Regarding the payout option between 65 vs 70. Using CPF's example of $1640/month, the total deferred payout is 1640 x 60 = $98400. The 550/month increase at 70 means that you will only break even at around 73 yrs old and only start to make gains after 73 yrs old. While this might make some financial sense, the other factor is about quality of life. In my opinion, the period between 65 to 70 is quite critical, where we might still be healthy enough to go travelling and enjoy more experiences. After 70, energy levels and health conditions is likely to be not so good... having a lot of money at this point is probably not as meaningful.
I agree with you. While numbers wise, it may seem more beneficial to defer to age 70. But we must also balance out - no point having lots of money but cannot use it.
I think in the example above, the breakeven point should be 85. Starts payouts at 65, by 85 you get 1640 x 12 x 20 = 393,600 Starts payouts at 70, by 85 you get 2190 x 12 x 15 = 394,200 So if you're sure that you can live beyond 85, then choose to have your payouts at 70.
Nobody knows one's life for sure, thousand and one mishaps can happen. You may lead a healthy life and still... Opt for earliest max payout is best bet unless you don't need them. As one ages, higher payout at later age means little when one's enjoyment options decrease extra fold.
The Standard Plan and Escalating Plan bequest is a straight line as it does not attract interest whereas the Basic Plan continues to attract interest and it is the typical shape of a drawdown curve with interest being paid on the principal until it depletes at the end. The interest lost by the Standard Plan and Escalating Plan can be significant at it may be more than 50 percent of the original RA value at age 65 (even more for women)
When we reach 65, we might be already at our late prime, deferred the payment and leave plenty of money after we died is a silly action, we only live once, delay payment is NOT my choice in principle
Hi Kelvin, sorry to be the fact checking police here as i generally appreciate your content... but I think you are factually wrong when you say at 9:20 that those under the basic plan will "need to" live until age 91 to benefit more from higher bequests availability... the truth is those under the basic plan are ALREADY exceeding those under the standard and escalating plans for bequests availability, UP UNTIL age 91, after which they are all not better off than each other.... meaning to say Basic Plan will NEVER be worst off in terms of bequest availability...
Just to share my thinking and strategy on CPF payout, to me this is an insurance of "longevity". If I happened to had cash on hand (or investment) at age 65 or above, I will delay the payout until 70s. Since is an insurance, my mindset is that is ok even end of the day I do not live for so long to enjoy it, like fire/car/personal accident/medical health insurance ... we buy but still hope that we need not use it.
It is super useful if you are close to selecting the plan... otherwise, the plans will probably change again by the time we reach 65 and make this discussion mostly outdated. 🤭
Hi Kelvin, thanks for the good video. If someone's RA is below $100K, do you think he or she should go for standard plan and forget about basic plan for highest bequest option..
Not sure about u, but personally i would do that. Cos basic plan’s main goal is to leave behind more money, while standard plan goal is to have more payouts today
CPF Life annuity payout is biased against women. If a woman gets between $100 to $200 less than a man per month, the difference will add up to between $1200 to $2400 per year. If she lives to 85 (which most men do) she would have received between $24000 to $48000 less than a man in 20 years. Based on the same premium paid, this is grossly unfair and definitely no equality at all. Could this very important equality issue be looked into? And may the treatment of elderly women be equal to elderly men. As most of the elderly women have already been subjected to much inequality in their lifetime, I hope it’s not too much to ask for these ladies to be treated fairly in their golden years.
I think the payout is derived from statistics. If we can access the wards in TTSH and nursing homes, we can understand the reason better. Personally, the only men I know live till 90. While 3 of my friends' grandma are still around, and above 100. Just sharing my experience and observations. Not an FA or in the industry. You can write to CPFB directly to enquire.
Kelvin, can you make a hypothetical projection scenario video on FRS to RA vs BRS+Pledge for folks who might want to withdraw more at 55 to self-invest instead of fully relying on CPFL
hi, thanks for the info. i was wondering, is it possible to use CPF OA to pay the monthly mortgage ? or it can only be used to pay down payment of the property?
For those born before year 1958 and on escalating category (the RSS scheme) , would you recommend the said person to change to CPF Life? Currently, been given this option and not yet make up mind about it. Has some cash in other fixed investments. Not an important objective to bequest to next of kin. A very normal life with no big intent to spend much on luxury. IMO, not to go for CPF Life but do not know my proposal to him is right.
Your Total Annuity payout + bequest analysis is interesting. But I'm single and therefore not bothered to what happens to my bequest amounts. Can you do the same analysis looking at Total Annuity payout only?
I think cpfb will still compute to pay out minimum amount until your RA run out. There is a cutoff point where it is still viable to join cpfl. From October contributions to OA and SA will automatically be garnished to RA if BRS/FRS not met.
