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Retirement funding for our parents: An idea.

Tuesday, August 4, 2015

My blog, ASSI, is very fortunate to have guest bloggers and some readers who are willing to share their very thoughtful ideas generously. Their thoughts have made the many discussions on diverse topics in ASSI more engaging.

Here, we have another example of what I am talking about:





Hi AK.


My parents are 66 yrs old this yr. Dad is still working. Likely to retire by 70. He prefer to work till 70 than staying at home. My parents belong to the earlier cpf minimum sum scheme. (Last for 20yrs only)



I am considering for them to join the cpf life. My parents saving is about $200k. Instead of keeping the cash in bank for their retirement usage, i am thinking of putting $200k into their RA.


Advantages:
1. They able to earn interest 4% per annual.
2. They able to get payout for life under the cpf life scheme.
3. Money is safe and will not lose to any scam cases.



I have also checked through the annuity plan by ntuc, aviva, tokio marine etc... they cannot match with cpf life. Of course there are other options such as buying stocks, reits, property etc... but not so suitable for retired folks.


Not seeking advise from you but like to hear second options if you have any. smile emoticon

You may like to post this in your blog so as to share it with other friends. smile emoticon

Cheers,
AL




AL shared this with me in a chat on FB not too long ago and I very much agree that CPF Life is the best annuity plan there is out there.

However, it would depend on whether he is able to convince his parents to accept his plan. That could be the biggest obstacle to overcome, I suspect.

Related posts:
1. Securing risk free returns for our retirement.
2. Retirement: AK bought a AAA rated bond.
3. An annuity proposal: AK does a case study.
4. EcoHouse: Questions we must ask.
5. A banker's advice on retirement income strategy.

6 comments:

Lowy Low said...

Correct my understanding if I am wrong. I saw a video before, let's just say if the parents passed away, only 200k will be given back to the children. All the interests earned during its RA period will not be given back to the children. Am I right?

AK71 said...

Hi LL,

You want to use the CPF Life Payout Calculator to be sure:

CPF Life Payout Calculator.

So, for a person who is 60 years old, for example, who has $155K, the monthly payout from age 65 is $888 to $961 (CPF Life Basic) but if he should pass on at age 65, he would leave behind $181,261 - $185,188 for his beneficiaries.

pf said...

I'm thinking the same as AL. I plan to top up my mother's cpf to meet her min sum. We will be using the money I have given her over these years and also whatever I am giving her this year. Once she is on cpf life, I'll see how to help my father as well.

Gg on cpf life wld be quite difficult for my father as his cpf went towards the flat. We may need to consider selling some of the lease of the flat back to hdb.

For us children with parents who are less well off financially and need help with their retirement, better not think abt inheritance. It is already very good to be on schemes that doesn't totally drain us of cash.

No cash, no options.

AK71 said...

Hi pf,

Sounds like you have plans in place to help your parents with their retirement funding. Monetising some of the remaining lease of your parents' flat is a good idea, I feel.

All of us have difference circumstances and we should count our blessings, I very much agree with you. :)

pf said...

Yes lor....a hdb flat is the only social welfare that we hv in sg. More or less. I hv friends who converted their citizenship just becoz of this reason. Or else they hv no way out of a tenant's life as private housing is too expensive.

It's good that govt provided options to make use of the flat as part of the retirement plan. That is why I stress the careful consideration in purchasing a flat and working with it as part of my financial objectives/plan. It is more than an expense but a financial asset. Of course, with the right conditions in place.

AK71 said...

Hi pf,

Well, you know what I will say. As long as the asset is going to generate income for you, it is an investment. I think that is also part of your plan. :)

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