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Thread: Any Ceiling for contribution of CPF OA?

  1. #31
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    There is no need to adjust the rates, the payout of CPF life is controlled by the board.

  2. #32
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    Sounds good on paper, but reality is another story.......

    You can go here and take a look (read the comments by Wilson Nugraha Citra), and people found that the CPF Life actual return that people will get even if they live until 86 years old is likely less than 1.94% based on current payout...........

    Mind you, 86 years old is already the average age of women (for men is about 82 years old), and the actual return of 1.94% based on the current payout is MUCH LESS than the 3.5-4% that you were told you will get from CPF Life.........

    Before people get carried away by all the statistics and figures touted and thrown in your face, you better make a reality check, whether these figures are real or not.........

    Quote Originally Posted by cbsh38584 View Post
    In early 2015, our PM announced that those 55 & above will receive not 1% but 2% for the RA acct.
    1st 30k - 6% = $1800
    next 30k - 5% = $1500
    Above 60k - 4%


    I am not sure whether they will make adjustment to CPF rates so soon when our PM just announced a
    GOOD NEWS for those 55 & above to gave extra 1%-2% as mentioned above.


    In the late 70s & ealy 80s, our parent bought their 1st 4rm HDB flat < $30k. Now it is worthed >350k to 450k
    after > 30 yrs later. They should have no problem to retire as HDB allow a Lease Buyback Scheme (LBS)
    They are eligible for the LBS as an additional monetisation option if they are from an elderly household living
    in a 4-room or smaller flat. Through this scheme, you will be able to tap on your flat to receive a stream of
    income in your retirement years, while continuing to live in it.


    I am 100% sure that the today BTO 4 rm flat $300k will not shoot up to $3m in 30 yrs time. We are a developed
    economies & growth rate will be 1-3% . Not 8%-12% in the 70s to 90s.


    As you have said, OUR GIC and Temasek announcements a reduced gains to 4%. So what make you very sure
    that you can BEAT & outperform our GIC & TEMASEK 4% return in long run.


    CPF is one of the best tool for retirement planning. If we do not fully make full use of the compounded 4% interest
    rate at young age. We may have problem in our retirement if somehow we SCREW our investment or habitutal
    spender when huge liquid CASH is so easily avail at a touch of BUTTON in our BANK acct.


    @IT CAN BE DONE@ to be able to Accumulate $1m in your CPF by age 55 to age 57 with starting pay ONLY $2500 at age 25.
    The best part is that you only use 20% of your salary + 17% employer contribution to your CPF acct. No voluntary CASH involved.
    At age 55. three CPF acct OA + SA + MA = One million dollars. Dont need to be a HIGH income earner to reach $1m in your CPF


    But only the minorities have the financial capablity , determination & discipline to prorities their retirement need when young & transfer
    from OA (2.5% - 3.5%) to SA (4% to 5%) to see the magic of compouned interest in their special acct.


    Since most of the young couple likely to marry late between age 30-40. Why not set yourself a tgt to hit your Special acct min $100k at
    age 35 by transfer OA to SA. Example By age U should have OA=$112k. SA=33k
    Move 67k from your OA to SA (33k + 67k ) to increase your SA to $100k tgt.

    It will be better if he/she can internal transfer up to the max ceiling of $161k for 2016 as ealy as possible if he/she has the financial capablilty
    when young. Once the max 161k ceiling is reached. U are no longer allow to internal transfer from OA to SA. Your CPF-OA will still continue
    to grow.


    Once your SA=100k is reached by age 35. You know that the BIG WORRY min retirement need is SETTLED .You can concentrate to
    enjoy your life style without any worry about your min retirement need @ age 65. Your SA will continue to grow even more SA>$100k if
    you are still working after @ age 35.

    SA @ $100k compounded 4% interest for 30 yrs. U will have at least 325k at age 65. A very basic retirement est 2.5k/mth at age 65 for life. http://www.moneychimp.com/calculator...calculator.htm







  3. #33
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    Quote Originally Posted by cbsh38584 View Post
    ]2015 was a difficult year for investments.
    Our local insurance outperform better than the foreigner in 2015. But not sure for 2016.


