Should you delay your CPF Life payout

[maple96]

i will not say it is unwise.

there are pros and cons for all. you just need to know everything before jumping in.

Spot on! Those who plan to delay 70 and choose standard/escalating plans should analyse the spreadsheets, spot the differences between 65 and 70, to see the pros and cons! I reserve my comments for the time being until people can spot it!

 

[henrylbh]

Spot on! Those who plan to delay 70 and choose standard/escalating plans should analyse the spreadsheets, spot the differences between 65 and 70, to see the pros and cons! I reserve my comments for the time being until people can spot it!

What a disappointment. I released the second worksheet with a little reluctant on my part, for your comments and observations, as you like to have, but you reserved your comments (for the time being?)

 

[henrylbh]

there is nothing wrong with everything that you have posted.

your above statement is correct.

it is that you are using cp+b as an evaluation which plan is better. you cannot do this.

You mean that anyone making decision on my worksheet without xirr would not make a good choice of the 3 plans?

 

[Mecisteus]

you know why dork say you must compute xirr from 65?

if you do that, you will realize that the xirr for standard and escalating is a perfect 0.

dork also say xirr is the compound interest rate
dork also say interest for escalating and standard is 0
bbc say no.
numbers and formulae dont lie.
dork is correct, bbc is talking rubbish

dork are you sure?

The XIRR is 0 if you die while drawing from RA.

The XIRR number rises if you live longer and drawing down from Lifelong Income Fund.

 

[kelhot2001]

dork are you sure?

The XIRR is 0 if you die while drawing from RA.

The XIRR number rises if you live longer and drawing down from Lifelong Income Fund.

If CPF allow, I would put in $264,000 at 55 and by 65, it should balloon to $390,000. From there, I will draw down $1375.00 p/mth which is equivalent to my yearly interest, whille my bequest will always be $390,000.00 regardless when I die while maintain 1375 to whenever I died. Is the fairer ?

 

[dork32]

dork are you sure?

The XIRR is 0 if you die while drawing from RA.

The XIRR number rises if you live longer and drawing down from Lifelong Income Fund.

for standard and escalating, you draw from the annuity, not ra.

just work on the google spreadsheet and you know what i meant that the xirr is 0. change the date of line 2 to 1 dec 2029 and the starting amount to the 266k .

remains at 0 all the way till the annuity is depleted. it then rises rapidly.

you can trust my maths

 

[dork32]

If CPF allow, I would put in $264,000 at 55 and by 65, it should balloon to $390,000. From there, I will draw down $1375.00 p/mth which is equivalent to my yearly interest, whille my bequest will always be $390,000.00 regardless when I die while maintain 1375 to whenever I died. Is the fairer ?

you are so smart. just as smart as the dork. in this way the payout and bequest is guaranteed.

but bbc, ang moh, say no. it will not work. because it is not his escalating dual survivor plan.

 

[dork32]

i reiterate this xirr is the compound interest rate.

if the compound interest is 0, like what dork and maple claims it be, then the calculated xirr has to be 0. otherwise dork and maple will be tokking rubbish, we dont.

 

[Mecisteus]

for standard and escalating, you draw from the annuity, not ra.

just work on the google spreadsheet and you know what i meant that the xirr is 0. change the date of line 2 to 1 dec 2029 and the starting amount to the 266k .

remains at 0 all the way till the annuity is depleted. it then rises rapidly.

you can trust my maths

Ok let me correct myself.

The RA for Standard and Escalating -> Annuity is correct

XIRR is 0% as long the RA amount (without interests) is drawn

XIRR is not 0% if you draw more than that

 

[dork32]

Ok let me correct myself.

The RA for Standard and Escalating -> Annuity is correct

XIRR is 0% as long the RA amount (without interests) is drawn

XIRR is not 0% if you draw more than that

for 55 to 65 it is ra for everyone.

at 65, if you have 100k

for standard and escalating, ra become 0, annuity becomes 100k

for basic, ra become 80k, annuity becomes 20k

 

[Mecisteus]

If CPF allow, I would put in $264,000 at 55 and by 65, it should balloon to $390,000. From there, I will draw down $1375.00 p/mth which is equivalent to my yearly interest, whille my bequest will always be $390,000.00 regardless when I die while maintain 1375 to whenever I died. Is the fairer ?

