it just means that all the annuities are rubbish and we should not be putting money into rubbish.
That doesn't follow.
Insuring against outliving your savings, with ironclad protection (extremely reliable payout), isn't necessarily "cheap." That's rather the point. It takes some financial backing to make and to keep that commitment.
if is like a bank is offering an interest of 0.1% whereas the rest of the world is offering 0.05%. You tell everyone this bank is giving a fantastic rate. No, they are all offering rubbish rates.
By what standard? If there's little or no inflation, or deflation, 0.1% truly is fantastic. Are you familiar with Japan?
Usain Bolt ran the 100 meter dash in 9.572 seconds. There have been other many other sprinters who have run the 100 meter dash in under 10 seconds. Sports researchers believe that the fastest among our species might be able to get as low as 9.27 seconds. Theoretically. So is Bolt's 9.572 second sprint "rubbish"? No, of course not. He holds the world record. He's the best. The theoretical best performance is only theoretical. We live in the real world.
CPF LIFE is the best value (and highest quality, as it happens) guaranteed lifetime annuity paying in Singapore dollars. Metaphorically, it's also a 9.7 second 100 meter sprinter among U.S. lifetime annuities. CPF LIFE is world class. There's a benchmark here.
If you want to describe
all guaranteed lifetime annuities as "rubbish" then what's the alternative insurance to protect against outliving savings? For example, is your alternative proposal that the children and grandchildren of elderly Singaporeans be required to backstop their elders? (And what about elder Singaporeans with no children?) What's the alternative, realistic proposal to address this very real problem (elder destitution)?
if i have money, is buying annuity the only choice? is it possible look for other instruments?
What other instrument(s) insure against outliving one's savings?
if you die before 92, you LOSE.
That calculation is wrong, as already pointed out. You can't assume that CPF's interest rates are some universal constant, and then plug those into an annuity calculation. The world doesn't work that way.
But no, you don't "lose." You might otherwise be destitute at age 65 or at any point thereafter. CPF LIFE means you won't be, not utterly. The monthly payment stream is itself an important aspect of the insurance. Just as it was with the Retirement Sum Scheme. The problem with RSS was that it was/is common to outlive RSS. CPF LIFE fixes that.
And beyond that, do you still not understand what insurance is? You're not a property insurance "loser" when your home fails to burn down. You were simply insured against a risk that did not befall you, personally. Thank goodness it didn't befall you. A lifetime guaranteed annuity is like that, with only one difference: you're hoping to live a long time. You're hoping for the fire, so to speak. You're insuring to protect against the
happy event of living a long, long time. But it's otherwise the same basic insurance principle.
Are you a MediShield Life "loser" when you don't get sick, die suddenly of a stroke at home in your sleep, and go directly to your funeral? No, you were lucky, healthy, and had basic medical insurance just in case you weren't. You can't predict this stuff, and that's why there's insurance.
What I suspect is possible is that rather well-to-do people are making these sorts of arguments because they think they're invincible, and they don't like the idea of universal participation. But I think that's pretty ridiculous. Even if you are one of those people and think that you're exceptional, and you ought not be required to participate in CPF LIFE, if you are truly wealthy then CPF LIFE is so tiny you really ought to get a life (pun intended) and worry about real problems. This tiny bit of longevity insurance simply won't affect you, the filthy rich invincible.
hope no error in formula.
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