Previously,
I have made available a “CPF Life Payout-Return Online Calculator“ here:
where
you can calculate the payout you are supposed to receive based on the expected
annuity return you desire (which should be 4% according to CPF) if you can live
to certain age!
However,
for people who are only interested in calculating the expected annuity return
only (based on the age they expect to be able to live until and the actual CPF
Life payout they receive and the bequest you are entitled when the person die),
that calculator is really a hassle and a pain in the neck!
For
those who are only interested in calculating the expected annuity return only
(based on the age you expect to be able to live until and the actual CPF Life
payout they receive and the bequest), good news! I have now created another CPF
Life’s Return Online Calculator which is specifically meant for that purpose!
Not
only that, this calculator also allows you to enter the “Bequest” amount (in
the “Future Value” box). This CPF Life’s Return Online Calculator is basically
similar to an annuity online calculator!
You
can access my CPF Life’s Return online calculator at this web link:
Ok,
using my online calculator, you need to key in the following (for example):
Online Calculator for CPF Life's Return / Annuity
Name Value
Present
Value ($) -258811
Number
of Periods (months) 120
Payment
Amount ($) 1196
Interest
Rate per period, % 0.01
Payment
At: Beginning =End
Instructions:
(a)
To calculate interest rate for default input values: Press "ir"
button to calculate interest rate for default values!
(b)
To compute for other unknown value: Type in four known values, then press one
of the buttons at the right to compute the unknown value. (E.g., to solve an
example problem to compute "Future Value", press the "fv"
button above)
(c)
Always remember that money you paid out (put) into annuity should have negative
value, while money you received should have positive value!
(d)
Note: If you are not getting any computed result for computing "ir",
try varying the value keyed into "Interest Rate per period, %"!
(e)
Also enter the interest rate per period (not per year).
Example,
to compute/solve for CPF Life annuity’s return (i.e. we are interested in the
“Interest Rate per Year, %” figure), press the "ir" button above!
This will result in the estimated CPF Life annuity’s return per period (in this
case 1 period = 1 month) being shown in the box to the right of the text
“Interest Rate per period, %” (and replacing the initial value of “0.01”)! However, we usually deal with per year return
and hence what we are really interest is the figure to the right of the text
“Interest Rate per Year, %”!
Note
that in the above, I assume:
(a)
The present value “-258811” is
the amount you will have at 65 years old if you retain $166,000 at 55 years old
in CPF Retirement Account.
(b)
The age by which this person
will live till passing away to be 75 years old (for example), so the “Number of
Periods” (which you would be able receive CPF Life payout) = (75-65)x12 = 120.
(c)
The “Payment Amount” is the
actual CPF Life payout amount you receive, which is currently about $1196 pm for
CPF Life Standard plan for women.
(d)
“Interest Rate per period, %”
is what we want to calculate, and we can do so by clicking on the “ir” button
(by clicking on “ir” using left-mouse-button).
If you are not getting any computed result or incorrect result for
computing the interest rate after clicking “ir”, try entering a different value
into the "Interest Rate per period, %" (e.g. 0.01, -0.01, etc)!
(e)
The “Bequest” figure is $91141
(based on CPF Board’s CPF Life payout estimator http://www.cpf.gov.sg/eSvc/Web/Schemes/LifePayoutEstimator/LifePayoutEstimator).
If you want to estimate the CPF Life annuity return for the case where a person
passes away earlier than the average life-span (and hence the “Bequest” is more
than $0), you can enter the “Bequest” figure in the box to the right of the
text “Future Value”!
Remember
to use negative values for money you paid into the annuity, and positive values
for money you received (for both monthly payout and bequest). Also enter the
interest rate per period, not per year (don’t enter anything into the “Interest
Rate per Year, %” box!). If you are receiving monthly payments and have an
annual interest rate, divide the annual rate by 12. Thus, interest rate for one
period of an 8% annual rate is 8%/12 and is entered as 0.666666.
My "CPF
Life’s Return Calculator Online" can be regarded as a complementary tool
to CPF Life’s "CPF LIFE Payout Estimator".
You
can access "CPF LIFE Payout Estimator" from the link in this URL...
http://make-money-secrets.blogspot.com/p/useful-links.html
When
you join CPF LIFE, you can choose between:
• the LIFE Standard Plan; or
• the LIFE Basic Plan; or
• the LIFE Escalating Plan.
Each
CPF LIFE plan provides a different combination of trade-offs between the amount
of monthly payouts that you would receive and the bequest that you would leave
for your beneficiaries.
No
details have been released as to how CPF Board derives the monthly payout and
bequest figures, and also the interest you will earn for your money (that
remains not disbursed yet), the insurance charges and also administrative fees
levied on you, and hence your best bet will be just to calculate the over-all
return of your CPF Retirement Account balance at 65 years old!
My
"CPF Life’s Return Calculator Online" can give you an idea how much
return has been assumed into the CPF Life payout based on the original CPF Life
principle number (your Retirement Account balance at 65 years old) and the
payout you are getting (to see whether you are getting better return from CPF
Life than Insurance Annuity scheme) and the bequest amount (even touch wood you
die before 82.5 years old when your RA fund has been totally drawn down). You can also get a glimpse of which scheme is
a better deal for you...
