Category: retire

old retirement, not “retire young”

[25]build up150k]wife’s greenPortion

Posted on by tiger40490

 

  • $10k self top-up by cash .. excluded from green_portion of cpfRA. “Only meant for CpfLife monthly payout”. No way to withdraw at 55 or any time after.
  • $10k within-family cash top-up, includes my annual 8k .. excluded
  • $10k within-family cpf transfer .. excluded
  • .. In my dashboard there is an amount displayed.
  • $10k self transfer from her own OA (including VCon).. will go into green_portion 🙂
  • $38k VCon -> 3-way split .. about 27k will go into green_portion 🙂
  • .. salary contribution .. similar. Let’s wait for that to kick in.

The green_portion of wifeRA is f4w by “pledging”. As of Feb 2025, 24k is red_portion. Green_portion is about 60k.

It’s crucial to build up a big SA balance before she turns 55, so that when cpfRA is created, it will have a sizeable green_portion.

The timeline and process:

  1. at 55, FRS amount (say 250k) is auto-transferred from OA/SA into my new RA. (There may be an excess balance in OA/SA.)
  2. IFF we pledge my portion of the flat as “collateral” then we can take out the green_portion of cpfRA. We should test this channel after 55, a little bit.
  3. The OA/SA excess balance can be withdrawn 100% any time. We should exhaust this channel beffore touching the green_portion.
  4. After 55 (by 65), I will top up cpfRA to the ERS watermark.
  5. Before wife turns 55, self-transfer OA balance to SA.

PFIOL=PF intOnlyLoan #PFSA

Posted on by tiger40490

PFIOL = prem financing interest-only loan
Wayne pointed out “interest-only” is quite common wherever lender owns an insurance policy as collateral. I am the beneficiary not the owner of the policy.

Q: why this PFIOL is acceptable while others aren’t? Actually I don’t remember the others in detail

  • A: current LIR is high, so I can easily visualize high LIR. Worst-case plann is easier.
  • A: pay_down is easy and free. simplicity
  • A: I can liquidate full policy after 36M. Prison term is shorter. simplicity
  • A: loan quantum is relatively small
  • A: no currency risks
  • A: LIR risk is “contained” within the final 14M window… simplicity

Q3: pay_down? See quote below
A: Note the first 2 of the 3 windows have good LIR. During the 3rd (final) window, if LIR skyrockets, I ought to pay down, perhaps using the first FLI2, or my USD (around 200k), provided by then I have yet to deploy USD elsewhere
A: After prison term, I think I should pay down iFF I have too much idle cash and unable to genertate 2.77 ppa (an hypothetical LIR).

Q3b: Both loans carry the same LIR, so pay down which first?
A: FWD, because I may soon surrender this one, and keep FLi250 leveraged.
A: FLi250, to protect this deal from default hazard

— COF is the overall cost across the CIMB buseiness.

🙁 COF is opaque, not as transparent as Sora.

👍 COF is stable… Sora is too volatile for the lender, so a thicker buffer (1 ppa spread) is imposed.  As of Nov 2024, for all-in LIR, Sora is worse than COF.

CIMB offers COF to loan customers as an option. If uncompetitive, customer can choose Sora, or customer can pay off the loan or default.

As of 27 Jan 2025, COF is 3.09 ppa.

— GIRO .. Repeated Giro failures would prompt Cimb to terminate the loan via policy surrender. (Annual prepayment is not an option.)

Scheme 1 .. To minimize monthly operational risk, I can switch to FWD monthly payout option. I will only withdraw surplus balance from PFSA [PremFinancing service acct] once a few months.

Scheme 1b .. after I receive each annual payout, I will withdraw surplus and leave sufficient balance for 12M

Current Scheme 2 .. Remind myself (gCalendar?) to top up PFSA periodically (quarterly?) and monitor PFSA balance as part of recon.

— I Looked into why (based on 3% loan rate for the final 19M) the net loss is so much higher than in the Singlife deal. I think the main reason is … I’m paying CIMB 6 months of additional interest. 3% x 190k for 6M = $2850 of additional interest. This $2850 is partially offset by a higher upfront rebate (1.87% vs Singlife 1.37%) and higher annual payout rate (3.38% vs Singlife 3.21%)

Actually, I will have more than 228k idle cash sitting in some bank accounts. During the final 14 months, I might be willing to keep the 228k loan at 3% LIR, and simultaneously earn a higher DIR. This /stance/posture/attitude/perspective/ might help cushion the pain and regret of “exit FWD deal at a loss”. That’s Scenario A.

