Retirement plan

[boredboiboi]

Hi,

Maybe for 20 years for age 60 and 15 years for age 65?

Hmm ok. Any budget? Premium paying term? And how much monthly income are you looking at?

 

[Nesplex]

As far as the second part, it doesn't really matter. Whatever you repay, whether it's $1 or $100,000, will earn 2.5% interest in your OA.

However, I don't think OA repayment should be your first or even second choice. In particular, if you have room below the CPF Annual Limit -- if your compulsory CPF contributions (employer plus employee) are below $37,740 for the year -- you can get >>2.5% interest from CPF. And, as mentioned, I don't think OA at 2.5% is attractive enough at age 42 versus simple dollar cost averaging into low cost, well diversified index funds.

Hi BBCWatcher, for a 65yo who has hit ERS and also maximised VC in 2021, can he/she still do a Housing Refund into OA? If yes, will this amount of Housing Refund money inside OA be available for withdrawal at anytime?

 

[snowcrabramyeon]

Hi BBCWatcher, for a 65yo who has hit ERS and also maximised VC in 2021, can he/she still do a Housing Refund into OA? If yes, will this amount of Housing Refund money inside OA be available for withdrawal at anytime?

Since you are considering Housing Refund, I presume you have some "spare cash" that you have that is uninvested? If all you are doing for your spare cash is out in fix deposit, then it is better to do refund unless you can find a fix D that can give you 2.5% interest. But you need to take note that withdrawal from CPF comes first from your SA, and then your OA.

 

[BBCWatcher]

Hi BBCWatcher, for a 65yo who has hit ERS and also maximised VC in 2021, can he/she still do a Housing Refund into OA? If yes, will this amount of Housing Refund money inside OA be available for withdrawal at anytime?

The answer to the first question is yes. The answer to the second question is yes but with the important caveat snowcrabramyeon described:

Since you are considering Housing Refund, I presume you have some "spare cash" that you have that is uninvested? If all you are doing for your spare cash is out in fix deposit, then it is better to do refund unless you can find a fix D that can give you 2.5% interest. But you need to take note that withdrawal from CPF comes first from your SA, and then your OA.

 

[myrick]

Hmm ok. Any budget? Premium paying term? And how much monthly income are you looking at?

Maybe payable over 5-10 yrs with monthly income $1k?

 

[Nesplex]

The answer to the first question is yes. The answer to the second question is yes but with the important caveat snowcrabramyeon described:

Thanks both snowcrabramyeon and BBCWatcher

 

[boredboiboi]

Maybe payable over 5-10 yrs with monthly income $1k?

1k income do u want it to be guaranteed or guaranteed + non guaranteed is 1k?

 

[myrick]

1k income do u want it to be guaranteed or guaranteed + non guaranteed is 1k?

Will prefer guaranteed $1k as the base.

 

[boredboiboi]

Will prefer guaranteed $1k as the base.

Ok. Will quote a few companies

 

[boredboiboi]

Will prefer guaranteed $1k as the base.

Quoted 2 company
Base on age next birthday 42 male non smoker
Company A
Income start age 60 for 20 years
Guaranteed 1k/month excluding bonus
Pay 5 years - $38886.10/year
Pay 10 years - $20238.60/year

Income start age 65 for 15 years
Guaranteed 1k/month excluding bonus
Pay 5 years - $28759.10/year
Pay 10 years - $14767.80/year


Company M
Income start age 60 for 20 years
Guaranteed 1k/month excluding bonus
Pay 5 years - $38820/year
Pay 10 years - $19873.01/year

Income start age 65 for 15 years
Guaranteed 1k/month excluding bonus
Pay 5 years - $27997/year
Pay 10 years - $14328/year

 

[snowcrabramyeon]

Any company offering the classic form of annuity?

 

[BBCWatcher]

Any company offering the classic form of annuity?

You mean single premium life annuities? Yes, a few. Manulife’s is probably the best of that type.

 

[boredboiboi]

Any company offering the classic form of annuity?

Yes as mentioned by BBC. U r looking at regular premium as quoted above or single premium?

 

[andyhtc]

Quoted 2 company
Base on age next birthday 42 male non smoker
Company A
Income start age 60 for 20 years
Guaranteed 1k/month excluding bonus
Pay 5 years - $38886.10/year
Pay 10 years - $20238.60/year

Income start age 65 for 15 years
Guaranteed 1k/month excluding bonus
Pay 5 years - $28759.10/year
Pay 10 years - $14767.80/year


Company M
Income start age 60 for 20 years
Guaranteed 1k/month excluding bonus
Pay 5 years - $38820/year
Pay 10 years - $19873.01/year

Income start age 65 for 15 years
Guaranteed 1k/month excluding bonus
Pay 5 years - $27997/year
Pay 10 years - $14328/year

Based on my calculation, if a person invests annually with a very modest return of 1% by himself e.g. Singapore Savings Bond, he will be better off.

 

[snowcrabramyeon]

Yes as mentioned by BBC. U r looking at regular premium as quoted above or single premium?

Sorry, I was asking on behalf of myrick, whether a classic form of annuity with a guaranteed payout of $1k a month (excluding bonuses) for the rest of his life, might better meet his needs.

 

[boredboiboi]

Based on my calculation, if a person invests annually with a very modest return of 1% by himself e.g. Singapore Savings Bond, he will be better off.

Thats only the guaranteed portion. There are still bonuses.

 

[boredboiboi]

Sorry, I was asking on behalf of myrick, whether a classic form of annuity with a guaranteed payout of $1k a month (excluding bonuses) for the rest of his life, might better meet his needs.

For income of lifetime, the income will be much lesser for same premium, or with the same payout, premium will be much higher

 

[SBC]

I am able to top up my CPF special account as it seems they are being transferred to my OA every month now.

I am age 42 this age and looking to draw down from age 60 or perhaps 65?

Anyone who is able to give me an illustration for the better plan in the market for comparison?

How far are you from FRS in your SA?

 

[myrick]

Quoted 2 company
Base on age next birthday 42 male non smoker
Company A
Income start age 60 for 20 years
Guaranteed 1k/month excluding bonus
Pay 5 years - $38886.10/year
Pay 10 years - $20238.60/year

Income start age 65 for 15 years
Guaranteed 1k/month excluding bonus
Pay 5 years - $28759.10/year
Pay 10 years - $14767.80/year


Company M
Income start age 60 for 20 years
Guaranteed 1k/month excluding bonus
Pay 5 years - $38820/year
Pay 10 years - $19873.01/year

Income start age 65 for 15 years
Guaranteed 1k/month excluding bonus
Pay 5 years - $27997/year
Pay 10 years - $14328/year

Thanks for this! Let me think through first.

 

[Finmall]

you have 23 years to 65. Your FRS is likely to grow with min sum at 55. Assuming you plan to continue to work till 65, the 23 years is a good runway to accumulate more; hence you can afford to be more aggressive than the annualised 2 - 4%

If your plan is to stop work at 55, then the immediate concern is between 55 - 65 and you have only 13 years runway.