    Great Eastern Life@ 2.24% (2015) 7.08% (2014) 3.62%(2013) 9.76%(2012) 1.54%(2011) 6.58%(2010)



    NTUC Income@ 1.79%(2015) 5.45%(2014) 1.63%(2013) 8.56%(2012) – 0.88%(2011) 5.90%(2010)



    Prudential @ 0.20%(2015) 5.90%(2014) 5.20%(2013) 11.00%(2012) 0.20%(2011) 7.20%(2010)



    Aviva @ – 0.53%(2015) 5.42%(2014) 0.19%(2013) 9.35 %(2012) 1.30%(2011) 6.63%(2010)



    Tokio Marine@ -0.15%(2015) 6.41%(2014) 2.35%(2013) 10.57%(2012) ? ?

    It happen to Temasek , GIC as well as insurance companies.
    The bonus declared will also be reduced for all insurance polices if the investment return continue to be weak in the next few yrs.
    Private annity will also be affected by the low return & need reduce their payout.

  4. #34
    teddybear's Avatar
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    That is not material to what we are saying here.........
    The thing is, we were told that CPF Life annuity payout is about 3.5-4.0% per year (if my memory did not fail me, correct me if I am wrong here), but actually when some people run a check on the figures touted based on the current payout, the real return even if you live till 86 years old is only like 1.94%, that is the problem..........
    So who pocketed the other profit of 1.56-2.06% pa?

    Anyway, Temasek claimed about 17% pa return and GIC claimed 6+% pa return, all so much higher than the 1.94% that CPF Life is paying out (and hence there is no risk to the 1.94% payout being cut, instead it should really be increased to 3.5-4% to back up what these people claimed)......

    For transparency of CPF Life account, it should be caved out as a separate account from CPF and have its own annual financial statements on incomes and payouts. Thereafter, when there are accumulated surpluses because of the low payout, the payouts should be adjusted upwards (In current form, it seems that if there are profits from the low payouts, CPF Board will pocket the profit?).

    Quote Originally Posted by cbsh38584 View Post
    It happen to Temasek , GIC as well as insurance companies.
    The bonus declared will also be reduced for all insurance polices if the investment return continue to be weak in the next few yrs.
    Private annity will also be affected by the low return & need reduce their payout.
    Last edited by teddybear; 31-07-16 at 18:19.

  5. #35
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    CPF.Retirement.Aug16.jpgCPF.Retirement.Aug16.jpgCPF.Retirement.Aug16.jpg
    Quote Originally Posted by cbsh38584 View Post
    In early 2015, our PM announced that those 55 & above will receive not 1% but 2% for the RA acct.
    1st 30k - 6% = $1800
    next 30k - 5% = $1500
    Above 60k - 4%

    I am not sure whether they will make adjustment to CPF rates so soon when our PM just announced a
    GOOD NEWS for those 55 & above to gave extra 1%-2% as mentioned above.


    In the late 70s & ealy 80s, our parent bought their 1st 4rm HDB flat < $30k. Now it is worthed >350k to 450k
    after > 30 yrs later. They should have no problem to retire as HDB allow a Lease Buyback Scheme (LBS)
    They are eligible for the LBS as an additional monetisation option if they are from an elderly household living
    in a 4-room or smaller flat. Through this scheme, you will be able to tap on your flat to receive a stream of
    income in your retirement years, while continuing to live in it.


    I am 100% sure that the today BTO 4 rm flat $300k will not shoot up to $3m in 30 yrs time. We are a developed
    economies & growth rate will be 1-3% . Not 8%-12% in the 70s to 90s.


    As you have said, OUR GIC and Temasek announcements a reduced gains to 4%. So what make you very sure
    that you can BEAT & outperform our GIC & TEMASEK 4% return in long run.


    CPF is one of the best tool for retirement planning. If we do not fully make full use of the compounded 4% interest
    rate at young age. We may have problem in our retirement if somehow we SCREW our investment or habitutal
    spender when huge liquid CASH is so easily avail at a touch of BUTTON in our BANK acct.


