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A recent conversation with a reader:
Reader says...
I have been a silent reader mostly for several years now.
And i am ashamed to say that i now feel like i have not learned well from your blog, and am caught in this situation where i just do not know if i should bite the loss of almost 15k, or just continue with the plan i bought from my FA.
Hence, I am writing to hear your advice.
I am 34 years old and my other half is 36... purchased a Retire Happy plan last year.
My husband purchased it mainly because of me.
I was doing a review of this plan and chanced upon your words of wisdom on this Retire Happy.
And then i realised that i might as well have topped up my own CPF account.
What should i do now?
Even though its my hubby's money, it is foolish to continue with a plan that is not value for money.
If i terminate the plan now, I will lose about 15k, which is damn a lot of money.
If i don't, there is no guarantee that my hubby will save.
After i have explored the CPF option, we are shocked to know how good it is but my husband still says he won't be maxing out his CPF as he doesn't have enough cash.
The most sensible and logical thing would be for my hubby to max out his CPF with the monies he is using for my plan and use it to provide for our retirement, but honestly, money is truly emotive and i don't know if he can.
What should i do, AK? I feel like a foolish wife now.
Would be eternally grateful for a response.
AK says...
I am only talking to myself in my blog.
If you overheard me talking to myself, you have to decide if I make sense. ;)
I think you know what you want to do.
Does it make sense to continue sending money to where it is not treated best?
I understand that things are not as straightforward in your case because you are trying to force your husband to save money.
Frankly, however, what is to stop him from not making regular payment towards Retire Happy?
I feel that if he is committed enough to pay regularly now, you should trust him.
Instead of paying Retire Happy, ask him to pay you and you manage the money.
You could take the money, do MS Top Up to his CPF-SA and not keep it for yourself to show that you are doing this for him and the family. :)
To be quite honest, we cannot be sure of anything in life. It is all about trust.
There is no guarantee that things will always go our way.
We just have to do what we feel will give us peace of mind.
It depends on what we believe in.
I believe in having a risk free and volatility free portion in my investment portfolio.
I believe in having an annuity that pays me not for only 20 years but for life.
I am lucky to be a CPF member and I am maxing out the benefits of my membership.
Related posts:
1. Retire Happy.
2. How many $29K do we have?
3. How to upsize $100K to $225K?
Bloggy Award
3 comments:
Hi AK and SI
SI, I am talking to myself, since I am also SI (LOL.) Ak, you are back from your hiatus, hope you felt rejuvenated, i feeling burnt-out, hence a bit kaypoing here.
SI,
2 wrongs do not make 1 right.
A product is lousy, is one thing, taking a loss of 15K is another. It is not like you are dealing with equity and need to cut loss to prevent further loss.
Be honest with yourself.
1) If I give you back 15K, the best you can do is put in CPF? Then just leave it there and close it when it breaks even, in the meantime of 10 years or more, learn how to make it work harder?
2) Why do you think CPF pays more, except that it is really by itself a good scheme? Before 55, even if you are willing to take a haircut of 50%, try asking CPF to give you back some of your money.
3) Are you too worried about "best deal" mentality? "best deal" mentality usually gave one more pain than happiness? It is unrealistic to assume the non-guaranteed component to be zero. of course, assuming it to be more than 1 % is hopeful, but it will not be zero. add 0.5-1% in your calculations at least for 10 of those 20 years. Insurance companies are not stupid, they have a reputation to maintain.
Hi Mike,
I guess I took a break from my break but I am still on my break from blogging.
It is difficult to ignore emails from readers for too long. I would feel bad for not replying. I guess it is difficult for me to stop blogging and its related activities for any relatively long period of time. -.-"
Burnt out? Time for you to take a break. ;p
Reader says...
I am just wondering do you have a blog post that give advice to people if the spouse is not working esp in the area of cpf.
AK says...
Not working, no mandatory contribution. Can do voluntary contribution.
Max out the benefits of your CPF membership. 😉
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