private annuities

[BBCWatcher]

Do you know if one can withdraw for 9 years from SRS, and then on the 10th year start the annuity?

I think you're asking whether you can buy the single premium life annuity in the 10th withdrawal year. From what I can tell in reading through MOF's SRS documentation, yes. The caveat is that the insurer might have a maximum entry age, so just watch out for that.

 

[foozgarden]

Bbcw, can you explain more on the joint spouse annuity?
It continues to pay even after the first spouse pass on.
But does the payout remain the same?

Unusual, but possible. It's more common among foreigners (non citizens/non PRs) since they are allowed to contribute substantially more into SRS each year.

 

[BBCWatcher]

Bbcw, can you explain more on the joint spouse annuity? It continues to pay even after the first spouse pass on. But does the payout remain the same?

Yes, it's usually called a "joint life" annuity. It doesn't have to be a spouse as the joint life annuitant, but that's the most common scenario. It's really very simple how it works: the annuity payment is made to primary policyholder and then, if the joint annuitant survives the primary, to the joint annuitant. And it's just a single stream of payments, unbroken. If it's a level nominal payout, then that's what it is, or hypothetically it could be an escalating stream.

As an example, U.S. Social Security retirement benefits are joint spousal life, including the surviving legal spouse (including now same sex spouses, and in some cases ex-spouses). They are also escalating, keyed to the U.S. Consumer Price Index.

 

[henrylbh]

Any idea if one can do something like that, in the scenario below?

At age 62, has $800k in SRS. Decided to withdraw $40k per year for 9 years. So left with $440k after 9 years. Purchased a life annuity, and the life annuity starts to payout @ $40k/year from age 71 onwards..

From what I know, any balance in any form in SRS at the end of 10th year will be subject to tax based on 50% of balance. The value of the instrument will depend on the operator.

 

[henrylbh]

800k in srs?!!

Possible only if you got a few multi baggers in your ventures and then it will be pay back time

 

[maple96]

Any idea if one can do something like that, in the scenario below?

At age 62, has $800k in SRS. Decided to withdraw $40k per year for 9 years. So left with $440k after 9 years. Purchased a life annuity, and the life annuity starts to payout @ $40k/year from age 71 onwards..

If the person die anytime after 62, only 400k less withdrawals in the first 10 years is tax exempt?

 

[BBCWatcher]

From what I know, any balance in any form in SRS at the end of 10th year will be subject to tax based on 50% of balance. The value of the instrument will depend on the operator.

There is one exception to the "10 year rule": a single premium life annuity. In fact, you can buy more than one of them, and they all can run past the 10 year window without being treated as a deemed withdrawal. They are still SRS distributions, of course, so 50% of each gross annuity payout would be treated as taxable income in the calendar year it's received.

 

[foozgarden]

bumping to the top.
i need some advice for the following.

62 earlierst withdrawl age.
69 curent age (70 next birthday)
80k in SRS (in UT, which i assume needs to be sold?)
20~25k pa other course of income

whats the stradegy to prevent penalty?
unlikely, cash withdrawl will work, since the limit is 40k pa (penalty free)

IFA are welcome to PM me.

 

[foozgarden]

Yes, it's usually called a "joint life" annuity. It doesn't have to be a spouse as the joint life annuitant, but that's the most common scenario. It's really very simple how it works: the annuity payment is made to primary policyholder and then, if the joint annuitant survives the primary, to the joint annuitant. And it's just a single stream of payments, unbroken. If it's a level nominal payout, then that's what it is, or hypothetically it could be an escalating stream.

As an example, U.S. Social Security retirement benefits are joint spousal life, including the surviving legal spouse (including now same sex spouses, and in some cases ex-spouses). They are also escalating, keyed to the U.S. Consumer Price Index.

i think this is the only joint life annuity in sgp?

TM Retirement PaycheckLife, which is the only joint-life option retirement plan in the market providing the same income stream for the surviving spouse.

Mr Tay says this plan would help women who, apart from living longer, also leave the workforce prematurely to take care of their families, thereby leaving them more vulnerable to the danger of inadequate funds for their retirement or old age.

 

[BBCWatcher]

i think this is the only joint life annuity in sgp?

TM Retirement PaycheckLife, which is the only joint-life option retirement plan in the market providing the same income stream for the surviving spouse.

Possibly, but I don’t think Tokio-Marine offers fully SRS qualified life annuities.

 

[foozgarden]

Possibly, but I don’t think Tokio-Marine offers fully SRS qualified life annuities.

fair point

 

[foozgarden]

There is no best life annuity in the world, including CPF Life (at least as of now with current payout and bequest).

rephrased. best bang for buck

 

[BBCWatcher]

Ervino, take it elsewhere, please. This thread is entitled "private annuities," not "when are annuities appropriate?"

