Need advice on CPF R.A

[Tengaboys]

On behalf of my Fil who is 74 now.
This month his RA monthly went up from 1040 to 1900 due to some Manpower Ministry changes. This will last him till 82.
1900 is just too much and not safe lying around in his bank. If he lives beyond 82 he will have zero in RA.

What will be Yr advice. How can I help him manage his funds.

 

[tangent314]

He should probably join the CPF Life scheme

https://www.cpf.gov.sg/members/FAQ/...ent Sum Scheme&folderid=20016&ajfaqid=7527450

 

[SKenny]

TS,
He can "re-deposit" some of it back to CPF via either Voluntary Contribution (VC) or Retirement Sum Topping-Up (RSTU).

PS: are you sure that his RA will be depleted when he is 82? Is it a typo?

 

[BBCWatcher]

He should probably join the CPF Life scheme

That'd be the most straightforward solution, and it's likely an excellent one. However, I too question whether this RA payout stream ends at age 82. That seems a little early. Let's make sure we understand the facts first before leaping to a firm conclusion.

Could this jump from $1,040/month to $1,900/month include a new, additional payout from the "Silver Support Scheme"? Just a wild guess.

 

[maple96]

On behalf of my Fil who is 74 now.
This month his RA monthly went up from 1040 to 1900 due to some Manpower Ministry changes. This will last him till 82.
1900 is just too much and not safe lying around in his bank. If he lives beyond 82 he will have zero in RA.

What will be Yr advice. How can I help him manage his funds.

Effective 2020, "Retirement Sum Scheme (RSS) payouts will last up to age 90* at most, instead of age 95. Hence older members who are already receiving payouts with duration exceeding age 90 will have their payout amount adjusted upwards" ==> from CPFB website.

Where did u get the 82 from?

Does your FIL think he can life past 90?

He dun need the 1900 per mth? He dun need these monies for survival or emergency use?

Then he can always topup (see note A below) to his RA to earn 4% interest plus increase his future payouts in the next CPF annual review. If he continues to topup his RA, it will likely extend beyond 90 closer to 90.

Note A: He can topup his RA to ERS. To get tax relief, "he" can topup to current FRS. U or your wife or "others" who need tax relief can make arrangement with your FIL to pass the mthly payouts to u or wife (assuming u or wife want to enjoy tax relief) to do the topup to his RA to get tax relief. Get him to login to CPF website to check how much he can topup to current FRS.

Option2: should he need these monies for emergency use, then he can always do VC-3A. But first check his MA balance as the bulk of the VC will go to MA.

 

[maple96]

He should probably join the CPF Life scheme

https://www.cpf.gov.sg/members/FAQ/...ent Sum Scheme&folderid=20016&ajfaqid=7527450

That'd be the most straightforward solution, and it's likely an excellent one. However, I too question whether this RA payout stream ends at age 82. That seems a little early. Let's make sure we understand the facts first before leaping to a firm conclusion.

Could this jump from $1,040/month to $1,900/month include a new, additional payout from the "Silver Support Scheme"? Just a wild guess.

Just because he dun need the mthly payout now, so both of u are suggesting he should pay "estate duty" by joining CPF Life should he die earlier than expected?

 

[rrr2015]

probably this … agree why join CPF life unless confident living beyond 90 lolz
https://www.cpf.gov.sg/members/abou...Scheme-payout-duration-and-CPF-interest-rates

 

[BBCWatcher]

probably this … agree why join CPF life unless confident living beyond 90 lolz

I'm sorry, but this is dumb.

What if he's only "slightly" confident of living past age 90? Are you recommending that he take (let's suppose) a 5% chance that he actually does live past age 90, and that his income suddenly drops to zero, even when he doesn't need the big payout he's getting now?!?!?

FFS, people, this stuff is not a game! And I'm really getting sick of the games. Many, many people understandably do not want to run any risk of outliving their savings. CPF LIFE is always a very fair offer to eliminate the risk of elder destitution, insofar as the Singapore government survives. That financial security is worth something. We can quibble about how much, and for whom, and how much above zero we want to defend/protect, but it's worth something.

 

[Tengaboys]

TS,
He can "re-deposit" some of it back to CPF via either Voluntary Contribution (VC) or Retirement Sum Topping-Up (RSTU).