This may be fair to you if you don't mind a constant nominal amount for the rest of your life.

But not fair if someone wants an insurance element.

 

[dork32]

XIRR is 0% as long the RA amount (without interests) is drawn

XIRR is not 0% if you draw more than that

xirr does not care how much you draw. xirr depends on how much is left and how much interest this left over amount is earning.

 

[Mecisteus]

for 55 to 65 it is ra for everyone.

at 65, if you have 100k

for standard and escalating, ra become 0, annuity becomes 100k

for basic, ra become 80k, annuity becomes 20k

I know these.

I'm saying the XIRR number for S and E are not 0 if you live till 105 years old.

 

[dork32]

I know these.

I'm saying the XIRR number for S and E are not 0 if you live till 105 years old.

you are right.

xirr starts to increase when your annuity is depleted. the reason is this:

lets say
you die at 85,
you had 266k at 65.
xirr is the interest rate that the 266k will be earning such that it can finance the payout all the way till you are 85. and at 85, your 266k just nice hit 0.

 

[maple96]

If CPF allow, I would put in $264,000 at 55 and by 65, it should balloon to $390,000. From there, I will draw down $1375.00 p/mth which is equivalent to my yearly interest, whille my bequest will always be $390,000.00 regardless when I die while maintain 1375 to whenever I died. Is the fairer ?

U forgot that 20% of $390,000 goes to the pool if u choose Basic oops u choose RSS?

 

[Mecisteus]

If CPF allow, I would put in $264,000 at 55 and by 65, it should balloon to $390,000. From there, I will draw down $1375.00 p/mth which is equivalent to my yearly interest, whille my bequest will always be $390,000.00 regardless when I die while maintain 1375 to whenever I died. Is the fairer ?

This is just like the old RSS.

No insurance element.

 

[maple96]

The table shows the payouts under the 3 plans, of a male born 1 Jan 1965 with 181k at age 55.

The payout (P), bequest (B) and cumulative payouts (CP) are taken from CPF Life Payout Estimator.

For payout, I picked the lower payout in the range given and for bequest, I have picked the highest in the range.

The fourth column (CP + B) under each plan is the cumulative payout plus bequest.

The fifth column (RSS balance) is the balance under the old Retirement Sum Sum based on the payout under the respective plans.

Observations –
What matter is the cumulative payouts plus bequest at time of demise? And does delaying payout matter?

BP is the best all the way to about age 90, followed by SP. From age 90, EP is the clear winner. The numbers does not take into account time-value of money and assume no future changes.

Up to about age 94, all plans would lose out to the previous RSS.

Above age 95, SP and EP would better of under CPFL than under RSS, whilst BP would have to be more than age 101 to be better of under CPFL than RSS.

Conclusion –
Up to you to decide when you are likely to uplorry and how much you are to prepared to lose or gain in selecting one of the plans

Give your observations.

Thanks to uncle henry for the hardwork. Now I put 2 tables together above, who can spot the differences?

 

[Mecisteus]

you are right.

xirr starts to increase when your annuity is depleted. the reason is this:

lets say
you die at 85,
you had 266k at 65.
xirr is the interest rate that the 266k will be earning such that it can finance the payout all the way till you are 85. and at 85, your 266k just nice hit 0.

In short, 0% if annuity not depleted.

XIRR approaches infinity% if you live till eternity

 

[henrylbh]

bequest is gotten right at the end. early money is worth more than late money. bequest is worth less than since it is given out in front.

xirr takes this into consideration.

bequest is given out at the back. that is why it is no good

there is nothing wrong with everything that you have posted.

your above statement is correct.

it is that you are using cp+b as an evaluation which plan is better. you cannot do this.

I am confused by your above statements on bequest specifically ... in front and at the back.

Whether front or back, the bequest includes interest. So what's wrong?

 

[kelhot2001]

This is just like the old RSS.

No insurance element.

Pardon my simpleton, what is the insurance element for ?
For people like me not smart/money savvy. I am only interested to take what I put in and take out what I have plus interest. Nothing more