Retirement plans

[polyglob]

Mine is a 10 years premium and only can see results thereafter.. so for now no money is good as dumping away. No interest, and no guarantees and no capital if surrender..

If you share details of whatever you bought, other posters can review and tell you whether better to keep or to cut. If to keep, then just be patient. Eat mentos also need to kam until shell crack then get the candy inside right.

 

[SBC]

Saw 2-3 Facebook groups posting for retirement ideas using CPF. Also promised up to $800 vouchers.

Anyone gathered useful info to share?

 

[Battery Operator]

What made you regret?

I am very happy with my TM retirement so far (single pay and has started receiving monthly payout after waited for 5 years accumulation period).

Mummynew, I assumed this is related to TM INFINITE VIP, whereby each single premium block of $133,350 and the payout per month is $500? Can you kindly share if the payout is $500 per month? Mine is not due till July 2021. Thanks for sharing, if possible.

 

[mummynew]

Mummynew, I assumed this is related to TM INFINITE VIP, whereby each single premium block of $133,350 and the payout per month is $500? Can you kindly share if the payout is $500 per month? Mine is not due till July 2021. Thanks for sharing, if possible.

Yes is the above series.

So far has been paying as per the 4.75% figures for more than a year. Pray it will maintain that way...

 

[ceciltan]

I would suggest travel around to cheaper locations around the world.

 

[Battery Operator]

Yes is the above series.

So far has been paying as per the 4.75% figures for more than a year. Pray it will maintain that way...

Thanks for sharing, much appreciated.

 

[ment0smintz]

This part about 'no money is good as dumping away'. Are you referring to as of now you can't see the money or you have no money to pay thru the 10 years?

If you mean can't see the money, then the feature of the product is like this for most if not all insurance products. Insurance products need time (usually 20 years) to see meaningful returns. As said, time flies and so need patience (for me, I have had two 25-year endowment policies matured years ago with the final one maturing next year and so can really feel 'time flies'.)

If you mean no money to support in foreseeable near future, then may consider to cut loss. Any insurance product if one wants to surrender will suffer heavy losses and so must think carefully before entering.

I have to pay through 10 years... But there is no growth and capital of surrender is a loss... It's so much cons for now... After 10 years premium... I will have my guarantee but the guaranteed and non guaranteed starts after 10 years ... And also have not include deductable...it is loss and the loss if I surrender at anytime... but the pro is after 60 years old I can receive an amount 9.8K... at 70 I will receive the remaining after I complete... Aiyo... Money can see but cannot touch... Worst than cpf..

 

[ment0smintz]

If you share details of whatever you bought, other posters can review and tell you whether better to keep or to cut. If to keep, then just be patient. Eat mentos also need to kam until shell crack then get the candy inside right.

Have to pay finish all... But anyway it's not worth it... If I put stashaway or somewhere else I prolly can earn more or use it anytime...

 

[boredboiboi]

I have to pay through 10 years... But there is no growth and capital of surrender is a loss... It's so much cons for now... After 10 years premium... I will have my guarantee but the guaranteed and non guaranteed starts after 10 years ... And also have not include deductable...it is loss and the loss if I surrender at anytime... but the pro is after 60 years old I can receive an amount 9.8K... at 70 I will receive the remaining after I complete... Aiyo... Money can see but cannot touch... Worst than cpf..

U need to know the objective of the plan. When u buy, by right your agent should have tell u that surrender at certain point of time will be a loss.
Capital guaranteed usually is during the payout period start

 

[ment0smintz]

U need to know the objective of the plan. When u buy, by right your agent should have tell u that surrender at certain point of time will be a loss.
Capital guaranteed usually is during the payout period start

He only says good enough to cover inflation.. and I also simple minded don't know how to think anyhow buy... Now money can see cannot use... I might as well single premium paid better right?? Quickly aid off premium and see it's growth like mummynew. Now have to kiv money to the insurance and cannot use and not mine liddat.. still give insurance 10 years money without interest... Fk... 15 years no money Simi sai...