    @IT CAN BE DONE@ to be able to Accumulate $1m in your CPF by age 55 to age 57 with starting pay ONLY $2500 at age 25.
    The best part is that you only use 20% of your salary + 17% employer contribution to your CPF acct. No voluntary CASH involved.
    At age 55. three CPF acct OA + SA + MA = One million dollars. Dont need to be a HIGH income earner to reach $1m in your CPF


    But only the minorities have the financial capablity , determination & discipline to prorities their retirement need when young & transfer
    from OA (2.5% - 3.5%) to SA (4% to 5%) to see the magic of compouned interest in their special acct.


    Since most of the young couple likely to marry late between age 30-40. Why not set yourself a tgt to hit your Special acct min $100k at
    age 35 by transfer OA to SA. Example By age U should have OA=$112k. SA=33k
    Move 67k from your OA to SA (33k + 67k ) to increase your SA to $100k tgt.

    It will be better if he/she can internal transfer up to the max ceiling of $161k for 2016 as ealy as possible if he/she has the financial capablilty
    when young. Once the max 161k ceiling is reached. U are no longer allow to internal transfer from OA to SA. Your CPF-OA will still continue
    to grow.


    Once your SA=100k is reached by age 35. You know that the BIG WORRY min retirement need is SETTLED .You can concentrate to
    enjoy your life style without any worry about your min retirement need @ age 65. Your SA will continue to grow even more SA>$100k if
    you are still working after @ age 35.

    SA @ $100k compounded 4% interest for 30 yrs. U will have at least 325k at age 65. A very basic retirement est 2.5k/mth at age 65 for life. http://www.moneychimp.com/calculator...calculator.htm






    Today Sunday times - CPF $1m by age 65
    =================================
    It is a no brainer that CPF compounded high interest RISk FREE is a good retirement plan scheme.

    But sadly, not many people TRUST in our CPF scheme. Lock in, PAP become the opposition, Shift
    "goal post " etc. It tool me 2yrs + to convince my friend who is quite financial savvy to transfer his
    CPF OA to CPF SA. He hestiated. But finally he transferred it. Later, he regretted for not transferring
    much earlier to enjoy the high compounded interest.

    With the S$1m, the interest will be est > $30k. Every yr keep increasing due to it compounded effect.
    I will be using the $30k interest to travel around the world with my wife when I am close to age 58-60.
    Still a long way but I am very patience to wait for that day.

  6. #36
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    Quote Originally Posted by cbsh38584 View Post
    CPF.Retirement.Aug16.jpgCPF.Retirement.Aug16.jpgCPF.Retirement.Aug16.jpg

    Today Sunday times - CPF $1m by age 65
    =================================
    It is a no brainer that CPF compounded high interest RISk FREE is a good retirement plan scheme.

    But sadly, not many people TRUST in our CPF scheme. Lock in, PAP become the opposition, Shift
    "goal post " etc. It tool me 2yrs + to convince my friend who is quite financial savvy to transfer his
    CPF OA to CPF SA. He hestiated. But finally he transferred it. Later, he regretted for not transferring
    much earlier to enjoy the high compounded interest.

    With the S$1m, the interest will be est > $30k. Every yr keep increasing due to it compounded effect.
    I will be using the $30k interest to travel around the world with my wife when I am close to age 58-60.
    Still a long way but I am very patience to wait for that day.

    Didi you notice recently that our GOVT has promoted AWARENESS of SDIC at heartland mall ?
    Why do our GOVT trying to promote the SDIC awareness ?

    SDIC - Singapore deposit insurance corporation. WE insure your deposits up to $50,000.

    In the event a Deposit Insurance Scheme member bank or finance company fails, all of your eligible accounts with that member are aggregated and insured up to S$50,000. Trust and client accounts held by non-bank depositors are insured up to $50,000 per account.

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    To support teddy, here is the Maths for the inputs:
    Current value: $241,500
    Current age: 55
    Payout age: 65
    Estimated payout: $1,770 - $1,920 monthly ($21,240 - $23,040 per year)
    Life expectancy: 86
    N = 86 - 65 = 21 (years)
    Future value: 0

    https://www.cpf.gov.sg/Members/Schem...ent-sum-scheme
    Last edited by richwang; 14-08-16 at 20:27.

