Are 'Private Annuity' Plans Superior to CPF? – A Gift for FI-35 and a Lesson for Others
Assumptions Used in Calculations:
Sibor: 1-mth Sibor for Loans
Flat Fee Assumption: 0.8%
Projected Monthly Returns Based on: 3.25% and 4.75% (Private Annuity), Age 55 begins, payouts begin Age 60
Projected Monthly Returns Based on: 3.75% and 4.25% (CPF, as stated on CPF Website, standard plan)
Borrowed Amount: 72% of the first year value --- where $350,000 = 28%, so 72% = $900,000 in borrowing value.
INDIRECT LOSSES! How They Kill Your Dreams (And How Investing Will Save You)
1) Career Opportunity Costs are calculated on an assumption of 5% per annum
For 1b), if you have to end work at the same age (55), Lawyer A would be unable to receive the increments he would otherwise have had if he had continued working.
Money Maverick
Sources:
1) Influence of the time interval from diagnosis to treatment on survival for early-stage liver cancer*
2) SEER: Stomach Cancer Survival Rates**
3) Risk Management and Insurance, Mark S Dorfman [6th Edition, 1998]
4) https://sbr.com.sg/healthcare/news/medical-inflation-rise-93-in-2020#:~:text=The%20cost%20of%20employer%2Dsponsored,insurers%20by%20Willis%20Towers%20Watson***