 

[boredboiboi]

He only says good enough to cover inflation.. and I also simple minded don't know how to think anyhow buy... Now money can see cannot use... I might as well single premium paid better right?? Quickly aid off premium and see it's growth like mummynew. Now have to kiv money to the insurance and cannot use and not mine liddat.. still give insurance 10 years money without interest... Fk... 15 years no money Simi sai...

Isnt single premium more shag? Where u can now easily grow the balance compare against single premium.

 

[nautilus]

Have to pay finish all... But anyway it's not worth it... If I put stashaway or somewhere else I prolly can earn more or use it anytime...

It seems that in your case, since you've finished paying your principal, it's best to wait till 40 yrs for the payout.

Assuming you only get the guaranteed payout, and if you terminate the policy now, you'll need to reinvest into something else that yields more than 3% PA in order to beat the guaranteed payout between now and 40 years. Unless you're really confident in beating that, it's best to just leave the policy running till 40 years.

 

[xtwis7]

Perhaps those proposed did not hear of financing for such products? Given that rates are incredibly low, many are not willing to downplay full single premium hence through financing, it frees up the rest of their cash flow for other purposes.

And almost all premium financing are servicing interest only with the option to redeem partially, as long as you give notice to the bank.

 

[mummynew]

He only says good enough to cover inflation.. and I also simple minded don't know how to think anyhow buy... Now money can see cannot use... I might as well single premium paid better right?? Quickly aid off premium and see it's growth like mummynew. Now have to kiv money to the insurance and cannot use and not mine liddat.. still give insurance 10 years money without interest... Fk... 15 years no money Simi sai...

usually if one allows a retirement plan to run it's full course, the return is about 4%.

Retirement plans, incl the CPF Life, will almost always have an 'accumulation period' during which 'cannot see money'. Usually the younger the person is, the plan will be with longer years for sufficient accumulation to match the buyer's retirement age. (I am in my mid 50s and so I opted for single pay and 5 years accumulation period to match my retirement needs. If I were younger, I doubt I will have sufficient resources to do that).

If you hold on and surrender the policy at 15th year, then you probably can get back at about 2.5% irr (I somehow do have faith that this will happen based on my own experience with TM). Then the irr goes higher if you are patient enough to let the policy runs thru the whole course. So perhaps you want to take it like a SSB or FD to feel better (I remember working out your plan has a gteed min of irr 1.5%).

The recent retirement plans i bought under my kids' name - need to pay 15 years and 'cannot see money' for 10 years before the payout start for 30 years (if surrender at 25th year, then the gteed surrender value yields irr 2.6%. The whole policy term is 55 years as compared to your 40 years (all these terms can be selected based on profiles).

Retirement plans are more for stability and not into higher returns like equities. After setting aside part of money into equities, this portion is the 'balancing' part in case the equities go wrong.

For those who are totally not into investments at all and with regular CPF contributions via work, retirement plans are not too bad actually. For those who really have the skills and stamina to do worthwhile investments (so far I dont really see most youngsters in their 20s/30s can learn more about investments without having themselves burnt once or twice first), then perhaps these plans will look like 'peanuts' to them.

Take it like 'forced saving' with the 15th year as your first goal? By then, look at the updated BI to see whether TM honouring their 4.75% numbers or not then decide your next move of whether surrendering or keeping it (by then, your financial position is likely to change and your perspective on returns may also change accordingly).

 

[ment0smintz]

It seems that in your case, since you've finished paying your principal, it's best to wait till 40 yrs for the payout.

Assuming you only get the guaranteed payout, and if you terminate the policy now, you'll need to reinvest into something else that yields more than 3% PA in order to beat the guaranteed payout between now and 40 years. Unless you're really confident in beating that, it's best to just leave the policy running till 40 years.

Correction is 45...

 

[BBCWatcher]

For those who really have the skills and stamina to do worthwhile investments (so far I dont really see most youngsters in their 20s/30s can learn more about investments without having themselves burnt once or twice first), then perhaps these plans will look like 'peanuts' to them.

