Annuity

[ricohflex]

Can some one advise on the various choices?
Don't quite understand it.
If one gets $650 each month for the rest of one's life starting from age 65, then what is the downside?
If one has no dependents, is this a good choice?

Then what about the starting from age 80 plan? By the way, how many people actually manage to live up to 80 and beyond?

 

[aryanto]

Can some one advise on the various choices?
Don't quite understand it.
If one gets $650 each month for the rest of one's life starting from age 65, then what is the downside?
If one has no dependents, is this a good choice?

Then what about the starting from age 80 plan? By the way, how many people actually manage to live up to 80 and beyond?

the downside is the 650/month may not be enough.
it could be enough then (at age 65) but 10 years later may be not.
if one dont have dependent it is a good choice as even when one died the money go to gahment anyway. if one have dependent then he/she need to think if it is worth leaving some inheritance, but if it is not worth (and make sure the inheritance tax has been calculated) it then, the annuity should be better.

how many people can benefit after age 80, i have no idea...

the above is my personal view without reading fineprints. :dunno:
reader should make his own decision :nono:

 

[Del_CtrlnoAlt]

imho, this kinda policy is for people who are bad with their control of money.

For those who are able to, this is one of the worse, if not worst, type of 'getting' monthly pocket money.

Its your money, and you gets to only use it at certain age, and only able to get a little at a time.

Even 650 to me now is too little, imagine when i'm probably 50, 650SGD may seem like 650JPY to me now... not even enuff for a decent meal, let alone a month.

Lets take a simple calculation of inflation, 30 year ago, 1 bowl of noodle probably cost you 1 buck. now it cost 3.5 to 4 bucks. thats like 400% increase... so roughly, but simple, prices 30 years later might be say 8 bucks, but i might also be 16 bucks... or even more... nobody knows what will happen in that time...

for me, i dun think i'll choose annuity (never read much about it, is it compulsory?)

 

[ricohflex]

I am not against this policy.
I just want to know more if there are any experts out there to explain it.
I also want to know more about the property pledge in place of cash in the Retirement Account. Does this mean we can pledge our property/flats?

In my view, this policy is good because:

1. as pointed out already by DCA - it is for those who fritter all their money fast. It helps to control them when they tend to get out of control on their own.

2. And I think it is good since CPF is Honorable body and will not cheat you. CPF will dutifully pay you what they promised and on time. Whether it is enough is arguable.

If there was no such CPF Annuity.
Do you have any idea how many con men and sharks are out there asking elderly people to "invest" in various funds, trusts, schemes, businesses, ML Ms. A lot, I think. Let me repeat that.

A LOT.

This is the real problem facing society.

Once you put your life savings in, I guess it is very hard to get it out again. There may be many excuses and put-offs, when you want to take your money out. I presume there are financial incentives for them to find more people to "invest" lots of money in and likewise there may be dis-incentives hurting them if you pull your money out.

And one day the fund may just not appear anymore. The local people who asked you to invest or those who manage it in a far away nation cannot be found. This happened in real life to one of my friends recently. He lost > 100K.

(I think) Whatever paper theoretical gains they claim you have made, are but smoke and mirrors if you cannot take the money out easily once you put it in.

Anyway they can just plain tell you, that too bad the market turned down and there is nothing you can do to them for losing your money. It is all in the fine print of the investment document that you signed.
You invested and they cannot guarantee that you will win all of the time.

The recent sub prime debacle and Bear Stearns disaster may have made some Sing investors poor. Because they may have put in lots of money into rated AAA investments that now are .....

Even if you get it back, after deducting their "admin" fees and other charges, what do you have left?

 

[creampuff]

Basically the mechanics of an annuity is the reverse of an insurance policy.

One puts a lump sum to the insurer who will in turn work out a regular payout (usually monthly) for a certain period of time or till death. The level of payout is dependent upon the age of the individual at the point of signing up and the payout period. Naturally there are varying conditions between different annuity policies but they all operate fundamentally the same.

Obviously it means that if you buy an annuity at a young age, the payout amount is smaller than someone who is more advanced in age because the investment of the initial sum with whatever bonuses has to stretch a longer period based on actuarial computations of life expectancy.

An annunity is a good instrument but it depends on your assessment of your own personal financial position.