Comparing FRS in RA plus BRS in SA vs ERS in RA, Part 4

This Opinion post first appeared in my blog here: https://pwlcm.wordpress.com/2023/01/30/comparing-frs-in-ra-plus-brs-in-sa-vs-ers-in-ra-part-4/

This blog post is part of a 4-part series:

1. https://pwlcm.wordpress.com/2023/01/27/comparing-frs-in-ra-plus-brs-in-sa-vs-ers-in-ra-with-standard-plan/
2. https://pwlcm.wordpress.com/2023/01/27/comparing-frs-in-ra-plus-brs-in-sa-vs-ers-in-ra-with-cpf-life-basic-plan/
3. https://pwlcm.wordpress.com/2023/01/28/comparing-frs-in-ra-plus-brs-in-sa-vs-ers-in-ra-with-cpf-life-escalating-plan/
4. https://pwlcm.wordpress.com/2023/01/30/comparing-frs-in-ra-plus-brs-in-sa-vs-ers-in-ra-part-4/

Refer to the list of acronyms on CPF in the following blog posts: https://pwlcm.wordpress.com/2022/01/06/acronym-cpf/

I am a CPF Volunteer. If you find this blog post providing useful information about CPF matters and it leads you to using CPF online services, you may fill in my full name “Tan Choong Hwee” in the “Referrer Name” field in some selected CPF online services.

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In a comment to my Part 1 post, a Seedly community member Nicole suggested additional scenarios to look at, i.e. CPF LIFE payout deferred to age 70. As such, I have added 2 more scenarios to the comparison:

• Scenario 1: FRS ($198,800 for 2023) in RA plus BRS ($99,400 for 2023) in SA
• Scenario 2: ERS ($298,200 for 2023) in RA
• Scenario 3: Scenario 1 with Payout deferred to Age 70
• Scenario 4: Scenario 2 with Payout deferred to Age 70

I wasn't able to use the CPF LIFE Estimator to get the monthly payout amount at age 70 for ERS (which would have grown to $555,063) because the estimator currently has a limit of $500,000 on the RA amount. Therefore, I use the yearly 7% increase to compute the deferred payout amount for scenario 3 and 4.

The Excel spreadsheets to compare scenario 3 and 4 for the 3 CPF LIFE Plans are shown below:

I wanted to put all 4 scenarios side-by-side for comparison, but the table became too wide to view the content legibly. Therefore I break it down to 2 tables comparing scenario 1 and 2 as well as scenario 3 and 4. I have also added more information (Cumulative Income, Income Breakeven Level, Age Income Drop Below, Age Income Breakeven, Age Bequest Become Zero) to facilitate my analysis.

Here is the comparison for scenario 1 and 2:

And here is the comparison for scenario 3 and 4:

However, I still want to do a comparison among all 4 scenarios. It dawned on me to use chart instead of table for comparison. I recalled the initial CPF LIFE Estimator had the useful feature of showing the information against the age in a line chart. So I decided to use that format for Retirement Income, Cumulative Income and Bequest as follows:

I believe these 3 charts will help you see which scenario will generate what kind of retirement income and bequest, when your retirement income for FRS+BRS scenario (scenario 1/3) will drop below ERS scenario (scenario 2/4), and when your cumulative income will breakeven, and when your bequest will drop to zero.

You can make a better informed decision for your own unique situation.