Use the official estimator to compare plans and start ages, and write down your choice.
Linda was getting close to CPF LIFE payouts and had already read about the three plans and the effect of deferring. Linda had a leaning, but no personal numbers side by side. CPF's Monthly Payout Estimator gives you those numbers, and turning them into one table takes about half an hour.
You need three things: your Singpass, your projected Retirement Account (RA) balance at 55 from lesson 6.4, and a spreadsheet or a sheet of paper with room for a table.
CPF's tool for this is called the Monthly Payout Estimator, and it is mainly for members aged 55 to 79. If you are in that age range, you log in with Singpass and it estimates your monthly payouts based on your Retirement Account balance. If you are not in that age range, check on cpf.gov.sg which CPF tool applies to you. Use the RA balance from your lesson 6.4 scenario map, or the retirement sum you are on track for, so the estimator and your own projection agree.
The estimator shows the assumptions behind its figures, such as interest rates and whether you are still working. Write those assumptions and today's date at the top of your table. When you rerun the estimator next year, you will be able to see what changed.
You are comparing the Standard, Basic and Escalating plans at two start ages. The first is your payout eligibility age, the earliest start age in the comparison. The second is a later age you could realistically wait until. Base that later age on the income you listed in lesson 7.3, since that income is what you would live on while you wait. Three plans at two ages gives you six runs.
For each run, record the starting monthly payout. Starting payouts later raises every payment, so the later-age figures will be higher. The Escalating Plan payout changes each year, so for those two runs also record the payout at 70, 80 and 90.
Then record the estimated bequest at 70, 80 and 90 for every run. A bequest is what your beneficiaries would receive if you died at that age.
Under the Basic Plan, less of your RA savings is used for the CPF LIFE premium, so the monthly payout is lower than under the Standard Plan. Use the estimator to see how the bequest changes over time under each plan. A toy example for the Standard Plan, with invented figures that ignore interest, shows the pattern. Say the premium is S$300,000 and the payout is S$1,500 a month from age 65. By 70 you have received S$90,000 and the bequest is about S$210,000. By 80 you have received S$270,000 of payouts and about S$30,000 is left. By 90 the bequest is zero, and the payouts continue, because under the Standard Plan they carry on after the bequest reaches zero.
The estimator's real figures include interest, so they will differ from a no-interest calculation like this one, but the pattern is the same.
Lay the table out with one row per plan and start age, six rows in all. The columns are starting payout, payout at 70, 80 and 90, and bequest at 70, 80 and 90. Read it with three questions in mind: which option gives the starting income you need for essential spending, which gives the most at 85 and 90 if you live that long, and which leaves the bequest you want at the ages you think most likely.
Linda's table showed a pattern Linda had not expected. At the payout eligibility age, the Escalating Plan started noticeably below the Standard Plan, and that was a worry. Deferred by three years, the Escalating Plan's starting payout was close to the Standard Plan's payout at the earlier age, and it still rose every year after. The Basic Plan kept the largest bequest at 70 and 80, but by 90 the gap between the plans had mostly closed.
Linda chose the Escalating Plan, deferred to 68. The reason was that part-time work should cover the gap until then, and Linda prefers payouts that rise through the eighties. Linda also wrote down two conditions. If Linda stops working before 66, payouts start at the eligibility age instead. If Linda's health changes, Linda will reconsider the Standard Plan.
Under your table, write one sentence with the plan, the start age and the main reason. Below it, list what would change your mind. The usual triggers are:
a health diagnosis a change in your other income a new dependant a change in the rules
This choice is not final. 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 payouts begin. Treat the table as a draft and update it each year as your balance and circumstances change.
Your table is complete when it has six rows covering three plans at two start ages, with the starting payout, payouts at 70, 80 and 90, and bequests at 70, 80 and 90 for each. The estimator's assumptions and the date sit at the top, and your chosen plan and start age sit 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.
Put the estimator results into a comparison table. Below it, write the plan and start age you would choose, and why.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).