Friday, August 25, 2017

CPF Life’s Return (/Annuity) Calculator Online

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 ($)                                           -258811
Future Value ($)                                            91141
Number of Periods (months)                        120
Payment Amount ($)                                     1196
Interest Rate per period, %                           0.01
Interest Rate per Year, %                             
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...  

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