IntroductionIf you are planning for your retirement, you may have heard of annuity plans. Annuity plans are a type of insurance product that can provide you with a steady stream of income for life or a fixed number of years after you retire. They can supplement your CPF LIFE payouts and give you more financial freedom and security in your golden years. But how do annuity plans work? And what are the best ones available in Singapore? In this article, we will answer these questions and compare four of the best annuity plans in Singapore: NTUC Income Gro Retire Ease, AIA Retirement Saver (III), Aviva MyLifeIncome II, and Manulife RetireReady Plus II. How do annuity plans work?How do annuity plans work? Annuity plans work like this: you pay a lump sum or regular premiums to an insurance company during your working years, and in return, you get a monthly payout starting from a certain age, usually 65 or 70. The monthly payout consists of two components: a guaranteed monthly income and a non-guaranteed bonus. The guaranteed monthly income is a fixed amount that is determined by the sum assured, which is the amount of money that the insurance company promises to pay you or your beneficiaries upon death or maturity of the policy. The sum assured is usually based on your age, gender, health status, premium payment term, and accumulation period. The non-guaranteed bonus is an extra amount that is determined by the performance of the insurance company’s participating fund, which is a pool of money that is invested in various assets such as equities, bonds, properties, and cash. The non-guaranteed bonus can vary from year to year depending on the investment returns and expenses of the fund. The monthly payout can be received for life or for a fixed number of years, depending on the plan you choose. Some plans also offer additional benefits such as retrenchment payout, premium freeze, loss of independence income, disability benefit, booster bonus, and waiver of premium. How much income do you need in retirement?How much income do you need in retirement? But before we dive into the details, let me ask you a question: do you know how much income you'll need to retire comfortably in Singapore? According to a study by the Lee Kuan Yew School of Public Policy, the average monthly household expenditure for retirees in 2022 was about $1,250. That means you'll need at least $15,000 per year to cover your basic living expenses. How about Your CPF Life Payouts?But what about your CPF LIFE payouts? Can they provide enough income for your retirement? Well, that depends on how much CPF savings you have and how much CPF LIFE payouts you can get. According to the CPF website , the current Basic Retirement Sum (BRS) is $93,000. If you have this amount in your Retirement Account at age 55, you can expect to receive about $740 to $800 per month from age 65 onwards. That’s not too bad, but it’s still below the average household expenditure for retirees. What if you have more CPF savings? Well, the current Full Retirement Sum (FRS) is $186,000. If you have this amount in your Retirement Account at age 55, you can expect to receive about $1,390 to $1,490 per month from age 65 onwards. That’s pretty good, but it’s still just enough to cover your basic living expenses. What if you want to have more income to enjoy a better quality of life in retirement? What if you want to travel the world, pursue your hobbies, or spoil your grandchildren? Well, that’s where annuity plans come in handy. They can supplement your CPF LIFE payouts and give you more financial freedom and security in your golden years. Let's look at the best 4 annuity plans in Singapore as per CPF websiteWhat are the best retirement annuity plans in Singapore? Now that you have an idea of how much income you will need in retirement, let’s take a look at some of the best annuity plans in Singapore: NTUC Income Gro Retire Ease , AIA Retirement Saver (III) , Aviva MyLifeIncome II , and Manulife RetireReady Plus II . Here’s a table that summarizes their main features and benefits: As you can see, there are some similarities and differences among the four plans. Let’s go through them one by one and see what they have to offer. NTUC Income Gro Retire EaseThis plan offers you the option to receive a lifetime income or a fixed income for 10, 15, 20, or 25 years. You can choose to pay a single premium or regular premiums for 5, 10, 15, 20, or 25 years. You can also choose your accumulation period from 10 or 15 years, or up to age 55, 60, 65, or 70. The guaranteed monthly income is 0.95% of the sum assured per year, which is the same as AIA and Aviva. However, the non-guaranteed bonuses are slightly higher, with a cash bonus of up to 5.4% of the sum assured per year and a terminal bonus at maturity or death. You also get a booster bonus of 0.5% of the sum assured per year starting from age 60 or the end of the 20th policy year after the accumulation period ends, whichever is later. The capital is guaranteed at the end of the accumulation period or earlier, depending on your premium payment term. For example, if you pay a single premium, your capital is guaranteed at the end of the eighth policy year. If you pay regular premiums for five years, your capital is guaranteed at the end of the 15th policy year. One drawback of this plan is that it does not offer any additional benefits for retrenchment, premium freeze, or loss of independence. However, you can add on supplementary benefits such as cancer premium waiver, easy term, and easy payer premium waiver for extra protection. AIA Retirement Saver (III) This plan offers you the option to receive a lifetime income or a fixed income for 5, 10, 15, or 20 years. You can choose to pay a single premium or regular premiums for up to age 50, 55, 60, 65, or 70. You can also choose your accumulation period up to age 80, subject to your entry age plus premium payment term plus accumulation period being less than or equal to 80. The guaranteed monthly income is also 0.95% of the sum assured per year, but the non-guaranteed bonuses are slightly