ANNUTIES-How can we use them?

I just did a PV calculation using the above and 4% interest and you have to live up to 99 (draw down from 65) before CPF Life becomes better than MSS...

I have a simpler way to decide if one should buy an annuity.

If the insurer i buy the annuity from can invest my premium and earn returns above 4% (net of all fees), i should buy the annuity. The non guraranteed payout from the annuity is dependent on the insurer's investment returns.

If the insurer cant earn returns above 4% (net of all fees), then obviously, i would go for 4% guaranteed returns from CPF board.

(28-03-2013, 04:09 PM)egghead Wrote: I just did a PV calculation using the above and 4% interest and you have to live up to 99 (draw down from 65) before CPF Life becomes better than MSS...

i actually have some worry because CPF's MSS also doesn't guarantee minimum 4% interest rate for those who have opted out of CPF LIFE.
i think Papies started the CPF LIFE not really for the benefit of people like us. Simple logic ma! i don't even have to use my elementary maths. i only know i will be getting less if i join CPF LIFE. For a start i will be paid less if i join CPF Life (though i get paid at 62) and also no guarantee like all annuity products. So my wife opted out of CPF LIFE too.
And the best is our MSS money still belongs to us not to a "pool". The water in the pool may increase or decrease or even fall too very dangerous low level. That there is very little water to share.
Anyway, the main point is i will be getting less not more if i join CPF LIFE. The only worry is interest rate fall below 4% if Papies claim they got no money to sustain the rate anymore.

... but then again, i think the mss with cpf is a very unfair option for singaporeans, it is like a 20 year bond priced at 4%, this is ridiculously low. And you have no chance of selling the bond even when interest rate goes down. The corporation that is on the opposite side of the deal is the one that has all the advantages.

(28-03-2013, 04:45 PM)safetyfirst Wrote: ... but then again, i think the mss with cpf is a very unfair option for singaporeans, it is like a 20 year bond priced at 4%, this is ridiculously low. And you have no chance of selling the bond even when interest rate goes down. The corporation that is on the opposite side of the deal is the one that has all the advantages.

i am not sure CPF's MSS is comparable to a 20 year bond @ 4%. For one thing you are withdrawing a certain sum per month from your MSS. Why do you think Papies started the CPF LIFE? More for you or for themselves? Use simple logic again will cast doubts in our hearts, isn't it?

(28-03-2013, 04:45 PM)safetyfirst Wrote: ... but then again, i think the mss with cpf is a very unfair option for singaporeans, it is like a 20 year bond priced at 4%, this is ridiculously low. And you have no chance of selling the bond even when interest rate goes down. The corporation that is on the opposite side of the deal is the one that has all the advantages.

So, any good alternative proposal?
By the way, the current 30 years SGD bond's coupon rate is only 2.5-2.6%.

(28-03-2013, 03:48 PM)CityFarmer Wrote:

(28-03-2013, 03:07 PM)specuvestor Wrote: CPF Life has an insurance component so it cannot have a better payout than the old MSS in 20 years

To add-on base on CPF calculator online, to back-up specuvestor statement.

https://www.cpf.gov.sg/cpf_trans/ssl/fin...imator.asp

https://www.cpf.gov.sg/cpf_trans/ssl/fin...s_cal2.asp

For a Singaporean born in Mar 1951, with MS of S$90K in cash. MSS payout is S$711, while CPF life standard is $499 - $530

So MSS payout is higher but only for 20 years, but CPF life is for life.

Feel free to comment if any mistake.

Ah!
Initially rules or regulations you can start withdrawal of MSS at age of 60 then increase to 62 but Papies gave you some $incentives. And then best of all if you can delay withdrawal until 65, the Papies gave a $bonus.
So 65+20 years of withdrawal, you will be 85. So in this way you have make your MSS into a "Logevity Annuity". No? Maybe some of us will live to 99. If so, from 85 to 99, God bless us who live to this ripe old age.

(28-03-2013, 05:08 PM)yeokiwi Wrote:

(28-03-2013, 04:45 PM)safetyfirst Wrote: ... but then again, i think the mss with cpf is a very unfair option for singaporeans, it is like a 20 year bond priced at 4%, this is ridiculously low. And you have no chance of selling the bond even when interest rate goes down. The corporation that is on the opposite side of the deal is the one that has all the advantages.

So, any good alternative proposal?
By the way, the current 30 years SGD bond's coupon rate is only 2.5-2.6%.

haha buy undervalued shares, i thought our banks (uob / ocbc) looks cheap compared to the current 30 years SGD bond's coupon rate of 2.5-2.6%.

(28-03-2013, 08:43 PM)safetyfirst Wrote:

(28-03-2013, 05:08 PM)yeokiwi Wrote:

(28-03-2013, 04:45 PM)safetyfirst Wrote: ... but then again, i think the mss with cpf is a very unfair option for singaporeans, it is like a 20 year bond priced at 4%, this is ridiculously low. And you have no chance of selling the bond even when interest rate goes down. The corporation that is on the opposite side of the deal is the one that has all the advantages.

So, any good alternative proposal?
By the way, the current 30 years SGD bond's coupon rate is only 2.5-2.6%.

haha buy undervalued shares, i thought our banks (uob / ocbc) looks cheap compared to the current 30 years SGD bond's coupon rate of 2.5-2.6%.

Sorry! i don't think any BLUE CHIP is cheap now. Even people working in the banks say so.

(28-03-2013, 05:08 PM)yeokiwi Wrote:

(28-03-2013, 04:45 PM)safetyfirst Wrote: ... but then again, i think the mss with cpf is a very unfair option for singaporeans, it is like a 20 year bond priced at 4%, this is ridiculously low. And you have no chance of selling the bond even when interest rate goes down. The corporation that is on the opposite side of the deal is the one that has all the advantages.

So, any good alternative proposal?
By the way, the current 30 years SGD bond's coupon rate is only 2.5-2.6%.

You can look at the different endowment/annuities in my previous posting. I suppose each of the insurers do have some strengths in their plans to sell. When I bought TM Life plan, the return till age 80 is around 3.3%pa based on the guarantee value. Did not actually calculate for the rest as they don't pay for life.