PS: are you sure that his RA will be depleted when he is 82? Is it a typo?

Hi, yes I can confirm that it is clearly stated till age 82.
In the letter from CPF:
Ministry of manpower announced in november 2019 that the retirement sum scheme has been revised.

Payout has been revised from current 1040 to 1900. This is estimated to last you till 82.

 

[BBCWatcher]

Hi, yes I can confirm that it is clearly stated till age 82.
In the letter from CPF:
Ministry of manpower announced in november 2019 that the retirement sum scheme has been revised.

Payout has been revised from current 1040 to 1900. This is estimated to last you till 82.

OK, that's really quite odd. Statistically, if he's in average or better health, a 74 year old male is much more likely than not to live past age 82.

At age 74 he was born in 1945 (or very early in 1946), and that means his Payout Eligibility Age was 62. So it looks like CPF has recalculated his RSS payouts to last for 20 years. Including bonus interest, which is puzzling.

Anyway, as Tangent314 pointed out, CPF LIFE is an alternative. Switching to CPF LIFE would restructure his income from his Retirement Account to last for his entire lifetime, however long it lasts. There are three CPF LIFE payout plans available. Any switch must be made before his 80th birthday, but if his Retirement Account is depleting this quickly then I don't think it'd be a good idea to wait that long.

As an aside, I'm really not sure why the government made this blanket change for everyone, without individual requests. It seems like a recipe for disaster, and it's good your father in law noticed the problem. Not everybody will.

 

[maple96]

U mentioned Nov 2019 revision/letter?

In 2020, there is a new revision to age 90, see my prior post. However CPF website state if the member is already getting higher payout than this new revision, his payout will not be revised.

Since u mentioned he dun need the higher payout, means he do not need CPF RSS payout for survival, he has other sources of funds or support for his survival and emergency needs?

So he just need strategies to grow or manage this "excess cash"?

With excess cash, why would he be worried about outliving his funds even if he is in excellent health conditions?

If he is seriously worried about too much monies from CPF RSS payout, I would suggest he meet or write in to CPFB to revise down his payout based on “2020 RSS payout till 90” rules such that his payout will last till 90.

But think carefully, cos he will not get 1900 if he needs it in future, unless he continues the RA topup I suggested in my prior post which might create the possibility?

Having an old folk under RSS makes a perfect investment vehicle for me if I have the choice and am willing and able to support the old folk till death. Ms Lorna Tan is one such smart person u can learn from. I supported my parents till their death.

I will not kill this golden goose (RSS) by forcing him to “pay estate duty” by joining CPF Life. But he is not your father. You know him, his health, potential life span and finances better.
*
CNY is around the corner, "siew kang" liao, good luck.

 

[dork32]

I'm sorry, but this is dumb.

What if he's only "slightly" confident of living past age 90? Are you recommending that he take (let's suppose) a 5% chance that he actually does live past age 90, and that his income suddenly drops to zero, even when he doesn't need the big payout he's getting now?!?!?

FFS, people, this stuff is not a game! And I'm really getting sick of the games. Many, many people understandably do not want to run any risk of outliving their savings. CPF LIFE is always a very fair offer to eliminate the risk of elder destitution, insofar as the Singapore government survives. That financial security is worth something. We can quibble about how much, and for whom, and how much above zero we want to defend/protect, but it's worth something.

i am sorry, this is super dumb.

if it is just 5% chance, all the more you should not be going for cpf life. chances of you losing out is big. if the chances are so remote, it is better to use other measures other than cpf life.

kenny already gave the suggestion. take wat you want from the payout. excess can be put back so that you can get amp. this will allow the payout to last a long long time.

and yeah yeah, only cpf life can save us from elderly destitution.

 

[BBCWatcher]

These arguments are utterly ridiculous. CPF LIFE is very, very fair, and it doesn't require 90+ year olds to try to figure out how to redeposit funds manually to eke out $5 more for a grandchild who doesn't even visit, for example.

Cut the crap, seriously. Let's let our elders live financially securely for all their days. They deserve it.

In this thread we evidently have a 74 year old father in law who will see his retirement income from CPF end at age 82. Statistically, if he's in average or better health, there is a much greater than 50% chance he will outlast his retirement income. The CPF Board recommends that everyone concerned about outliving their savings should consider CPF LIFE. The CPF Board is absolutely correct. It's a great offer, and it most effectively combats the longevity risk. No muss, no fuss.