As it happens, the government (which sets all tax policies) provides one and only one exception to the normal 10 year tax advantaged SRS withdrawal period: single premium life annuities. Single premium life annuities are the only way to stretch out qualified SRS withdrawals without triggering a 10th year deemed SRS withdrawal. The income tax savings is real in particular circumstances.

Did a study on that but I won't go for any, all lousy, no best bang for buck, including CPF Life (if I have a choice).

And this is a dumb sentence, particularly when you don't seem to understand how SRS accounts work.

 

[foozgarden]

Did a study on that but I won't go for any, all lousy, no best bang for buck, including CPF Life (if I have a choice).

Problem with these life annuity schemes are that they give very good illustrations, non-guaranteed 4.5% etc, but in reality you won't get even close to half of those even 30 years there after.
For CPF Life, the problem is with the low payout and bequests, coupled with yearly adjustment that seem to be getting lower and lower (in the name of "increasing life-span" - I don't know how that can happen when their calculation for CPF Life payout and bequest already estimated that all of you will live till at least 93 years old, while 50% of men would be dead by 80 years old)!

lets stay in context of the thread.
everyone is entitled to their own opinion, and everyone situation is also different.
i respect your choice that you wont go for any.
since you can find a scheme or method that allows your money to work harder than cpf/annuities. =)

 

[JuniorLion]

I cannot comprehend people who enjoys making sweeping statements.

Example 1: "All life insurance policies suck"
Fact 1: I've held an endowment plan (in my own name, and commissions are paid by me), and the XIRR over 30 years is in fact 4.55% nett.

Example 2: CPF monies is not yours
Fact 2: My relative has been withdrawing money from his CPF life for 2 years now. Everything is as written on the website.


So people should stop all the scare tactics, as though everything is scam except for property.

 

[ocs_woodlands]

I cannot comprehend people who enjoys making sweeping statements.

Example 1: "All life insurance policies suck"
Fact 1: I've held an endowment plan (in my own name, and commissions are paid by me), and the XIRR over 30 years is in fact 4.55% nett.

Example 2: CPF monies is not yours
Fact 2: My relative has been withdrawing money from his CPF life for 2 years now. Everything is as written on the website.


So people should stop all the scare tactics, as though everything is scam except for property.

I digress but just to share that at the beginning of this year, I cashed out an ILP with AIA which I bought in 2001. Did a quick check with the financial calculator. After 17 years, the return is 4.7% which I feel is ok.

Posted with Common Sense HardwareZone Forums app

 

[JuniorLion]

I digress but just to share that at the beginning of this year, I cashed out an ILP with AIA which I bought in 2001. Did a quick check with the financial calculator. After 17 years, the return is 4.7% which I feel is ok.

Posted with Common Sense HardwareZone Forums app

Yep, not all insurance stuffs are that bad.

 

[WC32890]

I cannot comprehend people who enjoys making sweeping statements.

Example 1: "All life insurance policies suck"
Fact 1: I've held an endowment plan (in my own name, and commissions are paid by me), and the XIRR over 30 years is in fact 4.55% nett.

Example 2: CPF monies is not yours
Fact 2: My relative has been withdrawing money from his CPF life for 2 years now. Everything is as written on the website.


So people should stop all the scare tactics, as though everything is scam except for property.

I don't have a problem with that. What I have a problem with is insurance agents quoting sky high returns and saying its achievable

 

[JuniorLion]

I don't have a problem with that. What I have a problem with is insurance agents quoting sky high returns and saying its achievable

Let's get the thread back on topic - this thread is on private annuities.

Personally, I'm a fan of combining CPF ERS with SRS Private annuities (at this moment NTUC Guaranteed Life Annuity) to ensure I enjoy my life at my golden years; assuming I stay alive till then.

 

[BBCWatcher]

Personally, I'm a fan of combining CPF ERS with SRS Private annuities (at this moment NTUC Guaranteed Life Annuity) to ensure I enjoy my life at my golden years; assuming I stay alive till then.

That's a perfectly reasonable combination. Both are tax advantaged (CPF LIFE up to FRS), and there's absolutely nothing wrong with enjoying some tax savings while achieving one's goals.

Note that you are evidently allowed to use a big SRS to buy a qualified life annuity then opt out of CPF LIFE. If you do that, your Retirement Account continues to collect the prevailing interest, as I understand it. And that could be an interesting play if you think the CPF LIFE plus private annuity payouts will be "too much." Furthermore, I think you're allowed to change your mind and hop back into CPF LIFE as long as you do it strictly before your 80th birthday. But please check all that carefully if it interests you.