You will use the official estimator to compare plans and start ages and record your choice.
Linda had read about the three plans and the effect of deferring, and she had a leaning. What she didn't have was her own numbers side by side. This exercise uses the official CPF LIFE estimator to build a comparison table, then records the plan and start age you would choose today. It takes about half an hour.
You need your Singpass, your projected Retirement Account balance at 55 from lesson 6.4, and a spreadsheet or a sheet of paper with room for a table.
Log in to cpf.gov.sg and open the CPF LIFE estimator. When you are logged in, it can read your current balances and project them forward. You can also enter a balance yourself. Use the RA balance from your scenario map in lesson 6.4, or the retirement sum you are on track for, so the estimator and your own projection agree.
Note the assumptions the estimator shows, such as interest rates and whether you are still working. Write them at the top of your table with today's date. When you rerun it next year, you will want to know what changed.
You will compare three plans at two start ages. The first start age is your payout eligibility age. For the second, pick a later age you could realistically wait until, based on the income you listed in lesson 7.3, Starting payouts later raises every payment.
That makes six runs: Standard, Basic and Escalating at the earlier age, and the same three at the later age. For each run, record the starting monthly payout. For the Escalating Plan, record the payout at 70, 80 and 90 as well, since it changes each year.
For each run, record the estimated bequest at ages 70, 80 and 90. This is what your beneficiaries would receive if you died at that age.
Bequests shrink as payouts are made, and the speed differs by plan. To see why, take a toy version with invented figures, ignoring interest. Suppose the premium for the Standard Plan were S$300,000 and the payout S$1,500 a month from 65. By 70 you would have received S$90,000, leaving a bequest of about S$210,000. By 80, after S$270,000 of payouts, about S$30,000 would be left. By 90 the bequest would be zero, though the payouts would carry on. The estimator's real figures will differ because it includes interest, but the pattern is the same: the bequest falls year by year, and the Basic Plan slows the fall.
Lay the results out as one row per plan and start age, six rows in all, with columns for the starting payout, the payout at 70, 80 and 90, and the bequest at 70, 80 and 90.
Then read across it with three questions. Which option gives the starting income you need for essential spending? Which gives the most at 85 and 90, if you live that long? Which leaves the bequest you want at the ages you think are most likely?
Linda's table, from her own estimator runs, showed a pattern she hadn't expected. At her payout eligibility age, the Escalating Plan started noticeably below the Standard Plan, which worried her. Deferred by three years, the Escalating Plan's starting payout was close to what the Standard Plan paid at the earlier age, and it still rose every year after that. The Basic Plan kept the largest bequest at 70 and 80, but by 90 the gap between the plans had mostly closed.
Under the table, write the plan and start age you would choose today, in one sentence, and the main reason. Then write what would change your mind: a health diagnosis, a change in your other income, a new dependant, or a change in the rules.
Linda wrote: "Escalating Plan, deferred to 68, because my part-time work should cover the gap and I would rather have rising payouts in my eighties. If I stop working before 66, I will start payouts at my eligibility age instead. If my health changes, I will look again at the Standard Plan."
This isn't a final decision. You choose your plan when payouts are about to begin, and the CPF Board sets out on cpf.gov.sg what can be changed after that. Your table is a draft that you update each year as your balance and circumstances change.
Yours is done when it has six rows, three plans at two start ages, with the starting payout, the payouts at 70, 80 and 90, the bequests at 70, 80 and 90, the estimator's assumptions and the date at the top, and your chosen plan and start age written underneath with the reason and the conditions that would change it.
Build the table from your own estimator runs, then write the plan and start age you would choose today and why.
Build a comparison table from the estimator results and write the plan and start age you would choose, with the reason.
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