Retirement vs Wealthbuilder ?

[kzonexx]

Hot from the oven: How-to-maximise-your-CPF-savings-in-2016

https://cpf-intouch.sg/How-to-maxim...fmailsub&utm_medium=edm&utm_campaign=intouch1

Do u still need more justifications why CPF should your choice?

for Cash top to CPF-SA to qualify for the tax relief up to $7K, it states only up to current FRS. Does the FRS refers to ur account balance only in your SA or OA+SA or OA+SA+OA utilised including accrued interest?

 

[life_is_great]

The enhanced retirement scheme (ERS) pays maximum 1.9K.. that alone is not enough. you need money from other sources. So if you are allergic to insurance plans. you will need to have a very steady portfolio that is able to pay you a steady stream of dividends (monthly income).

 

[hygge island]

Interesting, I am facing the same situation and asking myself the same questions. Here're my comments and even more questions.

1) I am slightly inclined towards retirement plan (with annuities) and I will probably do lump sum premiums rather than to keep paying till 60. Reason is if I get lump sum from wealthbuilder, I oso don't know what to do with it, might as well get annuities. Although, I might ask my FA to do a IRR calculation of the cashflows between wealthbuilder and retirement plan to make the final decision.

2) On top of deciding btw retirement plan and wealthbuilder, I am also trying to figure out the sweet spot between one of the above mentioned 2 plans and CPF life. Especially since CPF is sort of compulsory, it has to be evaluated along with other plans. CPF life - advantage is that I don't pay premium until I'm 65 so have cash vs opportunity cost. And meantime, can top up SA and lower tax. But when I am indeed 65 (27 yrs from now), the premiums for CPF FRS will higher than the current $161000, so must make sure the cash earns a better rate than what will eventually be the FRS $amount when I am 65. (but monthly payouts will also be adjusted upwards along with FRS adjustment - I think)
When I figure this out, then I can figure out how much "more" to put in retirement plan or wealthbulder.

Any advice or did I totally misunderstood some of the instruments/products?

 

[henrylbh]

The enhanced retirement scheme (ERS) pays maximum 1.9K.. that alone is not enough. you need money from other sources. So if you are allergic to insurance plans. you will need to have a very steady portfolio that is able to pay you a steady stream of dividends (monthly income).

If you and your spouse get 1.9k, 3.8k per month for life in 5 years' time is not enough?

 

[kzonexx]

If you and your spouse get 1.9k, 3.8k per month for life in 5 years' time is not enough?

I was about to ask the same question. Liabilities shud be over by then with no dependents so it's just basic needs.

 

[henrylbh]

I was about to ask the same question. Liabilities shud be over by then with no dependents so it's just basic needs.

If want to drive, depreciation and maintenance of a car will wipe a chunk even if no liabilities and dependents.

 

[kzonexx]

If want to drive, depreciation and maintenance of a car will wipe a chunk even if no liabilities and dependents.

true.. n holidays, eating at restaurants, drinking wine, golf green fees... its really not enough.

 

[hogrider88]

bump this. i think ur understanding of products no wrong.

i think if u can afford, lumpsum return will definitely be better than regular premium. retirement shd yield more than wealthbuilder as ur money still continue to grow while receiving annuities.

maybe depend what age u want to retire bah. i think i wont set too much aside for these. spare cash for high yield savings acct + investments (equities+bond).

Interesting, I am facing the same situation and asking myself the same questions. Here're my comments and even more questions.

1) I am slightly inclined towards retirement plan (with annuities) and I will probably do lump sum premiums rather than to keep paying till 60. Reason is if I get lump sum from wealthbuilder, I oso don't know what to do with it, might as well get annuities. Although, I might ask my FA to do a IRR calculation of the cashflows between wealthbuilder and retirement plan to make the final decision.

2) On top of deciding btw retirement plan and wealthbuilder, I am also trying to figure out the sweet spot between one of the above mentioned 2 plans and CPF life. Especially since CPF is sort of compulsory, it has to be evaluated along with other plans. CPF life - advantage is that I don't pay premium until I'm 65 so have cash vs opportunity cost. And meantime, can top up SA and lower tax. But when I am indeed 65 (27 yrs from now), the premiums for CPF FRS will higher than the current $161000, so must make sure the cash earns a better rate than what will eventually be the FRS $amount when I am 65. (but monthly payouts will also be adjusted upwards along with FRS adjustment - I think)
When I figure this out, then I can figure out how much "more" to put in retirement plan or wealthbulder.

Any advice or did I totally misunderstood some of the instruments/products?

 

[hogrider88]

true.. n holidays, eating at restaurants, drinking wine, golf green fees... its really not enough.

not enough... so how!!

 

[Lewis.T]

bump this. i think ur understanding of products no wrong.

i think if u can afford, lumpsum return will definitely be better than regular premium. retirement shd yield more than wealthbuilder as ur money still continue to grow while receiving annuities.

maybe depend what age u want to retire bah. i think i wont set too much aside for these. spare cash for high yield savings acct + investments (equities+bond).

Lump sum will definitely give higher returns, because of time value of money.

'Wealthbuilder' plans that give you the option of accumulating your maturity value will also give interest on the withheld portion, so retirement plans may not necessarily give you higher returns. Some of the 'wealthbuilder' plans also allow you to withdraw the accumulated amounts freely, in a bigger lump sum or regular payouts which can replicate a retirement plan or to suit your changing needs.

 

[hygge island]

update

Hi Guys, a little update from my end...
I signed the paper last week for AIA retirement saver. In honesty, was a rush act as I wanted to do so before my birthday for better rates. And today after days of pondering and researching, I withdrew it (within cooling period).
Reason: I calculated the IRR is 3.1% (with cancer rider). That rate is too low for the risk of a 38 years period with ~50% returns not guaranteed.
I believed a combi of stocks and bonds should beat this 3.1% easily.

1) Comments on my rationale above?
2) Bonds bonds bonds.. everyone says u should diversify with bonds besides equity. I have zero experience with bonds. A35 is not exactly a bond right? And its return is below 3% and the vol is so thin that to sell, u might have to take a hit? Can anyone share more about bonds or lead me to the link about bonds.
3) On Comparefirst.sg, I found more attractive plans than AIA. But not sure if I am comparing apple vs apples. Need to dig a little more.

 

[cscs3]

Hi Guys, a little update from my end...
I signed the paper last week for AIA retirement saver. In honesty, was a rush act as I wanted to do so before my birthday for better rates. And today after days of pondering and researching, I withdrew it (within cooling period).
Reason: I calculated the IRR is 3.1% (with cancer rider). That rate is too low for the risk of a 38 years period with ~50% returns not guaranteed.
I believed a combi of stocks and bonds should beat this 3.1% easily.

1) Comments on my rationale above?
2) Bonds bonds bonds.. everyone says u should diversify with bonds besides equity. I have zero experience with bonds. A35 is not exactly a bond right? And its return is below 3% and the vol is so thin that to sell, u might have to take a hit? Can anyone share more about bonds or lead me to the link about bonds.
3) On Comparefirst.sg, I found more attractive plans than AIA. But not sure if I am comparing apple vs apples. Need to dig a little more.

Very good decision.