  8. #38
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    You are assuming that the CPF interest rate remains unchanged with a min of 4% in SA and 2.5% in OA.
    However, isn't CPF interest rate supposed to be pegged to floating SG 10-year bond rate and the minimum interest rate will be removed? When will this new scheme start?

    Quote Originally Posted by cbsh38584 View Post
    CPF.Retirement.Aug16.jpgCPF.Retirement.Aug16.jpgCPF.Retirement.Aug16.jpg

    Today Sunday times - CPF $1m by age 65
    =================================
    It is a no brainer that CPF compounded high interest RISk FREE is a good retirement plan scheme.

    But sadly, not many people TRUST in our CPF scheme. Lock in, PAP become the opposition, Shift
    "goal post " etc. It tool me 2yrs + to convince my friend who is quite financial savvy to transfer his
    CPF OA to CPF SA. He hestiated. But finally he transferred it. Later, he regretted for not transferring
    much earlier to enjoy the high compounded interest.

    With the S$1m, the interest will be est > $30k. Every yr keep increasing due to it compounded effect.

    I will be using the $30k interest to travel around the world with my wife when I am close to age 58-60.
    Still a long way but I am very patience to wait for that day.

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    Let's use discount rate of 1.94%
    Standing at the year when you are 65 and calculate the "current value" of your total payouts:

    I = 1.94
    N = 21
    PMT = 21,240
    FV = 0

    Any financial calculator will give you:
    PV= 363,511
    http://www.calculator.net/present-va...1=end&x=61&y=9

  10. #40
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    In this case, 85.x years old is the average age of female and so should be the study case for a female.

    Yes, this is an interesting case and we would like to know what is the real return in this scenario (assuming a person lives till the average age of 86 years old and no bequest left)?

    Quote Originally Posted by richwang View Post
    To support teddy, here is the Maths for the inputs:
    Current value: $241,500
    Current age: 55
    Payout age: 65
    Estimated payout: $1,770 - $1,920 monthly ($21,240 - $23,040 per year)
    Life expectancy: 86
    N = 86 - 65 = 21 (years)
    Future value: 0

    https://www.cpf.gov.sg/Members/Schem...ent-sum-scheme

  11. #41
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    Wondering why you are calculating the PV?
    PV should be known (since at 55 years old you have $241,000 and you are supposed to get 3.5-4% return till 65 years old).

    What is unknown here is the interest rate / return for your annuity (from 65 years old onwards) if you live till the average age of 86 years old.

    Quote Originally Posted by richwang View Post
    Let's use discount rate of 1.94%
    Standing at the year when you are 65 and calculate the "current value" of your total payouts:

    I = 1.94
    N = 21
    PMT = 21,240
    FV = 0

    Any financial calculator will give you:
    PV= 363,511
    http://www.calculator.net/present-va...1=end&x=61&y=9

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    And now back to age 55, to see what is the effective rates used between age 55 and 65.

    PV = 241,500
    FV = 363,511
    N = 65 - 55 = 10
    PMT = 0

    Again any financial calculator will tell you:
    I = 4.174%

    http://www.calculator.net/finance-ca...tit=0&x=53&y=2

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    This is about right for the weighted average interest rate:
    First 30k 6%
    Next 30k 5%
    The rest 4% (241,500 - 60,000 = 181,500)

    To be exact
    Weighted I = (30,000 X 6 + 30,000 x 5 + 181,500 X 4 ) / 241,500 = 4.37

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    Ok, teddy is right.
    With weighted interest rate of
    I = 4.37
    PV = 241,500
    PMT = 0
    N = 65 - 55 = 10

    By age 65, the
    FV = 370,402

    http://www.calculator.net/finance-ca...it=0&x=67&y=11

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    Now stand at age 65,

    PV = 370,402
    FV = 0
    N = 86 - 65 = 21
    PMT = 21,240

    Financial calculator tells you:
    I = 1.755

    http://www.calculator.net/finance-ca...tit=0&x=62&y=2

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    My dear, teddy was nice to say 1.96%!

  17. #47
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    For those who are interested in the calculation, some kind soul has developed a Google Sheet to help you to calculate the figures (please click here!), and you can see for yourself (LIVE) that CPF Life really pays very low annuity return of 1.9% (or so) even if you live till 85 years old (for women)........ (You need to make a copy of the Google Sheet file before you can change the figures! To make a copy, you need to have Google Drive account and login to it. You can also download a copy as Excel .xlsx file).
    If people tell you otherwise, you can show them how you calculate them and ask them to justify and prove the contrary (don't just empty talk and bullshit)...........................

