn that lovely CPF RA interest. That's not how the deal works. Since 4% interest spinning into a low cost/low overhead life annuity is VERY attractive, you should not only keep it but max it out (push your RA up to the ERS from age 55, and keep pushing it up when the ERS is raised) before considering a private life annuity.

In certain "edge" cases it might make sense to buy a life annuity from a reputable, high quality life insurer -- perhaps even a life annuity denominated in another currency. For example, if you're married to someone who is not a CPF member, or if you plan to have a retirement spanning a couple countries, it might make sense. (CPF doesn't offer a joint or contingent life annuity, which I happen to think is a shortcoming that CPF should tackle.) Also, if you end up with a really huge Supplementary Retirement Scheme account balance -- over S$400K -- then it might make sense to buy Manulife's fully SRS qualified single premium life annuity since that'd let you stretch the withdrawals beyond the 10 year window to keep your tax bracket low or zero.

It's very, very hard for me to understand why people buy limited term annuities, i.e. annuities that don't pay for life, however long it lasts. Maybe someone can give me a good argument in favor of that sort of annuity, but I'm still looking for one.

 

[Dividends]

Nothing beats CPF life, unless you're getting a leveraged annuity. But that comes with its own set of risks for the additional returns.

 

[boredboiboi]

I haven't updated the informal list I've been keeping since 2019, but you can find a 2019 blog article about it here. At some point I'll probably go update my list, when I get around to it.

I completely agree with BoredBoiBoi: you shouldn't buy a life annuity in order to opt out of CPF LIFE. That's just not financially smart. And if you think you can buy a life annuity in order to opt out of CPF LIFE and keep your dollars in your CPF Retirement Account, no, sorry, that's not allowed. Opting out of CPF LIFE means you must withdraw your funds from your RA, and thus they won't earn that lovely CPF RA interest. That's not how the deal works. Since 4% interest spinning into a low cost/low overhead life annuity is VERY attractive, you should not only keep it but max it out (push your RA up to the ERS from age 55, and keep pushing it up when the ERS is raised) before considering a private life annuity.

In certain "edge" cases it might make sense to buy a life annuity from a reputable, high quality life insurer -- perhaps even a life annuity denominated in another currency. For example, if you're married to someone who is not a CPF member, or if you plan to have a retirement spanning a couple countries, it might make sense. (CPF doesn't offer a joint or contingent life annuity, which I happen to think is a shortcoming that CPF should tackle.) Also, if you end up with a really huge Supplementary Retirement Scheme account balance -- over S$400K -- then it might make sense to buy Manulife's fully SRS qualified single premium life annuity since that'd let you stretch the withdrawals beyond the 10 year window to keep your tax bracket low or zero.

It's very, very hard for me to understand why people buy limited term annuities, i.e. annuities that don't pay for life, however long it lasts. Maybe someone can give me a good argument in favor of that sort of annuity, but I'm still looking for one.

why most pple choose limited payout over lifetime because they usually think they will live till 85-90
And in which base on returns calculation, the return will be much higher for limited return, example of income from 65-85 for limited payout vs lifetime return from 65-85. But anything above 85, have to have some backup plan.
which is why limited is recommended to compliment cpf life and supposely after age 85 spending power is way lesser than before age 85.

 

[xtwis7]

CPF life should always be the primary annuitity that anyone needs. Beyond that, why some people look at private life annuities are reasons such as earlier payout ages and transferring of wealth to the next generation.

Without leveraging, the yield may not be attractive enough for most to consider.

 

[athletic91]

What do you think of buying such plans for your children to give them lifelong income

 

[reddevil0728]

What do you think of buying such plans for your children to give them lifelong income

It’s like a legacy planning tool

 

[BBCWatcher]

What do you think of buying such plans for your children to give them lifelong income

It’s like a legacy planning tool

If you're going to do something like that you really need to take inflation into account. One option is to get an escalating life annuity. Another option (not mutually exclusive) is to layer life annuities, i.e. to have more than one life annuity but with staggered payout starting dates.

I don't think it's generally a good idea, though. Most children have long time horizons, and prudent, long-term investments work. Then that feeds into longevity insurance for the "final kilometers."

 

[Prof. Utonium]

It's very, very hard for me to understand why people buy limited term annuities, i.e. annuities that don't pay for life, however long it lasts. Maybe someone can give me a good argument in favor of that sort of annuity, but I'm still looking for one.

I find it pointless to get for life.

My retirement age is planned starting at 50 (Manulife RetireReady Plus).

Assuming I take a 5 years payout instead of 10. So from 50 to 55, I would be using this payout ($1k/mth for 10 years minimum, will assume $2k/mth for 5 years). Then from 55 to 65, I would be using my withdrawn CPF. Then 65 onwards, my CPFLIFE.