Here’s Scenario B. The earliest exit time is Nov 2027 for FWD. If in early 2027, I foresee that I will exit ASAP, and I can’t earn a better DIR than LIR, then I would sink in up to 228k to pay_down (or even wipe out) the loan. This will make the end-to-end PnL positive (or less negative :). I think this is viable, according to the email thread “loan pay-down i.e. partial pre-payment”.

However, the bigger my total PFL quantum, the heavier is my debt burden, the slower I could pay_down. I would probably surrender my very first FLI2 for pay_down. 

Penalty for prepayment? See loan offer letter. Two scenarios — 1) within free-look period 2) short-notice. Silvester replied that

There’s no lock in for the loan and you can choose to redeem anytime. However, there is a 1 month notice period for partial repayment, and 3 months’ notice period for full repayment. Since there’s no limit to partial repayment, if such events were to occur, you could partial pay off majority of the loan after 1 month. It will be left with $10k as the remaining loan which you are able to pay fully and redeem your policy 2 months after your partial payment.

 

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Posted on by tiger40490

This comparison proves to me that cpfOA is an inferior parking space.

Therefore, I should consider housing refund from FSM to OA to SA.

SA OA FSM bank
(comp)return@$1k marginal amount 4% 2.5% 2-3%
.. dependable return? yes no yes
how soon can take out without loss age 55 6M 1D
use for edu #after 55? BRS yes
use for housing before 55? no yes yes
use for U.S. housing/edu? no no yes
use for stocks mostly US no unlikely yes

lock up100k]cpf if no liquidity need

Posted on by tiger40490

See also

— The worries .. Given 300k [1] idle cash in your bank account, this sitting suck is exposed to (ranked by my worry)

  1. scams … growing threat as we age and lose some of our judgement
  2. splurge .. by anyone in the family
  3. [a] adult children 啃老 .. relying on me
  4. [a] adult children’s housing needs .. their problem, not my duty. I want to help out within my means. Having most of my fund locked into cpfLife obviates these tricky, heavy, stressful decisions.
  5. [a] start-up .. by my adult children or someone else. A good cause. However, beyond my 60s I won’t have big (above 100k) appetite for start-ups.
  6. [a] donations .. Large donation is safer in my will, not an impulsive decision. In contrast, regular contribution can be adjusted at any time.

[a] Some may call me an elderly hoarder but I want to protect my wife and my own retirement.

[1] You may have more idle cash, but let’s focus on a slice of it.

——————————-

If you are between 55 and 65, and foresee no “liquidity needs” after 65, then better lock it away in cpfRA. Time your action to some time close to 65.

If you don’t need this amount of idle cash after 55, then better lock it away in cpfRA. Note you still can withdraw the snap55_FRS_minus_BRS amount (the green portion). See %%big-ticket outlays: 55-65 – dTanbinvest

Q: how much locked up is too_much_locked_up?
A: an amount (like 1000k locked up) that affects my big-ticket purchases.
A: no amount is “too_much_locked_up”, if I have no big-tickets in my old age

— Q: Considering long-term inflation (60~90), but assuming no liquidty needs, should I lock up this huge[1] amount in cpfLife?

  • optimist .. I will have work income into my 70s. Part of it, if in Singapore, will go into cpfOA and f4w
  • optimist .. Assuming no liquity needs, my everyday living expensese will Not experience inflation as high as in housing, medical, education,,,
  • if I lock away this huge[1] amount of idle cash, then my monthly payout would be increased by some $x amount. I could invest this $x into inflation-hedging asset such as stocks or FixD
  • Outside cpfLife, I will have other productive assets such as rental prop, dividend stocks

FLI25-specific #partial

Posted on by tiger40490

 

— partial surrender for FLI25

eg: partial surrender $50774. Premum drops: $250774 -> 200k. Annual Payout amount to reduce proportionally.

You need to inform CIMB, pay off the loan 100%, then start new loan with proportional quantum. Hopefully LIR statys unchanged.

[25]CPF: 2channels: withdraw{55

Posted on by tiger40490

This bpost provides simple binary framework. It is applicable to my and wife’s cpf withdrawals after 55.

Green_portion channel is irreversible, so use it as a last resort.

— channel: from OA

Right after RA creation, “excess” amount flows into OA. Any OA balance is 100% withdrawable any time, including subsequent salary contributions. OA becomes something like a bank account. No restriction like ‘SA top-up amount is not withdrawable’.