lower, with a cash bonus of up to 5.4% of the sum assured per year and an annual bonus that can be converted to additional monthly income at a non-guaranteed rate. The capital is also guaranteed at the end of the accumulation period or earlier, depending on your premium payment term. For example, if you pay a single premium, your capital is guaranteed at the end of the eighth policyyear. If you pay regular premiums for three years, your capital is guaranteed at the end of the 13th policy year. One advantage of this plan is that it offers some additional benefits for retrenchment, premium freeze, and loss of independence. If you are retrenched during your premium payment term and remain unemployed for at least three months, you will receive a lump sum payout of 40% of your annual premium. If you face financial difficulties during your premium payment term, you can put your premium payment on hold for up to two years while your policy stays in force. If you suffer from loss of independence during your income payout period, you will receive up to an additional 100% of your guaranteed monthly income depending on the severity of your condition. Aviva MyLifeIncome IIThis plan offers you the option to receive a lifetime income only. You can choose to pay a single premium or regular premiums for 3, 5, 10, 15, 20, or 25 years. You can also choose your accumulation period up to age 80, subject to your entry age plus premium payment term plus accumulation period being less than or equal to 80. The guaranteed monthly income is also 0.95% of the sum assured per year, and the non-guaranteed bonuses are the same as NTUC Income, with a cash bonus of up to 5.4% of the sum assured per year and a terminal bonus at maturity or death. You also get the same booster bonus of 0.5% of the sum assured per year starting from age 60 or the end of the 20th policy year after the accumulation period ends, whichever is later. The capital is also guaranteed at the end of the accumulation period or earlier, depending on your premium payment term. For example, if you pay a single premium, your capital is guaranteed at the end of the eighth policy year. If you pay regular premiums for three years, your capital is guaranteed at the end of the 13th policy year. One drawback of this plan is that it does not offer any additional benefits for retrenchment, premium freeze, or loss of independence. However, you can add on supplementary benefits such as cancer premium waiver, easy term, and easy payer premium waiver for extra protection. Manulife RetireReady Plus IIThis plan offers you the option to receive a lifetime income or a fixed income for 5, 10, 15, or 20 years. You can choose to pay a single premium or regular premiums for 5, 10, 15, or 20 years. You can also choose your accumulation period up to age 70, subject to your entry age plus premium payment term plus accumulation period being less than or equal to 70. The guaranteed monthly income is higher than the other three plans, at 1.2% of the sum assured per year. However, the non-guaranteed bonuses are lower, with a cash bonus of up to 4.8% of the sum assured per year only. The capital is also guaranteed at the end of the accumulation period or earlier, depending on your premium payment term. For example, if you pay a single premium, your capital is guaranteed at the end of the eighth policy year. If you pay regular premiums for five years, your capital is guaranteed at the end of the 15th policy year. One advantage of this plan is that it offers some additional benefits for disability and premium waiver. If you suffer from total and permanent disability during your premium payment term, you will receive a waiver of future premiums and continue to receive your monthly income. If you suffer from disability during your income payout period, you will receive up to an additional 100% of your guaranteed monthly income depending on the severity of your condition. Another advantage of this plan is that it gives you more flexibility to adjust your income payout period. You can choose to shorten or lengthen your income payout period by up to five years before it starts, subject to certain conditions and charges. How to choose the best annuity plan for you?So there you have it: four of the best annuity plans in Singapore that can help you achieve your retirement goals. Which one should you choose? Well, that depends on your personal preferences and circumstances. Here are some factors that you may want to consider:
To help you make an informed decision, you may want to consult a financial adviser who can assess your needs and recommend the best plan for you. You may also want to compare different plans using online tools such as MoneySmart’s annuity comparison tool or SingSaver’s annuity comparison tool. ConclusionAnnuity plans are a great way to secure your retirement income and enjoy a better quality of life in your golden years. They can supplement your CPF LIFE payouts and give you more financial freedom and security. However, not all annuity plans are created equal. Some offer higher payouts, some offer more flexibility, some offer more protection, and some offer more bonuses. How do you choose the best one for your retirement needs?
In this article, we have compared four of the best annuity plans in Singapore: NTUC Income Gro Retire Ease, AIA Retirement Saver (III), Aviva MyLifeIncome II, and Manulife RetireReady Plus II. We have looked at their features, benefits, pros and cons, and see how they stack up against each other. We have also given you some factors to consider when choosing an annuity plan. We hope this article has given you some insights into annuity plans and how they can help you secure your retirement income. If you have any questions or comments, please feel free to leave them below. And if you found this article helpful, please share it with your friends and family who may benefit from it. Thank you for reading, and we wish you a happy and prosperous retirement! Read more in detail from CPF's website. Comments are closed.
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