Selecting between the three ultimately depends on how much you rely on cpf life payouts for income when you retire. Those who have substantial passive income outside of the cpf system (investment, rental, business, etc) and practically see the CPF balance as mostly bequest or top-up to existing income will probably choose Escalating. Those who rely on CPFL near 100% for daily living then Standard will be, well, standard. Basic falls between the two. Add more variables like health, ave mortality, expenses level etc, you have to treat it like any finance issue, IT’S PERSONAL
Interesting as a Brit to see that your principal - interest payouts are inheritable. With our annuities, you hand over your principal and if you die early that principal is kept by the annuity comapny.
Thank you for the great info. If I have not contributed much to CPF all my life, can I make a one time top up into the CPF life or retirement account to enjoy the maximum payout. In only 53 years old though. 🤣
I opting the basic plan, not becos I am passing down to my family.. its becos i don't trust PAP la, I would like to withdraw at 55 whatever PAP allows...just becos cases of men spending on batam, prc women, what about womens spending on men...
@Kelvin Tan that's what my wife said..but pap says leave it there and use it like ATM, great salesman for high interest rate but my concern is pap will prata like what happened to full withdrawal at 55...
Regarding the payout option between 65 vs 70. Using CPF's example of $1640/month, the total deferred payout is 1640 x 60 = $98400.
The 550/month increase at 70 means that you will only break even at around 73 yrs old and only start to make gains after 73 yrs old.
While this might make some financial sense, the other factor is about quality of life.
In my opinion, the period between 65 to 70 is quite critical, where we might still be healthy enough to go travelling and enjoy more experiences.
After 70, energy levels and health conditions is likely to be not so good... having a lot of money at this point is probably not as meaningful.
In a webinar I attended, the presenter mentioned illness usually starts between age 60 and 65
Hi, could you illustrate on what do you mean by "breakeven at 73"..? Thanks.
I agree with you. While numbers wise, it may seem more beneficial to defer to age 70. But we must also balance out - no point having lots of money but cannot use it.
I think in the example above, the breakeven point should be 85.
Starts payouts at 65, by 85 you get 1640 x 12 x 20 = 393,600
Starts payouts at 70, by 85 you get 2190 x 12 x 15 = 394,200
So if you're sure that you can live beyond 85, then choose to have your payouts at 70.
Nobody knows one's life for sure, thousand and one mishaps can happen. You may lead a healthy life and still... Opt for earliest max payout is best bet unless you don't need them. As one ages, higher payout at later age means little when one's enjoyment options decrease extra fold.
YODO ...
You only die once
The Standard Plan and Escalating Plan bequest is a straight line as it does not attract interest whereas the Basic Plan continues to attract interest and it is the typical shape of a drawdown curve with interest being paid on the principal until it depletes at the end. The interest lost by the Standard Plan and Escalating Plan can be significant at it may be more than 50 percent of the original RA value at age 65 (even more for women)
When we reach 65, we might be already at our late prime, deferred the
payment and leave plenty of money after we died is a silly action, we only live once, delay payment is NOT my choice in principle
Hi Kelvin, sorry to be the fact checking police here as i generally appreciate your content... but I think you are factually wrong when you say at 9:20 that those under the basic plan will "need to" live until age 91 to benefit more from higher bequests availability... the truth is those under the basic plan are ALREADY exceeding those under the standard and escalating plans for bequests availability, UP UNTIL age 91, after which they are all not better off than each other.... meaning to say Basic Plan will NEVER be worst off in terms of bequest availability...
Ah, you are right. Sorry for that!
Just to share my thinking and strategy on CPF payout, to me this is an insurance of "longevity". If I happened to had cash on hand (or investment) at age 65 or above, I will delay the payout until 70s. Since is an insurance, my mindset is that is ok even end of the day I do not live for so long to enjoy it, like fire/car/personal accident/medical health insurance ... we buy but still hope that we need not use it.
That’s a good way to think about this!
But the premium for those insurances is small. Not $200K to $400K wiped out on a single day @ 65. Amd we can't suka suka stop paying premium.
I think standard life plan is the best. Your advice please. Thanks
Thanks for sharing, Kevin! It’s super useful 😁
It is super useful if you are close to selecting the plan... otherwise, the plans will probably change again by the time we reach 65 and make this discussion mostly outdated. 🤭
Basic plan + property pledge + brs. Withdraw and lock in s&p. Then you don't really draw down. U smart. You do the math
Hi Kelvin, thanks for the good video. If someone's RA is below $100K, do you think he or she should go for standard plan and forget about basic plan for highest bequest option..