Assuming at 55 (3 decades later), my cohort's FRS is $360K, would be taking BRS hence $180K is able to be withdrawn. $18k/annum spending till CPFLIFE.

This is considering I still have my other instruments to rely on.

That was how I planned it in my mid 20s.

 

[BBCWatcher]

OK, but you don’t need an insurance company for a 5 year bridge. They’re not actually very good at that particular mission.

 

[Prof. Utonium]

Honestly, the private annuity was just a last resort safety net.

If I have to frank, CPF would give a better returns but I needed to allocated some sum to private annuity to balance out my "bond" and at the same time support my IFA, a small sum to pay to maintain some relationships.

 

[kickass22]

Honestly, the private annuity was just a last resort safety net.

If I have to frank, CPF would give a better returns but I needed to allocated some sum to private annuity to balance out my "bond" and at the same time support my IFA, a small sum to pay to maintain some relationships.

Curious. Why do you need to pay a small sum to maintain some relationship?

 

[Prof. Utonium]

Curious. Why do you need to pay a small sum to maintain some relationship?

Pardon me if I am a bit incoherent in my reply below, as I am a bit drunk right now.

You know your friend open new chicken rice store, you go down to support? Same same but different.

TL;DR: A firm believer of BTIR but needed a specific product to cater to my needs/plan, bought it since I am comfortable with the policy's coverage, returns & TDC and at the same time support my IFA whom had been very supportive to me despite me not being a cash cow.

---

So background was that I was looking for a product other than saving plans to supplement my retirement during my mid 20s. CPF+private annuity+equities, from lowest risk to highest risk which then CPF(SA)+private annuity will form my "bond". A buy and forget product while I devote more attention to my equities if required, and assume more risk while knowing that there is a safety net for me to fall on to if equities portion fail (worst case scenario).

So I came across private annuity. Made some comparison and found that Manulife was bang for buck at that point of time (I think now NTUC is not bad too). Hit up my IFA and inquire more on it then bought it.

My rationale at that point of time; I do not wish to rely solely on CPF due to the possibility of shifting goalpost and I do not wish to put into SSB as the returns are not attractive. Sure there are other bond instruments (ETF) that can definitely generate higher returns, but I was looking at something similar to CPF annuity and one that can complement alongside it. Hence concluding to a private annuity.

It was a lump sum payment with estimated total returns of >=$100k (conservative/guaranteed estimate) 2-3 decades later. The premium also represents <10% of NW at that point of time, so I was fine with locking it to prevent accidental usage or losses due to dabbling in equities.

With such variables above and I am not looking into VC/top up cash into CPF, thus I took that route.

However, with that being said I can assure you CPFLIFE is really the best annuity plan you can have. If you have restricted cash flow or am fine with going all out on CPF, do maximize it to the fullest potential. Best bang for bucks.

 

[kickass22]

Pardon me if I am a bit incoherent in my reply below, as I am a bit drunk right now.

You know your friend open new chicken rice store, you go down to support? Same same but different.

TL;DR: A firm believer of BTIR but needed a specific product to cater to my needs/plan, bought it since I am comfortable with the policy's coverage, returns & TDC and at the same time support my IFA whom had been very supportive to me despite me not being a cash cow.

---

So background was that I was looking for a product other than saving plans to supplement my retirement during my mid 20s. CPF+private annuity+equities, from lowest risk to highest risk which then CPF(SA)+private annuity will form my "bond". A buy and forget product while I devote more attention to my equities if required, and assume more risk while knowing that there is a safety net for me to fall on to if equities portion fail (worst case scenario).

So I came across private annuity. Made some comparison and found that Manulife was bang for buck at that point of time (I think now NTUC is not bad too). Hit up my IFA and inquire more on it then bought it.

My rationale at that point of time; I do not wish to rely solely on CPF due to the possibility of shifting goalpost and I do not wish to put into SSB as the returns are not attractive. Sure there are other bond instruments (ETF) that can definitely generate higher returns, but I was looking at something similar to CPF annuity and one that can complement alongside it. Hence concluding to a private annuity.

It was a lump sum payment with estimated total returns of >=$100k (conservative/guaranteed estimate) 2-3 decades later. The premium also represents <10% of NW at that point of time, so I was fine with locking it to prevent accidental usage or losses due to dabbling in equities.

With such variables above and I am not looking into VC/top up cash into CPF, thus I took that route.

However, with that being said I can assure you CPFLIFE is really the best annuity plan you can have. If you have restricted cash flow or am fine with going all out on CPF, do maximize it to the fullest potential. Best bang for bucks.

As Morgan Housel says, whatever fits and works for you and lets you sleep at night is the best plan. Thank you for taking the time to reply. =)