— channel: from the green portion of cpfRA. See [21]cpfRA for liquid parking@4% – dTanbinvest

HsbcLWA #

Posted on by tiger40490

Small quantum is the key reason for my quick-n-easy decision

— Here are the key product features I have collected about HsbcLWA [HsbcLife_Wealth_Abundance], to be confirmed.

  1. I pay 5 annual premiums of 12k/Y, over 49 months (M1 M13 M25 M37 M49), and then wait for another 71 months.
  2. .. Free and unlimted prem holiday after 5th installment.
  3. surrender value is not so good within the initial (49+71) 120 months i.e. MIP i.e. the prison_term. The “early surrender penalty” improves with time, and drops to 0 after 120M
  4. my 60k would buy units of a chosen fund (switchable FOC among 60).
  5. NAV of the units determine my surrender value at any given time after 10Y
  6. death benefit .. based on the higher of NAV and total premium.
  7. monthly payout starts in M2, based on current NAV, and continues till age 99 of “life assured”
  8. both monthly payout rate and NAV will fluctuate
  9. Life assured .. would be my daughter… automatically assign to me.
  10. .. after some time, I may buy another policy for my other kid, at the same premium.
  11. (sustainable) payout .. is managed by PIMCO; death benefit is guaranteed by insurer. Surrender value is specified in the insurance contract and specified in terms of NAV.
  12. transparent expRatio 2.1 ppa during 120M… a real charge to my account, though I may not notice it. Improves to 0.6 ppa after 120M.
  13. 8% “startup bonus”

— two components
aa) a fixed-income mutual fund
bb) a simple life insurance with 10Y prison_term, without gurantee of 100% surrender value

The (aa) provides “lifetime” payout + a capital preservation better than cpfLife.
The (bb) provides death/TPD benefit and nothing much

— Overall product rating (most important on top) .. Comparing against CC) cpfLife and AA) my existing annuities and other products

  1. quantum: excellent. Comparable to (actually better than) one of my annuities [FLI250]
  2. prison_term: bad.. I can’t back out easily if I find the product unsuitable.
  3. .. between CC and AA. CC prison_term is “life imprisonment”
  4. sustainable payout rate: 6% is recent performance only. CC is the best, despite the declining bequest
  5. surrender value safety: no guarantee, unlike my existing annuities
  6. .. between CC and AA
  7. payout wait: perfec, better than CC and AA
  8. death benefit: acceptable. Better than CC

— prison_term .. is defined/enforced by the ESC (early surrender charges). Within MIP, a withdrawal by default incurs ESC as a penalty. Penalty amount declines over the 10 Y window, to become $0 after 120M.

There is 1 big flexibility + 1 minor flexibility.

1) Monthly payout is a big flexibility. Assuming 5 ppa payout, within the MIP I would cash out 50% of my initial investment 🙂

2) A minor flexibility .. two fee-waived partial withdrawls during MIP. Here is one realistic timeline.

  1. Suppose customerX pays 12k via five installments in M1 M13 M25 M37 M49.
  2. In M50, NAV is 55k (close to the 60k total premium), and she withdraws, free of charge, 6% of that i.e. $3300.
  3. .. NAV immediately drops by $3300, and monthly payout would follow the reduced NAV.
  4. A few years later, when NAV is 50k, she does her second and final 6% free withdrawal, of $3000.

Q: How did I come to accept the life imprisonment of cpfLife?
A: Indeed I might top up to ERS at age 55 and have 450k locked up forever. This is possibly irrational.
A: Note a quarter of my ERS amount is withdrawable if I pledge my property.
A: With CpfLife, I don’t worry about payout_rate drop, though it is absolutely possible within my life time.

[24]SG inflation affect`annuities #FLI15

Posted on by tiger40490

 

k_FLI2

— SGD inflation.. affects cpfLife, FLI150, FLI250, FWD300

The further out you receive the $4472 annual payout, the less stuff it buys. Payout is not rising with inflation. A common issue with all bonds + annuities, which deserve a place in every portfolio. In 30 years, SGD may not be so strong, and imported inflation may become less well-controlled. Singapore is a small, open economy, tightly connected to the regional and global economy, so the local government has a bigger impact on this economy than the governments of bigger countries. Therefore, long-term inflation risk depends critically on government policies and performance… regime risk.

A true blue annuity product will feature a lengthy accumulation phase. It enhances payout rate (like 6% DYOC), to combat long-term inflation. On the flip side, the accumulation phase entails a prolonged prison term or slow breakeven.

