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CPF Life, a form of annuity scheme, will start in five years time. That means those who are 50 years old will get to opt for one of the twelve schemes five years later.
Originally when the idea was first mooted, people created a ruckus. This was because they were both kiasu and kiasi, and were afraid to lose out if they were to do early. While I think we cannot really predict our lifespan, I think you can make a guess based on your family history. Now, we can choose when to receive the money and also whether we want the money to go to our family if we happen to pass away before collecting the principal sum.

If you happen to enjoy longevity, the extra money that is payable to you actually comes from other people who passed away before the entire sum is fully paid out. If you want the money unpaid to go to your family members in the event of your death, like some form of insurance, then you will have to pay higher premiums.

All these money will come from the CPF Minimum Sum. You can choose to start receiving payouts from 65, 70, 75, 80, 85 or 90 years all. I am very puzzled about the 90 years old. How many years can this person enjoy before passing away? In addition, the interest earned from the premiums do not seem to be transparent at this stage. With close to 45 years, the interest earned would be huge. This also means that the government can delay paying for a longer period of time. I doubt many will take up the 90 years option. Already, people were complaining about receiving money only after 80 years of age.

I guess the successful retirement plan should include many streams of income after 50. It would be great to come into different sources of money every few years after retirement. In addition, since we cannot predict inflation, the $300 promised to you now may be worth peanuts after another 30 years. They had already said that they could not factor in inflation because the costs would escalate wildly.

In a nutshell, this annuities scheme should be only one small source of income come retirement. Make use of your SRS, CPF, insurance payouts, rental, stocks and royalty payments among others. Include pocket money from children. Train them from young that they need to give you pocket money when they start working.

When do you think you want yours to start? Which one do you want to opt for?

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