    And in case you are wondering why use 85 years old for women, you can see the statistics here, which states that life expectancy for Singapore women is 84.9 years and for men is 80.4 years!


    Quote Originally Posted by richwang View Post
    To support teddy, here is the Maths for the inputs:
    Current value: $241,500
    Current age: 55
    Payout age: 65
    Estimated payout: $1,770 - $1,920 monthly ($21,240 - $23,040 per year)
    Life expectancy: 86
    N = 86 - 65 = 21 (years)
    Future value: 0

    https://www.cpf.gov.sg/Members/Schem...ent-sum-scheme

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    Now, let's find out how much they should pay, using 4% as the rate:

    PV = 370,420
    FV = 0
    N = 86 - 65 = 21
    I = 4


    Calculate
    PMT = 26,403
    (S$2,200 per month)

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    I only know if you buy property, you pay 20% loan 80%.

    Before the loan is fully pay, you buy another one and loan.

    This way you are ahead of inflation.

    1988 4 room HDB cost 83,000

    1996 5 room HDB cost 225,600 (now 5 room asking 640,000)

    2006 2 Bedroom cost 535,000 (now asking 1,450,000)

    2011 3 bedroom PH cost 1,305,800. (now asking 1,500,000)

    If bank can loan me money, I will still buy property.
    Last edited by Arcachon; 14-08-16 at 22:15.

  20. #50
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    How to make money all year round if you only know about investing in property and nothing else???

    Quote Originally Posted by Arcachon View Post
    I only know if you buy property, you pay 20% loan 80%.

    Before the loan is fully pay, you buy another one and loan.

    This way you are ahead of inflation.

    1988 4 room HDB cost 83,000

    1996 5 room HDB cost 225,600 (now 5 room asking 640,000)

    2006 2 Bedroom cost 535,000 (now asking 1,450,000)

    2011 3 bedroom PH cost 1,305,800.

    If bank can loan me money, I will still buy property.

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    Every month collect rental don't need until the end of the year.

    The amount of money printing is getting worst.

    Whoever believe in money is going to get a shock when they need it most.

    Next month all BUS and TRAIN under the government.

    Soon you will get shorter lease so that more can enjoy housing.

  22. #52
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    Rental?
    There is nothing guarantee about rental, so the rental is a bonus and I won't even bet on collecting it every month non-stop.
    Most important is that even if you have NO rental, how long can you last?

    And for money you can't deploy in property, you better get better return than leaving them in the bank (as you said, "The amount of money printing is getting worst")! So, better learn to invest for good returns in other venues (other than properties)............. And Don't leave your money in CPF, they are dead-duck!

    Quote Originally Posted by Arcachon View Post
    Every month collect rental don't need until the end of the year.

    The amount of money printing is getting worst.

    Whoever believe in money is going to get a shock when they need it most.

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    Without bullets better don't go for war.

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    Guerilla warfare can be extremely profitable without any bullet, think you should learn to invest and make money outside of properties (which unfortunately most people like you have been priced out because of property cooling measures like TDSR and ABSD etc).

    You people should learn to forget about profiting from property (which you can't now) and still make lots of money elsewhere..............


    Quote Originally Posted by Arcachon View Post
    Without bullets better don't go for war.

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    People can make money anywhere or anyhow, or any way.

    Property good, stocks also good. Borrow to invest, just think of scenarios like Swiber. If hedge everything carefully, its still ok overall.

    The bulk of my friends keep cash and worship cash in bank. That is the only strategy that feels safe but is highly risky over the very long run.



    Quote Originally Posted by teddybear View Post
    Guerilla warfare can be extremely profitable without any bullet, think you should learn to invest and make money outside of properties (which unfortunately most people like you have been priced out because of property cooling measures like TDSR and ABSD etc).

    You people should learn to forget about profiting from property (which you can't now) and still make lots of money elsewhere..............
    The three laws of Kelonguni:

    Where there is kelong, there is guni.
    No kelong no guni.
    More kelong = more guni.

