Special Account After 55

[Okenba]

if you are looking at yield, don't choose ERS because ERS is not for it.

You don't buy life insurance for hospitalization, right?

Agree. There's a lot more to managing money than some theoretical yield.

Even with the heavy emphasis on low expenses that many talk about, it would be pretty useless if the investor doesn't have the discipline to invest or jumps at the slightest market dip.

As for CPF Life, the yield is more than decent for people who don't want to do anything and just get money for it.

If you're the type who likes to meddle with your own investments, by all means put as little as you can into your RA so you have more cash to play around with on your own.

The theoretical yield for how much you can make through your own investment theories is infinity.

 

[henrylbh]

Who is picking?

I only questioning what's the worst case, not the best case

if you are looking at yield, don't choose ERS because ERS is not for it.

You don't buy life insurance for hospitalization, right?

Another gone case answer.

 

[fr33d0m]

Another gone case answer.

worst case is -100%. you get nothing back.

is that what you are after?

 

[dork32]

If you have room under the CPF Annual Limit, then you can do both (55th birthday then annual January ERS top ups into your Retirement Account, "all three" top ups within the CPF Annual Limit). However, the latter will earn a blended rate of interest that's inferior to the Retirement Account's most pessimistic yield certain. Yes, to the extent the "all three" top up lands in OA+SA (and not MA) there's immediate liquidity from age 55, but exercising that liquidity comes at a high price because withdrawals are biased to draw from the higher yielding SA first, driving down the effective yield on remaining dollars.

yes, i can do both vc and top up ers. based on your 2.46%, it is advisable that we do vc first. but it is higher that 2.46%. you will be misleading people into doing vc, where topping up to ers could be a better choice.

 

[dork32]

For somebody age 56 (let's suppose) who makes an "all three" top up, assuming that person has a MediSave Account at or above the Basic Healthcare Sum and has previously hit the Full Retirement Sum, only 13.5% of his/her "all three" top up lands in his/her Special Account (4% interest). The rest lands in his/her Ordinary Account (2.5% interest).

your are right.

but do you know that 13.5%*4 + 86.5* 2.5 >2.46?

 

[henrylbh]

worst case is -100%. you get nothing back.

is that what you are after?

Why assume what's I am after?

He said x plan (there are 3 plans) yields x% in worst case.

To be transparent, I merely asking what the other plan/s yields to show the actual, most pessimistic yield on an ERS.

 

[dork32]

i believe this what henry wants to see

you choose standard. you start your withdrawal at 65 and you die at 80. if you calculate the xirr from 65 to 75 or to 80, it is 0%.

because the xirr for the last 15 years is 0, it is going to bring down the xirr if you are going to calculate from 55. under such condition xirr is 2.41% if you start from 55

you can do something for escalating as well.

 

[fr33d0m]

deleted

....

 

[romeo88]

And also starting LIFE at 65 deduction is lower than at 70

Assuming for male it’s 10% and female is 20% due to life expectancy, am very hesitant to top up from FRS to ERS when the time comes.

At least with basic, it’s either 80% or 90% of RA at age 65 onwards that the payout is clearly defined.

I was mislead by the false adverting and was gunning for Standard until I found out there's a big difference in the mechanics of the plans, other than the differential of monthly annuity.

Ever since, I focus on Basic only - for me the other 2 are just distractions.

There's no right or wrong whether to top up at 55, or later after LIFE has started, or not to top up at all. The biggest unknown is your longevity, and a tiny little bit of your yield from other investments had you used the top-up money instead of, every step of the way.

Just to be precise, I'll definitely top up SA/MA before 55 because I think I could not have earned risk-free yield of 4% consistently (not withstanding all the restrictions of RA) and assuming it's not going to drop below 4% in the future too.

Based on the mechanics for Basic plan, RA (including top-up after LIFE has started) will be totally depleted at 90. Based on my parameters, from 90, I'll be withdrawing my "original" principal when LIFE started (the so-called 10-20% deduction). This "original" principal is still part of my bequest incidentally. From 92 to 95/96, I'll be drawing down the interest I could have earned but no longer (and thus not part of the bequest). So at this point at 95/96 based on my parameters, I have been withdrawing my "own" money, there's nothing coming from LIFE.

I'd only get to "enjoy" (if you will) the longevity insurance (LIFE) if I'm still alive after 95/96.

So go figure your probability of living beyond 95 and every year after LIFE started, the probability of not living until this age (which at this stage, everything is already history as in no more decision to make).

I'm sure you'll get your answer very soon. Good luck.

For the other 2 plans, it’s at the discretion of CPF on the payout, which is what I dislike.