Not sure about u, but personally i would do that. Cos basic plan’s main goal is to leave behind more money, while standard plan goal is to have more payouts today
CPF Life annuity payout is biased against women. If a woman gets between $100 to $200 less than a man per month, the difference will add up to between $1200 to $2400 per year. If she lives to 85 (which most men do) she would have received between $24000 to $48000 less than a man in 20 years. Based on the same premium paid, this is grossly unfair and definitely no equality at all. Could this very important equality issue be looked into? And may the treatment of elderly women be equal to elderly men. As most of the elderly women have already been subjected to much inequality in their lifetime, I hope it’s not too much to ask for these ladies to be treated fairly in their golden years.
I think the payout is derived from statistics. If we can access the wards in TTSH and nursing homes, we can understand the reason better. Personally, the only men I know live till 90. While 3 of my friends' grandma are still around, and above 100.
Just sharing my experience and observations. Not an FA or in the industry.
You can write to CPFB directly to enquire.
Hi, do you think those high yield crypto investment are safe?
No
Kelvin, can you make a hypothetical projection scenario video on FRS to RA vs BRS+Pledge for folks who might want to withdraw more at 55 to self-invest instead of fully relying on CPFL
hi,
thanks for the info.
i was wondering, is it possible to use CPF OA to pay the monthly mortgage ? or it can only be used to pay down payment of the property?
Yup can! Up to a certain percentage of the downpayment (forgot exact amount, u can check it out)
@@KelvinLearnsInvesting thanks man .
how about monthly payment of mortgage ?, apart from down payment
Cpf oa can be used to fully pay monthly mortgage payment
@@KelvinLearnsInvesting thank you so much for ur response. much appreciated
How is CPF life compared to the private annuity plan on the market?
Hi kelvin, can u do a review or SGFINDEX? Please please 😅
For those born before year 1958 and on escalating category (the RSS scheme) , would you recommend the said person to change to CPF Life? Currently, been given this option and not yet make up mind about it.
Has some cash in other fixed investments.
Not an important objective to bequest to next of kin.
A very normal life with no big intent to spend much on luxury.
IMO, not to go for CPF Life but do not know my proposal to him is right.
Your Total Annuity payout + bequest analysis is interesting. But I'm single and therefore not bothered to what happens to my bequest amounts. Can you do the same analysis looking at Total Annuity payout only?
What happen to those turn 65 but the amount in RA is far below the minimum amount?
good luck. all stuck inside RA.
you will get your monthly payouts from the RA directly, for up to 20 years
I think cpfb will still compute to pay out minimum amount until your RA run out. There is a cutoff point where it is still viable to join cpfl. From October contributions to OA and SA will automatically be garnished to RA if BRS/FRS not met.
Sifu say I died at 65. My forefather all pass away at 65.
Selecting between the three ultimately depends on how much you rely on cpf life payouts for income when you retire.
Those who have substantial passive income outside of the cpf system (investment, rental, business, etc) and practically see the CPF balance as mostly bequest or top-up to existing income will probably choose Escalating.
Those who rely on CPFL near 100% for daily living then Standard will be, well, standard.
Basic falls between the two.
Add more variables like health, ave mortality, expenses level etc, you have to treat it like any finance issue, IT’S PERSONAL
Interesting as a Brit to see that your principal - interest payouts are inheritable. With our annuities, you hand over your principal and if you die early that principal is kept by the annuity comapny.
after working till 55/62, still need to defer till 70? sigh.
Thank you for the great info. If I have not contributed much to CPF all my life, can I make a one time top up into the CPF life or retirement account to enjoy the maximum payout. In only 53 years old though. 🤣
For single person without love one. What plan should choose and take money first better as don't want to live above 80
escalating plan seem the worst deal looking at mortality rate.
How about with the age of 55?
Choose Standard Plan & if got extra balance at the end of the month, then invest in S&P500 lor...or Kelvin's favorite....TSLA!!! 🤭
Deferring payout, you must take into account the effects of inflation
can you explain on the cpf interest part?
I opting the basic plan, not becos I am passing down to my family.. its becos i don't trust PAP la, I would like to withdraw at 55 whatever PAP allows...just becos cases of men spending on batam, prc women, what about womens spending on men...
withdraw early and risk spending every penny, no thanks
@Kelvin Tan that's what my wife said..but pap says leave it there and use it like ATM, great salesman for high interest rate but my concern is pap will prata like what happened to full withdrawal at 55...
I think you are talking about choosing BRS/FRS/ERS when you reach 55 yrs old. This video is talking about the payout plan.
Hi, is it possible to opt for BRS if u have more than FRS amount in SA?
Let's not be hopeful. Soon your CPF money cannot pay your flat
👍
God is the best ever
Since I exercise most days, I'll choose Escalating Plan.