I don’t meet many people in that age range able to plonk down $100K+ single premiums, who don’t prematurely surrender the policies, who think 4%/year yields (at best; they’re not guaranteed) on 30+ to 60+ year money are attractive, and who plan to die 30 years after payout start. Am I not looking hard enough?

This is simply not an area where insurance companies are particularly helpful, not in this way. For starters, if you want a retirement plan, after you’ve maxed out CPF LIFE then consider a genuine life annuity. Then an insurance company is at least starting to do what an insurance company can do pretty well: insure.

 

[mummynew]

I don’t meet many people in that age range able to plonk down $100K+ single premiums, who don’t prematurely surrender the policies, who think 4%/year yields (at best; they’re not guaranteed) on 30+ to 60+ year money are attractive, and who plan to die 30 years after payout start. Am I not looking hard enough?

This is simply not an area where insurance companies are particularly helpful, not in this way. For starters, if you want a retirement plan, after you’ve maxed out CPF LIFE then consider a genuine life annuity. Then an insurance company is at least starting to do what an insurance company can do pretty well: insure.

At that age range, most are unlikely to be able to afford single premiums and so the $200 - $300 monthly kind of savings.

I have two nieces who started work for about 5 years and both have about six figures saving in various types of FDs and bank accounts. These belong to pure savers category that they are not keen in buying any equities at all. I ever thought of asking them to top up their CPFs but didn't ask them to do so as I foresee the rate that they are going, they can max their CPF Life when they hit 55 when the time comes just like my kids (hardworking and 'innocent/ignorant' people).

My kids' policies I have payout for 30 years. These two nieces discussed and they preferred to have payout for 25 years. I told them if chosen 25 years they will have lower irr as compared to 30 years. But both are fine with it when they said they may not live that long lives and so, so be it that their payout period chosen was 25 years (maybe my kids will take $600/year for 30 years and nieces will have $700+/year for 25 years). I think these available choices are good to let people think and plan themselves.

A major category of youngsters tends to over-spend, someone like one of my nephews. He maybe an ideal candidate to buy endowment/retirement products as if he has the flexibility to deal with spare money, he is likely to spend all away. This kind needs to force them to save (the monthly/annual premium becomes part of their 'expenses' that they will learn to cater for such instead of just spend and spend all away).

*people who come to this forum are those who are keen to learn and hope can really learn something good for their financial planning (I must say some may actually become worst due to own temperament of knowing but cannot follow through), but majority out there are still very clueless what to do with their incomes.

 

[BBCWatcher]

At that age range, most are unlikely to be able to afford single premiums and so the $200 - $300 monthly kind of savings.

OK.

I have two nieces who started work for about 5 years and both have about six figures saving in various types of FDs and bank accounts. These belong to pure savers category that they are not keen in buying any equities at all.

What do you think the insurance company does? Your nieces would still be buying "equities" (and bonds), but they're just doing it via an insurance company, that's all. There's nothing particularly sophisticated about the "retirement plans" you're describing.

I don't think you're giving these individuals enough credit for what they're able to do. They're most probably able to shop ruthlessly for the best deal on a Toyota or a pair of sunglasses, as examples. Why are they somehow presumed incapable of shopping for the best deal on retirement savings? It makes no sense. (And why nieces only, by the way? That sure seems like gendered stereotyping which has no basis in reality.)

My kids' policies I have payout for 30 years.

So what useful purpose is a 30 year payout period serving? I don't understand that part at all.

....I think these available choices are good to let people think and plan themselves.

Sure, "choices," great, but plan for what? Retirement income falling off a cliff at age 85, or age 90? Who has that plan? Does it ever make any sense as a plan?

A major category of youngsters tends to over-spend, someone like one of my nephews.