Talk about shifting goalpost aka shifting payout.......

 

[dork32]

Based on the mechanics for Basic plan, RA (including top-up after LIFE has started) will be totally depleted at 90. Based on my parameters, from 90, I'll be withdrawing my "original" principal when LIFE started (the so-called 10-20% deduction). This "original" principal is still part of my bequest incidentally. From 92 to 95/96, I'll be drawing down the interest I could have earned but no longer (and thus not part of the bequest). So at this point at 95/96 based on my parameters, I have been withdrawing my "own" money, there's nothing coming from LIFE.

I'd only get to "enjoy" (if you will) the longevity insurance (LIFE) if I'm still alive after 95/96.

So go figure your probability of living beyond 95 and every year after LIFE started, the probability of not living until this age (which at this stage, everything is already history as in no more decision to make).

I'm sure you'll get your answer very soon. Good luck.

if your objectives is to benefit from the pool at an earlier age, then you should choose standard or escalating. because of the higher payout, you will drain your principal and interest off more quickly.

we choose basic because we do not want to lose that 4+1+1% interest to the pool. Not because we want to beat the pool.

 

[fr33d0m]

if your objectives is to benefit from the pool at an earlier age, then you should choose standard or escalating. because of the higher payout, you will drain your principal and interest off more quickly.

we choose basic because we do not want to lose that 4+1+1% interest to the pool. Not because we want to beat the pool.

correct me if I am wrong, you did not lose that 4 + 1 + 1%. it is never yours.

The pool may be better than the other option.

 

[romeo88]

My objective has never been to benefit from the pool, it is I don't want to participate in the pool. My objective is how to maximise cash to earn 4% and given it's mandatory to join the pool, minimise loss to the pool, which will translate partially to more bequest as well.

if your objectives is to benefit from the pool at an earlier age, then you should choose standard or escalating. because of the higher payout, you will drain your principal and interest off more quickly.

we choose basic because we do not want to lose that 4+1+1% interest to the pool. Not because we want to beat the pool.

 

[henrylbh]

we choose basic because we do not want to lose that 4+1+1% interest to the pool. Not because we want to beat the pool.

I thought by now you would know better than to say one would lose 4+1+1%.

I thought by now you would know better that the interest lost is negligible compared to the principal amount taken away from you, if you don't reach 90

 

[dork32]

correct me if I am wrong, you did not lose that 4 + 1 + 1%. it is never yours.

The pool may be better than the other option.

4+1+1 is all yours if you are in basic.

4+1+1 is the pool's if you are in the other two. some people will say that it is still yours because you own part of the pool.

 

[dork32]

I thought by now you would know better than to say one would lose 4+1+1%.

I thought by now you would know better that the interest lost is negligible compared to the principal amount taken away from you, if you don't reach 90

to me, i lose that 4+1+1 interest in standard. it is up to other people to think otherwise.

the principal is never taken from you in all the three schemes. it is just whether it is earning interest or not for you.

the interest loss is not negligible. it is very significant. if you are on frs and start to draw at 65, it is more than 100k by the time you hit 80.

are you sure you know wat u tokking.

 

[henrylbh]

4+1+1 is all yours if you are in basic.

4+1+1 is the pool's if you are in the other two. some people will say that it is still yours because you own part of the pool.

Agree that we forgo all interest in choosing the other two plans.

But not all of 4+1+1 is yours in choosing basic either.

 

[fr33d0m]

4+1+1 is all yours if you are in basic.

4+1+1 is the pool's if you are in the other two. some people will say that it is still yours because you own part of the pool.

yours, you mean yours and your beneficiaries' or purely yours as you can take it out?

If you can't take it out, it is not yours.

 

[romeo88]

I'm definitely not one of the some people. The one who's planning for Escalating and age 70 is a god who knows he/she is going to be a centenarian.

4+1+1 is the pool's if you are in the other two. some people will say that it is still yours because you own part of the pool.

 

[dork32]

yours, you mean yours and your beneficiaries' or purely yours as you can take it out?

If you can't take it out, it is not yours.

i have kids. my kids are spending my money today. my kid's money is also as good as my money.

i buy aviva saf insurance. if i die, my kid gets the money. if i am so reluctant to give my kid money when i am gone, i would not have bought insurance.

there are people that does not buy life insurance. same like there are those that choose standard.

You go ahead and choose standard/escalating. put your money where your mouth is. i will mine where it is.

the other thing is if i last long enuf, i would be taking it out.

 

[dork32]

I'm definitely not one of the some people. The one who's planning for Escalating and age 70 is a god who knows he/she is going to be a centenarian.

many people here agree with us.

we are all aware who the god is.