Hi anon,
I presume you're already above 55.
If I had spare cash and my CPF RA balance isn't at ERS, I'll top up CPF LIFE first. It's a fuss free way to get higher payouts.
However, the funds are locked in pretty much for good. That's the draw back.
At the same time, if you're already receiving CPF LIFE payouts, a top up will impact your next CPF LIFE payouts in that the next payout will be increased.
If you have already reached the limit of topups, then of course you can't put any more in. We need to remember that CPF LIFE was structured to provide a basic level of payouts for life. If your retirement lifestyle requires bigger payouts, and you have maxed out CPF LIFE, then you will want to look at private annuities.
For private annuities (I presume you are referring to the sort that pay for life, and not the sort that pay an income for X years after which there is nothing left), they tend to preserve your capital. Some even guarantee it. However, you will need to wait a little before the payouts start, and since they preserve or guarantee your capital, you won't be seeing the payouts as high as CPF LIFE.
On the flip side, you do get to decide when your payouts start, for example, getting a private annuity at 55 could mean that you get your payouts starting at 57 as some annuities start payout pretty fast, all things considered. This could allow you to ease from working to semi-retired mode while waiting for CPF LIFE which cannot start earlier than age 65.
You can also surrender your private annuity or partially encash it to get some capital back. The same cannot be said for CPF LIFE.
In the end there is no one asset that is perfect, but I do think that you should aim to maximize the benefits of CPF LIFE first. After that, look to private annuities for additional income. However, given the lag time to get payouts from private annuities, you might want to start your planning a little earlier.
Hi anon,
I presume you're already above 55.
If I had spare cash and my CPF RA balance isn't at ERS, I'll top up CPF LIFE first. It's a fuss free way to get higher payouts.
However, the funds are locked in pretty much for good. That's the draw back.
At the same time, if you're already receiving CPF LIFE payouts, a top up will impact your next CPF LIFE payouts in that the next payout will be increased.
If you have already reached the limit of topups, then of course you can't put any more in. We need to remember that CPF LIFE was structured to provide a basic level of payouts for life. If your retirement lifestyle requires bigger payouts, and you have maxed out CPF LIFE, then you will want to look at private annuities.
For private annuities (I presume you are referring to the sort that pay for life, and not the sort that pay an income for X years after which there is nothing left), they tend to preserve your capital. Some even guarantee it. However, you will need to wait a little before the payouts start, and since they preserve or guarantee your capital, you won't be seeing the payouts as high as CPF LIFE.
On the flip side, you do get to decide when your payouts start, for example, getting a private annuity at 55 could mean that you get your payouts starting at 57 as some annuities start payout pretty fast, all things considered. This could allow you to ease from working to semi-retired mode while waiting for CPF LIFE which cannot start earlier than age 65.
You can also surrender your private annuity or partially encash it to get some capital back. The same cannot be said for CPF LIFE.
In the end there is no one asset that is perfect, but I do think that you should aim to maximize the benefits of CPF LIFE first. After that, look to private annuities for additional income. However, given the lag time to get payouts from private annuities, you might want to start your planning a little earlier.