Asked by Anonymous
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
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.
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.
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?
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.
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.