Worried you won't live to enjoy all your CPF savings?

Added (20 Jan 17):
Reader says:
I was talking to my colleagues today about CPF life.

They are very concerned about the payout starting at 65 and they not being able to live long enough to fully draw out their CPF money.

I tried to explain that they might outlive the $166k and receive free income for life, but they are skeptical that they will live beyond 80+...






AK says:
I rather have the assurance that I won't be old and destitute than worry about whether I would be able to enjoy all my savings before I die... chances of us living past 85 are quite good.



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A reader's questions after reading a recent blog post of mine:

My reply:
Hi iwimsasl,
If we do not believe that having an annuity is a good idea to help fund our retirement, then, this is probably a bother. 

However, if we believe that an annuity is a good idea, then, there isn't a better annuity offer than the CPF Life out there.





CPF Life is meant to start paying out at age 65 but we can choose to defer the starting age till 70. 

The benefit is that the payout will be bigger monthly because the CPF-RA funds will have another 5 years to accumulate. 

Allowing earlier withdrawal would translate to a less meaningful monthly payout which is why it is not a good idea.




Will the minimum age be raised from 65 to 67? 

I don't know but I don't think it is a bad thing if it should happen.

It would probably mean that Singaporeans are living longer and we would receive larger monthly payouts because the accumulation period is longer.

See: 
Upsize $100K to $225K?

Insurance is about transferring risk and also the sharing of risk. 

Annuity is an insurance. 





For having the certainty of a basic level of lifelong retirement funding in my old age, I think bearing some cost is reasonable. 

What if we happen to be blessed with longevity? 

It could happen and insurance is about guarding against what we cannot foresee.




Very often, the preoccupation with trying to get back some money from buying insurance after X number of years leads many to overpay for insurance. 

This is probably why so many are under insured or pay too much to be adequately insured.

Know which insurance products are essential and get the best value for our money. 




I believe that an annuity is essential and as an annuity, CPF Life gives me the best value for my money.

FB (31/12/16)

...





Related posts:
1. Mom stunned by what happened to her CPF-RA!
2. Retirement funding for our parents.
3. Funding XX% of our retirement with CPF.

Mom stunned at what happened to her CPF-RA money!

Alamak, another blog post on the CPF?

Quick, those who are tired of the topic, close the window!





Still reading?

OK lor.

My mother is going to be 70 years old next year.

When she turned 55, $65,000 was moved into her then newly created CPF-RA. 

That was the minimum sum for her cohort, apparently.

My mother is still actively employed but is thinking of retiring soon.






Mom:
"Ah boy ah. Can help me go into my CPF account online or not? I want to see how much I have now."

AK:
"You want to see how much money government gave you, is it?"

Mom:
"Aiyoh, cannot be a lot lah. Maybe now my CPF-RA will have $80K or $90K lor."

AK:
"You will be pleasantly surprised."


After 14 years, what has happened to the money in her CPF-RA?





This happened:

Click to enlarge.

$118,709.04

Mom:
"I so stunned like vegetable! Haha."

Stunned already can still laugh?

OK, no need to call ambulance.





If there is a need for it, this will provide her with a monthly income.

What? 

People say don't be stupid to top up your CPF-SA?

OK lor.

Related posts:
1. Get 6% from CPF?
2. Financial strategy for elderly?
3. Retirement funding adequacy.