 

[Okenba]

From a numbers perspective, it is probably true that RSS is more "worth it".
(I have not run the numbers and don't intend to.)

However, frankly:
- Members of this forum are probably more financially savvy than the average 74 year old.
- At 74 yrs old, I really don't want to bother doing calculations to squeeze out the last cent from CPF.
- Even if I could bother, health and mental ability at 74 certainly may not match health and mental ability before 74. 50+, 40+, 30+, etc.
- Even my kids or their spouses might not have the inclination to do the sums and intercede on my behalf.
- Even if they could and may want to, my mental state might not allow them to. (Eg. Early Dementia?)

Frankly, while DIY through RSS may be more 'efficient' and more 'worth it', when I get older, I suspect I would just want to take my hands off the wheel and have a consistent income anyway.

Sure, this may not be an immediate change. IE. I may not suddenly at 65 think that I don't want to be as active in managing my finances. But as I get older, I would think that I would trend towards that.

Your mileage may vary.

 

[dork32]

These arguments are utterly ridiculous. CPF LIFE is very, very fair, and it doesn't require 90+ year olds to try to figure out how to redeposit funds manually to eke out $5 more for a grandchild who doesn't even visit, for example.

Cut the crap, seriously. Let's let our elders live financially securely for all their days. They deserve it.

you can dump your grandpa in your own country and run here.

we dont. we do visit our grandpa regularly.

 

[dork32]

However, frankly:
- Members of this forum are probably more financially savvy than the average 74 year old.
- At 74 yrs old, I really don't want to bother doing calculations to squeeze out the last cent from CPF.
- Even if I could bother, health and mental ability at 74 certainly may not match health and mental ability before 74. 50+, 40+, 30+, etc.
- Even my kids or their spouses might not have the inclination to do the sums and intercede on my behalf.
- Even if they could and may want to, my mental state might not allow them to. (Eg. Early Dementia?)

people that cannot do proper maths will speak this way. we will optimize as much as possible.

 

[BBCWatcher]

From a numbers perspective, it is probably true that RSS is more "worth it".

Only if you're risk loving or risk neutral. If you're rationally risk averse, as most people are, it doesn't make sense.

CPF LIFE is fundamentally longevity insurance, but it has several special characteristics:

1. It's offered by a sovereign government, with low overheads and on a not-for-profit basis (no dividends to insurance company shareholders, for example);

2. It's technically voluntary but effectively compulsory, which means the risk pool is excellent;

3. It offers unique Singapore tax advantages;

4. It offers unique asset protection features, including in the conveyance of any residuals to heirs;

5. The CPF Board is really rather good in serving elderly members, for example in Community Centres.

It's a genuinely good program, and for basic lifetime retirement income security in Singapore it's unbeatable.

 

[dork32]

people that cannot do proper maths will speak this way. we will optimize as much as possible.

there are people like us that will put money in uob1 and multiplier. there are also those that prefer to put it in everyday savings

 

[dork32]

Only if you're risk loving or risk neutral. If you're rationally risk averse, as most people are, it doesn't make sense.

you are wrong again. do you know the definition of risk? standard deviation is a measurement of risk.

with the rss, the standard deviation is 0. it means whatever happens, you draw will draw out what you put in.

with cpf life, the standard deviation is not 0. the amount you draw out depends on how long you live.

er.. do you know wat is standard deviation? you maths enuf or not?

 

[dork32]

In this thread we evidently have a 74 year old father in law who will see his retirement income from CPF end at age 82. Statistically, if he's in average or better health, there is a much greater than 50% chance he will outlast his retirement income. The CPF Board recommends that everyone concerned about outliving their savings should consider CPF LIFE. The CPF Board is absolutely correct. It's a great offer, and it most effectively combats the longevity risk. No muss, no fuss.

i am not tokking about 74 or 82 or 59% chance of survival

i am tokking about you saying it is better to switch to cpf life if the chance of survival is 5%. this is utter trash.

wat you mean by no fuss. you still have to go cpf building sign forms and all the crap to switch to cpf life. stay in the rss is the real no fuss