Long-term inflation (beyond 30Y) is harder to predict. See my letter to Aaron in https://tanbinvest.dreamhosters.com/15331/ready-lifeincome-aaron/. So any payout received 50Y later has a questionable present value i.e. my family “may live in a very different world so would they appreciate a pocket money of $1000/Y  or $1400/Y or whatever?”

FLI2 is perceived by many as 90% a short-term bond, and 10% a true annuity. In the “10% scenario”, prevailing IR drops to 3%, then this annuity becomes cash-cow for some time up to 5Y.

==== FLI150

FLI2 = [Singlife Flexi Life Income II ]

  • $50,066 x 3 = $150,197 total premium payable in Sep | Mar24 | Mar25.
  • Annual payout: Mar 2026 to start receiving $4,472/Y until my passing. 2.98% of total premium
  • Upfront rebate: 3k+$3,129 by end of 2023, representing a 4%+ discount.

Annual payout consists of guaranteed 2.2% of SAss + projected 3% of SAss. “Once declared, considered guaranteed” because you receive “projected” amount in real cash. If actual payout drops below 2.98%, or if tBill yield stays above 3%, you can liquidate/surrender/cash out

Q: (sharp question) How does this deal compare with earlier annuity products like PLIP{Markus;ReadyLifeIncome{Aaron ?

  • Now in mid 2023 I have more spare cash
  • Now in mid 2023 I am not so keen about U.S. stocks like 300k ptf
  • #1 difference — liquidity i.e. quick breakeven in terms of surrender value

Liquidity .. Total premium amount becomes guaranteed from Mar 2026 onwards. Until then, surrender value was described to be $0. Therefore, _prison_term_ is 2.5Y from Sep23 to Mar26

Scenario 1: liquidate after first payout. Total “profit” is 6129+4472 coming out of $150,197 over 2.5Y

FWD3+FLI25 #PFSA #commercial_annuity

Posted on by tiger40490

 

  • For both, non-guaranteed surrender bonus accumulates in an accelerating pace 🙂 Looks like timeIsOnYourSide. The longer you hold, the sweeter.
  • .. FWD grows a bit faster, by 1k/Y on average if you look at “non_guaranteed_included” column
  • — FWD
  • FWD Surrender value … entails up to 20% loss .See Risks section.
  • — FLI25
  • 3rd window .. 10M, better than FWD. LIR risk lower.
  • loan quantum .. 190k, better than FWD 228k. Both 76% of totalPrem
  • upfront .. 1%, inferior to FWD 1.87%
  • FLI2 guaranteed surrender value starts at 80% (200k) , growing beyond 100% after 30M. See BenefitIllustration
  • FLI2 death benefit 101%, lower than FWD 105%
  • partial surrender is a unique /option/ in FLI2

— my overall favorite i.e. asset to force-surrender last, asset to keep longest = Singlife

  1. clawback [f] .. (after N years) SSSSSSinglife … amount bigger than the upfront
  2. my confidence in payout commitment for first 10 years .. FFFFFWD as an eager new entrant [4]
  3. surrender bonus [f].. (over long term) FFFFFWD … will enhance XIRR
  4. worst case PnL .. (i.e. earliest exit) SSSSSSinglife way better , due to clawback + better quantum
  5. quantum .. SSSSSSinglife
  6. payout rate [f] .. FFFFFWD slightly better, partly to compensate for longer prison term, but I won’t “choose” it
  7. upfront .. FFFFFWD 1.87%
  8. LIR exposure .. during 3rd window. SSSSSSinglife wins, due to prison
  9. prison .. (years without 100%BrE possibility) SSSSSSinglife. 6M shorter powerless-regret phrase.
  10. death benefit .. FFFFFWD

Silvester pointed out FWD is the deal to hold long term, given those [f] items.

— all the risks .. With BGC, I overlooked/neglected currency risk. This time I want to highlight those neglected but realistic risks. This secion is gaining attention and importance.

  • LIR risk .. if LIR skyrockets (K.Hu #2), I need to surrender partially, or liquidate ASAP, or pay_down the loan as describe below. See am long LIR !
  • LIR risk .. if LIR drops very low, Wayne felt good for me as insurance annual payout would tend to stay up (FWD 3.38 ppa) for a long time.
  • inflation risk .. (K.Hu #1) affects all fixed-income investments. See my first bpost on FLI2
  • Giro operational risk .. esp. if I work overseas. A common risk in any monthly Giro / billPaymentObligation.
  • If I lose my job .. Luckly, there will be no pending /payable/. This payout would support family /livelihood/.
  • If I pass away .. FWD policy terminates with 105% death benefit (101% for FLI2), and loan paid off. simplicity
  • early-surrender risk .. surrender value can show up-to 20% loss if within 36M. See BenI.
  • projected payout risk .. see separate section

— “Projected payout” .. not as good as guaranteed. Similar risk in any long-term fixed-income.

