Q: My sister,age 58, not working, hasabout $30k in her CPFMinimum Sum (MSS)account. Recently shereceived a letter from CPFboard asking her toconvert to the CPF LifeAnnuity.
My sister does not havemuch savings. Please advise if she should take up the offer or not?
I have received conflicting advice from insuranceadvisers and friends. Some told me it is better toleave the MSS alone and let it draw down till zero.Kindly advice.Thank you.
A: Dear reader, let me answer your question step by step:
1) Click on this CPF link to check whether, and how much L-bonus, you qualify (depends on your income and type of home), and the estimated monthly life annuity payout of the four CPF Life plans
2) Contact CPF Board to ask what is the bequest to beneficiaries for each of the four plans.
She may also like to ask CPF – if the monthly payout (which I obtained from the CPF Minimum Sum Payout calculator using her age and amount) is $271, what is the higher amount (if any) that she can request to withdraw monthly, because for people with small CPF balances, they can’t survive on the very small payout according to the CPF calculator?
3) Click here to calculate your monthly payout under your existing CPF Minimum Sum, which is the estimated monthly payout for about 20 to 23 years (because the CPF Minimum Sum calculator uses 4 per cent in the calculator, whereas CPF Life uses an estimated 4.75 to 5.25 per cent on the first $60,000, and 3.75 to 4.25 per cent on the amount above $60,000 (the CPF Minimum Sum will also pay the estimated 5 per cent on the first $60,000 and 4 per cent on the excess)
4) Decide based on the dollar amounts obtained going through the above steps.
5)The deadline for you to decide to opt-in to CPF Life in order to get your L-bonus (if any) is 31 December 2010.