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Payout of $360 a month on retiring
In two years' time, when she turns 62, Madam Yeo Ai Kiaw (above) will get a payout of about $360 a month from her CPF Life Basic plan.
The plan, which has the lowest payout among the four options, will allow her to leave more money to her beneficiaries when she dies.
'My husband and I are now living with our son. He and his wife take care of all the household bills. I don't have to worry about anything,' said the sprightly 60-year-old.
'So if anything happens to me, I want to leave some money for my children.'
The family lives in a three-room flat in Punggol. Madam Yeo has a daughter who lives in the same block.
Asked if $360 would be enough to cover her monthly expenses in the future, Madam Yeo said: 'Why not? I'm not the type who spends a lot of money... If you get more money, you will just spend more. If it's not enough, I'm sure my son and daughter-in-law will top up with some money.'
Her two children - one is self-employed while the other is looking for a job - currently do not give her an allowance as she is still working. She is an operator at a laundry firm and earns $900 a month.
Her husband, 63, a taxi driver, earns about $1,000 a month. He is getting about $300 a month under the CPF Minimum Sum Scheme. He has not signed up for CPF Life yet.
'I told my children that they don't have to give me an allowance now because I'm still working. But when I retire, they'll probably give me about $400 a month,' she said.
She also has about $30,000 in savings from the sale of the family's four-room flat in Simei in 2002.
Of the CPF Life scheme, Madam Yeo said: 'It's good that I can get a regular income after retirement. I won't have to depend on my son entirely and, at the same time, I can leave some money for them if anything happens.'
LIFE BASIC PLAN: Gives the lowest payout but leaves the most for beneficiaries. It is recommended if you are in the pink of health or have sufficient savings outside your CPF.
Preparing himself for a longer life
Mr Palaniappan Kannappa is not afraid of death but he is worried about 'living too long'.
'The Minimum Sum in my CPF will dry up in about 20 years. What will happen if I live longer than that?' he said. So the 59-year-old accountant started shopping for a retirement policy a year ago.
Around that time, he read about the CPF Life plan, which was introduced to the public last year.
'I felt that the scheme gave better value for money than those offered by insurance companies. The rate of return is high, and since it's run by CPF, it's safe,' said Mr Palaniappan, who lives in an HUDC flat in Serangoon North with his wife, a homemaker, and their son, 27, a dentist.
They have a daughter, 30, who is a civil servant and is married.
He was among the first to sign up when the scheme was opened to Singaporeans and permanent residents aged 55 and older last month, and he chose the Life Balanced plan.
He expects to get about $620 a month from age 63. He has about $105,000 in his Retirement Account.
'It's the perfect plan for me because you don't lose everything if you die earlier than expected,' he said.
Besides the CPF scheme, he also has a $70,000 Manulife annuity policy which will give him about $700 a month from age 62. It will last for 20 years.
He also has several endowment policies which will mature over the next few years. The payouts will not cover his $4,000 monthly expenses entirely but he said they are 'better than nothing'.
'It will be one source of our future income. If we are lucky, maybe our children will also give us some money. If worst comes to worst, we can always cut down on our expenses,' he said.
LIFE BALANCED PLAN: The default plan for members who are automatically included under the scheme from 2013, if they do not choose a particular plan. It strikes a balance between your monthly payout and the bequest.
Independent in his old age
Mr Cheng Yew Fatt wants to remain independent in his old age.
For this reason, the 55-year-old, who is unemployed, signed up for the CPF Life Plus plan last month.
It provides him with a higher monthly payout than the Life Balanced plan, but leaves less for his beneficiaries. It suits him because he feels his three children are already well protected financially.
The family of five lives in an executive flat in Jurong West. His two sons, aged 22 and 20, are in national service. His daughter is 16.
He and his wife, a receptionist, bought endowment and education insurance policies for them when they were young.
'We have already given them a head start in life. It's now time that my wife and I looked at our retirement too,' he said.
'We don't want to ask our children for help in the future... The money that's left can be used to settle our funeral matters.'
Mr Cheng was drawing a salary of $10,000 a month as a research and development manager until he was retrenched two years ago.
His wife, who is 50, will automatically be on the scheme from 2013.
From age 65, Mr Cheng expects to get about $1,000 a month from the annuity scheme. This will be on top of the savings - a few hundred thousand dollars - that he will draw from.
'It's reasonable. At least my wife and I can still enjoy a cup of good coffee once a month,' he quipped.
His family expenses are about $5,000 a month now.
He said he preferred the CPF scheme over other annuity products because of the higher rate of return and availability of choices.
'I have older friends who bought annuity plans from other insurance companies. They are getting about $400 to $500 now. It's not even enough to pay my water bills and conservancy charges.'
LIFE PLUS PLAN: Provides a higher payout, but leaves less for beneficiaries. Experts say it will appeal to individuals with chronic medical conditions who want the higher payouts, but still wish to leave something behind for their loved ones.
His savings will run out in 5 years
Mr Lee Poh Lee is a family man, but last month, he signed up for the CPF Life Income Plan, which will give him the maximum payout from his CPF from next year.
The 63-year-old, who runs a crane rental company, decided on this plan because his CPF savings are low.
'I've only about $19,000 in my CPF so it'll run out very fast.'
The family's terrace house in Yew Tee, which was bought for about $1 million in 2000, would be a good enough inheritance for his children, Mr Lee said.
He has four adult children. Two are married while the others are single.
This year, he began receiving about $300 a month from his CPF savings under the Minimum Sum Scheme.
But with so little savings in his CPF, Mr Lee said it will run out within five years. He does not have other savings, he said. 'What if I live longer, till about 90 years old?'
As a result, his children helped him to sign up for the CPF Life scheme - when applications were opened to those aged above 55 last month.
The payout is lower than what he is getting now - about $120 a month - but he will receive it till he dies.
'It's about $4 a day. It's still enough for a cup of coffee and a bowl of noodles. When you are old, you don't need to eat so much,' he said.
Mr Lee now draws a monthly salary of $2,000. His children do not give him an allowance but his two sons, who are single and live with him, chip in to pay the household bills.
He said he will work for as long as he can. 'I will work until I cannot work any more.'
LIFE INCOME PLAN: Gives the highest payout but leaves nothing for beneficiaries. While it may be suitable for those with no beneficiaries, experts do not recommend it in case the member changes his mind or his circumstances change.
He's not signing up
When Mr Christopher Seet turned 55, he invested $70,000 from his CPF in an American International Assurance (AIA) annuity plan.
Early this year, he started getting a monthly payout of $562.
Now 62, Mr Seet does not intend to sign up for CPF Life. He said it does not bother him that the monthly payout he is getting now will last for only 17 years, unlike the CPF annuity scheme, which is for a lifetime. 'What is important is the present. If I really outlive my savings, then I'll just have to find some way to make ends meet.'
Based on his calculation, he said he would also get less - just about $300 - if he were to apply for CPF Life instead.
The former engineering officer at SingTel, who has two daughters, both of whom are married, said he has savings of about $100,000, which he has invested in endowment plans. He also has another $70,000 from his CPF, which he withdrew when he turned 55.
He draws out the money for his monthly expenses, which come up to about $1,000 a month.
His wife, in her 50s, is not eligible for the annuity plan yet. She works as a customer service officer at a bank.
'I'm not worried about my finances. So far, I'm healthy so I just live each day as it is,' Mr Seet said.
This article was first published in The Straits Times.
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