
At 83.5 years, Singaporeans have one of the longest life expectancy in the world.1 With this expected to continue increasing, it is therefore important to keep in mind rising longevity when planning for your retirement. Would you have enough for your retirement or will there be a possibility of you outliving your savings?
While CPF Life was designed to help Singaporeans plan for our retirement, eligibility for pay outs start from age 65 with monthly pay outs starting from just $750. As such, if you were to enjoy an early retirement at age 55, would you have sufficient retirement savings to tide you through age 55 to 65? Moreover, would $750 a month be sufficient for your retirement expenses? In this article we highlight the 3 reasons to consider using annuities for your retirement.
(See "3 Reasons To Not Get Basic Critical Illness Insurance")
Updates on CPF Life
The Basic Retirement Sum (BRS) for 2020 is set at $90,500.2 This shows an approximate 3 per cent year on year increase in BRS.
Basic Retirement Sum (BRS) required at age 55 |
Percentage increased |
Monthly pay outs from CPF Life Standard Plan at age 65 |
|
2017 |
$83,000 |
- |
$700-750 |
2018 |
$85,500 |
3% |
$720-770 |
2019 |
$88,000 |
3% |
$730-790 |
2020 |
$90,500 |
3% |
$750-810 |
However with CPF Life’s Standard Plan only giving $750 to $810 a month in pay outs, this may be insufficient for our retirement expenses. Therefore, if you would like to receive higher pay outs to supplement your CPF Life pay outs, consider annuities.
(See "I Already Have CPF Life, Do I Still Need Annuities?")
What are annuities?
A type of life insurance, annuities are usually purchased for retirement planning. Upon reaching retirement age, pay outs are given thus allowing the insured to receive a regular stream of income for life. These pay outs can then be used for retirement income or to supplement CPF Life pay outs and/or retirement savings.
Annuities are available for all to purchase regardless of any medical conditions or pre-existing illnesses. With a guaranteed acceptance, annuities provide a convenient solution to those who wish to receive a regular stream of income for life.
(See "Is Your MINDEF Group Insurance Really The Cheapest?")
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#1 Annuities as a solution to outliving your savings
Providing a regular stream of income, annuities eliminate the possibility of us outliving our savings. This offers reassurance with knowledge that we will have enough for our retirement. With pay-outs starting from a specified retirement age, annuities can be used to complement our retirement savings. Additionally, this also prevents the premature use of our savings as well as allow for the accumulation of non-guaranteed bonuses for higher pay outs.
If you find the CPF Life monthly pay outs of $750 to $810 insufficient, consider using annuities to receive additional retirement income.
(See "Best Personal Accident Insurance Singapore 2020")
#2 Annuities are protected by the Policy Owner’s Protection Scheme
Protected by the Policy Owner’s Protection Scheme (PPF Scheme), annuity plans are guaranteed in the event of the failure of the insurer. While unlikely to happen, this acts as a safety net for your policy by offering 100 per cent protection for your guaranteed benefits thus providing a peace of mind.3
(See "3 Reasons To Use Your SRS For Annuities")
#3 Income from annuities may not be subjected to market volatility
Market fluctuations could make your assets worth more in good markets or less if markets were to underperform. With assets subjected to market volatility, this brings about uncertainty with the value of $1 million now likely to be valued differently 10 years later. However, income from annuities may not be subjected to this market volatility.

Comprising of both guaranteed and non-guaranteed components, annuities provide a steady stream of income. The guaranteed component in annuities will also provide you with income certainty. With financial security, this allows you to embrace and enjoy your retirement years without having to worry about the markets or your finances.
(See "The Truth About Endowments")
Annuities are suitable for:
Annuities are not suitable for:
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1Source: http://hdr.undp.org/en/content/2019-human-development-index-ranking
2Source: https://www.cpf.gov.sg/askjamie/user/uploads/Retirement%20Sums.pdf
3Source: https://www.sdic.org.sg/calc/pop_calc
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