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I have met many people who told me they didn't believe in the CPF and they didn't believe in CPF Life.
When I explained that CPF Life is an annuity that would pay us a monthly income for life from age 65, some would go on to say that they didn't believe in having annuities.
There are different reasons given for not having an annuity but amongst investors, those that do not believe in annuities usually believe that they can always do better investing their own money.
It could indeed be the case that some of us constantly outperform the market.
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| See related post #2 at the end of this blog. |
Well, I am not too confident of my own ability to do so.
So, I like to have some assurance that I would have a basic retirement income that is predictable.
In case my investments do not perform well enough in certain years, I have a well I can depend on.
Having a well helps us to live well.
Sorry, I couldn't resist it.
Really.
No Evian? At least have well water.
That is what an annuity like CPF Life can do for us.
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| AK anyhow draw one. |
Peace of mind is priceless.
Related posts:
1. An annuity.
2. CPF Life Escalating Plan.
Bloggy Award
6 comments:
Sau Yee Fong:
Agree. An annuity ensures certainty in cash flow in our golden years. Don't think that we can always pick the right dividend stock or REIT. Even dividend stalwarts like SPH, Singpost and SIA Engineering suffer from dividend cut in recent years.
Hi Unknown,
Payout is guaranteed but the amount will be within a range.
This has always been the case.
Nothing has changed.
See the example in this blog:
CPF Life Estimator.
The report highlighted that with CPF's interest rate structure, CPF Life is able to provide an effective annuity rate of 7.1 per cent based on a $100,000 premium.
"This compares favourably with life annuities in most markets," stated the report. The annuity rate was calculated based on the ratio of annual payout to premium paid, for a male member born in 1962, or is 55 this year, who receives payouts at age 65.
It is no wonder that financial experts like Mr Christopher Tan, chief executive of Providend, believes that every retiree's portfolio must include an annuity plan to hedge against longevity risk.
He says: "CPF Life is currently the best annuity plan in the market. It is low-cost and offers high return."
http://www.straitstimes.com/business/invest/is-the-new-cpf-life-plan-ideal-for-you
Hi Unknown,
Alamak. I already said I anyhow draw one wor. ;p
On a serious note, what I did was to illustrate roughly what an annuity is supposed to do for us as investors for income and that is to provide a safety net which greatly reduces volatility.
Tony Shue says...
I would argue that given a choice (where CPF Life is compulsory), having an annuity for retirement is a matter of personal preferences. Because annuities does lock up that portion of your retirement fund. I think a lot of sinkies are "complaining" about that. Again, "all other things being equal", etc.
AK says...
Certain things have to be made compulsory because we cannot expect everyone to do what is right and responsible.
As long as we are compensated with having the best product there is (i.e. CPF LIFE), I don't have a problem.
If CPF LIFE was an inferior annuity compared to other annuities available, then, I would protest in the loudest voice possible! ;)
Wei Yi Tan says...
Assi AK Thank you for being the voice of reason!
Dont worry the truth will always prevail.
CPF is indeed meant to help us with building our retirement nest egg.
4-5% risk free (SG sovereign risk) interest!
One would be insane not to take advantage of that!
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