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    Quote Originally Posted by cbsh38584 View Post
    Today Sunday times - CPF $1m by age 65
    hmmmm ... I thought there is a cap to SA contribution ? there is no way you can reach 1mil by 55.

  27. #57
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    There is definitely a cap to SA contribution at FRS, which is currently $161,000(?) (as far as I know).
    Is there a cap to CPF OA? Even if there isn't, the return is only 2.5% on CPF OA, too little to be of any use........
    So the article is misleading perhaps?
    There is no problem to hit $1M in CPF if people contribute most of these money from Cash top-up but definitely not because they contribute small amount of money into CPF and CPF give them superb returns to help them to achieve $1M (which seems to be the story the writer is trying to sell?)

    However, this is not to say that CPF or the government short-change people because hei, 2.5% is still a good rate for people who don't know how to invest! For these people, they should be grateful!

    For those who know how to invest, it is better to DIY (than leave their money in CPF) and more options and avenues for them to invest should be made available (instead of all those stupid restrictions restricting them from many investments which are available to them if they use Cash).........

    Quote Originally Posted by amk View Post
    hmmmm ... I thought there is a cap to SA contribution ? there is no way you can reach 1mil by 55.
    Quote Originally Posted by cbsh38584 View Post

    Today Sunday times - CPF $1m by age 65
    =================================
    It is a no brainer that CPF compounded high interest RISk FREE is a good retirement plan scheme.

    But sadly, not many people TRUST in our CPF scheme. Lock in, PAP become the opposition, Shift
    "goal post " etc. It tool me 2yrs + to convince my friend who is quite financial savvy to transfer his
    CPF OA to CPF SA. He hestiated. But finally he transferred it. Later, he regretted for not transferring
    much earlier to enjoy the high compounded interest.

    With the S$1m, the interest will be est > $30k. Every yr keep increasing due to it compounded effect.
    I will be using the $30k interest to travel around the world with my wife when I am close to age 58-60.
    Still a long way but I am very patience to wait for that day.

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    Quote Originally Posted by richwang View Post
    Ok, teddy is right.
    With weighted interest rate of
    I = 4.37
    PV = 241,500
    PMT = 0
    N = 65 - 55 = 10

    By age 65, the
    FV = 370,402

    http://www.calculator.net/finance-ca...it=0&x=67&y=11
    OOPS, wrong interest rates used. Because the higher rates only applies to the first $60k, with the amount increasing, the weighted average rate will go lower than 4.37%. So the FV 370,402 is over estimated. Thus the annuity rate is under estimated.
    We really need a spreadsheet for all the cash flows.

    Sorry for this.
    Richard

  29. #59
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    Here is the catch: putting in $3,000 cash MONTHLY.

    "Mr Wong will continue to transfer 100 per cent of his Ordinary Account funds to his Special Account this year and the next. In addition, he will top up his Special Account with $3,000 cash monthly during the same period."

    http://www.straitstimes.com/business...-cpf-by-age-65

  30. #60
    teddybear's Avatar
    teddybear is offline Global recession is coming....
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    You can use this Google Sheet to help you to calculate the figures:
    https://docs.google.com/spreadsheets...it?usp=sharing


    You need to make a copy of the Google Sheet file before you can change the figures! To make a copy, you need to have Google Drive account and login to it. You can also download this copy as an Excel .xlsx file for offline use.

    Since 2015, the 1st $30k of the Retirement Account earns 6%, the next $30k earns 5%, and the remaining earns 4%, and this only applies for the period when you are 55 years old to 65 years old.
    After that, as our calculation shows, even if a woman lives until average age of 85 years old, the return you get is only <1.9%............
    So who claimed that CPF Life is giving you 3.5 to 4% return???


    Quote Originally Posted by richwang View Post
    OOPS, wrong interest rates used. Because the higher rates only applies to the first $60k, with the amount increasing, the weighted average rate will go lower than 4.37%. So the FV 370,402 is over estimated. Thus the annuity rate is under estimated.
    We really need a spreadsheet for all the cash flows.

    Sorry for this.
    Richard
    Last edited by teddybear; 15-08-16 at 21:00.

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