Asked by Anonymous

What do you think of the Aviva MyRetirement plan?

My friend recommended me this Aviva MyRetirement plan. I’m 23 this year. Does the plan sound good? Policy term: 52 Premium term: 20 Guaranteed monthly: $530 from age 61 to 75 Non guaranteed monthly: $600 - $1005 Yearly gotta paid: $1925

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  • Hariz Arthur Maloy
    Hariz Arthur Maloy, Independent Financial Advisor at Promiseland Independent
    Top Contributor

    Top Contributor (Feb)

    378 Answers, 632 Upvotes
    Answered on 15 Oct 2018

    Aviva's MyRetirement Series of products are one of the highest yield retirement products in the market.

    Usually they'll return 4.1-4.4% p.a.

    One thing to note. An endowment product is purchased to make sure certain events in life that require money are there no matter what.

    In this case, it provides a guaranteed income source upon retirement for an X amount of years.

    Also since you're young, and if you have a risk appetite for investments, you should invest to achieve higher returns as well.

    But if you're a low risk taker, utilising CPF, bonds, and similar retirement products are a good way to provide guaranteed income in your golden years.

    But one final thing, when planning for retirement at such a young age, we need to plan for us to live way past the current estimated life expectancy age. You and I might live till 92 or more. Thus, planning for a lifetime income payout like CPF Life would be safer.

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    • Question Poster
      Thanks for your reply! I’m not a risk taker, just hope to have a stable plan to beat the inflation rate rather than keeping all my money inside the bank. The reason I’m considering this plan at this age is because I just became a PR and my salary is not very high, I’m afraid that my CPF drawout may not be enuf for retirement, this plan is sort of like supplement to it.
      15 Oct 2018
    • Hariz Arthur Maloy
      Then by all means. It is better than the bank's rates for sure. Again as I mentioned, longer payout age would be ideal in case we outlive our savings. You should be saving anywhere between 20-40% of your income into instruments that beat inflation and have 6 months of your salary as liquid cash at all times. You can consider topping up your CPF SA on a ad hoc basis to help you hit your FRS and withdraw more at 55.
      15 Oct 2018
  • Lee Jiahui
    Lee Jiahui
    55 Answers, 103 Upvotes
    Answered on 16 Oct 2018

    Most foreigners dont buy endowment or retirement plans as they may take up jobs in other countries. Claims for insurance is also usually country specific, other than death benefit but i am not an agent, dunno the specifics. Many PRs withdraw their CPF money when they decide to move to another country. It's the easiest to take out cos it's cash and guaranteed. For stocks, cashing out means having to accept prevailing market prices.

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  • Brandan Chen
    Brandan Chen, Financial Planner at Manulife Singapore
    156 Answers, 228 Upvotes
    Answered on 15 Oct 2018

    No doubt it is a decent plan.

    However, you do have to ask yourself if this plan is suitable for you in the long run since the policy terms is almost 5 decades long and you would not be able to see your money for the next 37 years.

    It would be good to consider the following before you purchase this plan:

    1) Are you adequately covered in terms of insurance?

    2) What is your risk profile? (Conservative, Moderate, Adventurous)

    3) Based on the guaranteed income, it is worth S$255 per month in today's terms (inflation rate of 2%) Would that be sufficient for you?

    4) Have you considered other sources of investment?

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    • Question Poster
      Thanks for your reply! 1) Yes, currently having life and CI insurance. 2) not a risk taker. 3) It’s not enough. This is just a supplementary to my CPF payout for retirement. 4) Do u have any recommendation?
      15 Oct 2018
    • Brandan Chen
      Pardon my slow responses as I'm quite packed recently. If you are quite sure that you would not need the money till retirement, a better alternative would be to top up your CPF SA accounts. If you are able to stomach some risk, perhaps you can look into placing your money in dividend paying funds which is less risky but of tens liquidity should you require cash from now till retirement. Feel free to hit me up on www.facebook.com/brandan.chen if you would like to have a more in-depth discussion
      19 Oct 2018
  • Cheng You Yi
    Cheng You Yi
    7 Answers, 13 Upvotes
    Answered on 15 Oct 2018

    The internal rate of return is 2.57%.

    Total premiums: $38,500

    Total guaranteed income: $95,400

    If I remember correctly, there is also a maturity payout for this plan. Generally speaking, this is a decent plan. While some might say, you are still young, should put in investments instead, I find nothing wrong to have some level of guaranteed income set up to hedge against dividend fluctuation in your retirement. This is especially true if you are risk adverse.

    Additional recommendations will be to compare between different insurers and different plan (there are some that provide lifelong income) to see which one is more suitable to your retirement goals.

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    • Cheng You Yi
      I suggest you get a trusted advisor to help look through the benefit illustration to see if it fits your current goals
      16 Oct 2018
    • Cheng You Yi
      btw, the 2.57% is based on the guaranteed portion only
      16 Oct 2018
  • Elsa Goh
    Elsa Goh
    83 Answers, 159 Upvotes
    Answered on 15 Oct 2018

    Depends on what your monthly income is. Note it is $160 a month. Can you sustain? If there's a chance you can't sustain, don't take it up as you will more likely than not cancel it at some point.

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    • Question Poster
      Thanks for your reply! I’m confident that I’ll be able to sustain it. I just want to find out if it’s worth of my effort + time or there is alternative way which can offer me a better outcome. I’m not a risk taker, at least for now. And I understand the power of compound interest hence I would like to start early.
      15 Oct 2018
    • Elsa Goh
      Ok. Whatever plan you take up, don't leave nothing for emergencies. Else u might end up surrendering your plan early in event of an emergency.
      16 Oct 2018