A question on CPF Life asked in Sammyboy Coffeeshop forum

February 19, 2008 by admin
Filed under: CPF, Clarifications 

A good question was posted in Sammyboy Coffeeshop forum by the moniker SimplyGab. This forummer asked, “… explain in simple terms which option is the best if i don’t see myself living beyond age 80?”

This is my reply to him:

The two things that you should consider are the amount of monthly payout you want for yourself, and how much you want to leave your beneficiaries. There is no need to consider your own mortality. Let me explain.

If you want higher payout for yourself and either don’t have beneficiaries or couldn’t be bothered to leave them anything, then just choose your LI payout age to be 65, which is the earliest possible. That will give you the maximum payoff, but leave your beneficiaries with the least. This is because your account no longer accrues interest, and so there will be no interest to pass on to your beneficiaries when you die.

If you can cope with lower payouts and want to leave more for beneficiaries, then choose as high an LI age as you desire. The maximum LI payout age is 90, which gives you the lowest monthly payout, but leave the maximum for your beneficiaries because your RA (retirement account) has the maximum funds as well as the maximum time to accumulate interest and bonuses from the CPF Board.

The reason why there is no need to consider your own mortality is because the above dymanics (lower LI age, higher payoff to yourself and less to beneficiaries; higher LI age, lower payoff to yourself and more to beneficiaries) works regardless what age you die. For example, if you indeed die at 80, your beneficiaries still get the most if you choose an LI age of 90, and get the least if you choose an LI age of 65.

Tags:

Comments

One Comment on A question on CPF Life asked in Sammyboy Coffeeshop forum

  1. Daily SG: 20 Feb 2008 « The Singapore Daily on Wed, 20th Feb 2008 11:28 am

    2. [...] Posted by The Singapore Daily on 20 February 2008 Singaporeans are fed, up with progress! – Sgpolitics.net: A question on CPF Life asked in Sammyboy Coffeeshop forum [...]

Tell me what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!