I am not from Singapore, but I am fairly familiar with the mathematics behind annuities.Hullo Bogleheads,
I'd like to find out more about how I should value annuities.
Is there somewhere I can go to read up and find out more?
Specifically, lifelong annuities.
Should I value a plan with a lower payout but 2% pa increasing? Or a higher but flat payout?
How much more in payout should I expect if I start payout when I'm 70 instead of 65?
Specifically, my country has a lifelong annuity with certain options that we can choose and I'm trying to figure out what is the best way to think about it. For those interested, I'm from Singapore and am wondering how I should think about CPF Life.
Have you looked at this website, put out by the Singapore government? It describes at a high level the Central Provident Fund (CPF) and how payouts should be considered.
https://www.cpf.gov.sg/member/infohub/e ... f-cpf-life
Since it’s a government-guaranteed retirement plan, I expect that the various patterns of payouts (increasing payments vs flat, starting younger vs older, etc) are all meant to be “actuarially equivalent” for the average person. That is, they should have the same present value to the average Singapore citizen.
So, the plan that you choose should be the one that fits your situation the best -
—- If you are unhealthy compared to the average person, you could choose a payout plan that gets you as much money as possible as soon as possible - that is, level payouts starting as young as possible. Conversely, if you believe you are more healthy than the average person your age, you could choose a payout plan starts at a later age and increases over time.
—- If your other sources of retirement income (drawing down other investments, part time work, etc) are meager, you might want to start getting CPF payments as soon as possible to supplement your income. But if you have generous other retirement income, you might want to defer getting CPF payments.
It really is a personal choice as to when the start payments and what payment pattern to elect. There’s no single right answer. It all depends on you.
Hope this helps.
Statistics: Posted by Stinky — Thu Feb 22, 2024 4:42 am — Replies 3 — Views 348