That's true of some people, sure. But all an insurance company can do to help is (a) send a bill (analogous to an electric bill), and (b) make the surrender value so painful that you're loathe to surrender, which is simply a byproduct of being a super high cost vehicle. Part (b) doesn't seem like a great feature. Part (a) is a great feature in a certain sense, but it's well solved with what are called in Singapore "RSPs" ("Regular Savings Plans"). That is, the savings/investment amount is deducted automatically from your bank account every month via GIRO or FAST, just as with monthly insurance company bills.

 

[mummynew]

What do you think the insurance company does? Your nieces would still be buying "equities" (and bonds), but they're just doing it via an insurance company, that's all. There's nothing particularly sophisticated about the "retirement plans" you're describing.

I don't think you're giving these individuals enough credit for what they're able to do. They're most probably able to shop ruthlessly for the best deal on a Toyota or a pair of sunglasses, as examples. Why are they somehow presumed incapable of shopping for the best deal on retirement savings? It makes no sense. (And why nieces only, by the way? That sure seems like gendered stereotyping which has no basis in reality.)

Coz they can't pick and probably stick to equities/bonds/allocation issues that they let insurance do it (can also be done by financial advisors via unit trusts but for them, the simplest is still via insurers' products except ILPs).

Perhaps we have very difference experiences with the youngsters we met and so we have different perspectives about them. No right or wrong on this and I am just sharing my experiences of many many many of them are clueless about the use and value of money when young. (my nephew definitely can tell when to eat the best Waygu beef).

So what useful purpose is a 30 year payout period serving? I don't understand that part at all.

Sure, "choices," great, but plan for what? Retirement income falling off a cliff at age 85, or age 90? Who has that plan? Does it ever make any sense as a plan?

I know you are a strong advocate of lifelong payout but if lifelong, then the monthly payout maybe $400 or $500/month instead of $600 or $700/month. So it's a choice for all to make.

The extra income for this payout period (cant remember the range available, maybe from 15 - 30 years) is just an income supplement before CPF Life begins. A sum that is 'good to have' when one reaches mid 50s.

That's true of some people, sure. But all an insurance company can do to help is (a) send a bill (analogous to an electric bill), and (b) make the surrender value so painful that you're loathe to surrender, which is simply a byproduct of being a super high cost vehicle. Part (b) doesn't seem like a great feature. Part (a) is a great feature in a certain sense, but it's well solved with what are called in Singapore "RSPs" ("Regular Savings Plans"). That is, the savings/investment amount is deducted automatically from your bank account every month via GIRO or FAST, just as with monthly insurance company bills.

Ya, I know about RSP. RSP still requires one to pick something (ETF or UT) and it can be stopped and liquidated anytime one wants. This feature is a pro and con for some people.

*my nieces and kids are with RSP STI ETF. They asked me when then they should sell and I still owe them this answer (this ETF is not doing well at the moment).

 

[soneat]

Coz they can't pick and probably stick to equities/bonds/allocation issues that they let insurance do it (can also be done by financial advisors via unit trusts but for them, the simplest is still via insurers' products except ILPs).

Perhaps we have very difference experiences with the youngsters we met and so we have different perspectives about them. No right or wrong on this and I am just sharing my experiences of many many many of them are clueless about the use and value of money when young. (my nephew definitely can tell when to eat the best Waygu beef).



I know you are a strong advocate of lifelong payout but if lifelong, then the monthly payout maybe $400 or $500/month instead of $600 or $700/month. So it's a choice for all to make.

The extra income for this payout period (cant remember the range available, maybe from 15 - 30 years) is just an income supplement before CPF Life begins. A sum that is 'good to have' when one reaches mid 50s.





Ya, I know about RSP. RSP still requires one to pick something (ETF or UT) and it can be stopped and liquidated anytime one wants. This feature is a pro and con for some people.

*my nieces and kids are with RSP STI ETF. They asked me when then they should sell and I still owe them this answer (this ETF is not doing well at the moment).

I know what you mean. There is no one size fit all solution.

Many people value the convenience and simplicity that these insurance products bring. There are some who choose to do this because they are in the financial sector and they had to do declaration everytime they want to buy something.