FWD, Singlife, ChinaLife and GEL all give a top-line payout rate (like 2.98 ppa, or 3.55 ppa of total prem). I confirmed with Wayne of ICBC and Iris of GEL that this payout rate was computed from the annual payout amount in the 4.25% illustration column.  Clearly the sales team and the insurer treat this payout rate as a promise, not just a fake illustration. As such, Singapore insurer bends over backward to keep this promise. Singapore insurers do cut payout rate selectively, usually targetting the “expensive” policies first. These insurers (like TokyoMarine) once promised /unsustainable/ payout rates to early customers, and subsequently had to cut it. It is probably not a default event, becasue insurers have plenty of protective clauses in all official documents that give them leeway to cut bonus/payout.

The industry-standard illustrative return was reduced from 4.75% to 4.25% exactly for the goal of sustainable payout rate.

[4] FWD as an eager new entrant presumably has a large reserve to help prop up projected payout, at least for N years

See also my email [[cashflow situation]] to Silvester and [[GEL annuity with prem financing]] to Iris Pek

— which month to surrender … Comparing the two surrender scenarios, Singlife pays me up to 12M additional !
* FWD.. Cleanest month to surrender is right Before receiving annual payout. If you surrender 3M after that, then 9M clawback is factored into the surrender value.
* Singlife.. best done right After receiving annual payout. No “monthly” option. If you surrender 3M after that, then you would have paid 3M of LIR for no gain.

— Owner of policy  .. is CIMB. CIMB receive all annual payout, surrender value, death benefits … from insurer and forwards to me.

nomination, change of person insured … doable after you pay off loan and take over ownership.

 

cost@living: compare cities #retire++

Posted on by tiger40490

k_PPP

Q: why are some locations more expensive but salaries are lower across many sectors?

As of 2025, I can see that Beijing/Shanghai price levels are well above half of Sgp but not wages.

It’s crucial to decide which job sectors to exclude. For example, in SG we exclude large portions of the workforce.
… Answer: They are low-wage foreigners, often on WorkPermit. Their low-cost roles in the economy help subsidize the cost of many public services in SG.

Answer: salary tax and company tax .. is a cost to employer. Employers pass on the cost to consumers.

Answer: home ownership is crucial in controlling accommodation costs. Sgp government manages public housing for citizens and PRs

I was surprised that SG public transport fares are fairly competitive vis-a-vis Chinese cities, let alone American cities.
… Answer: governments subsidize public transport. However, private cars are very expensive in SG because government levy on the rich.

Raw or packaged food is probably cheaper in the U.S. but
… Answer: __Cooked__ food is truly low-cost in Singapore due to SEAsia’s street-food culture. Actually, a lot of hawker stalls are taken over by Chinese and Malaysian immigrants, who continue to keep the price level competitive

Repairs are the most neglected but non-trivial cost.
… Answer: in general SG labor cost is lower than U.S. but higher than many developing countries.

— eg: SG vs NYC… SG has higher GNI per capita but lower after-tax salary than HK or U.S. In terms of economics on the ground, I think it has to do with cost of living including rental and home price. https://www.mylifeelsewhere.com/cost-of-living/singapore-c5119/new-york-c3934 is fairly realistic, based on UGC. Their data is presumably more consistent among U.S. cities and U.S. states. Further, I suspect the database is U.S.-centric and possibly limited outside the U.S. Due to the UGC demographics, the data points reflect a lifestyle of a young expat, clearly less frugal than me. At a conceptual level, this site ses a “basket” to compare two cities. You an see local prices in local currency, and derive your own ppp-fx.

  • gas/transit-pass/taxi costs are realistic
  • raw foods .. NY costs are overstated
  • accommo .. expat exclub
  • childcare .. expat exclub
  • clothing (tiny part of CPI basket) .. expat exclub. No China brands!
  • — Personally, I feel slightly richer in Singapore than U.S. due to
  • healthcare, med-bx.
  • car ownership (forecast)
  • college cost (forecast),

Overall, U.S. feels like a high-cost, moderate-tax, low-welfare country. Luckily, nutrition, bicycle, clothing, gadgets, repair tools … are very affordable.

— eg: SG vs HK … https://www.mylifeelsewhere.com/cost-of-living/singapore-c5119/hong-kong-c4452