Assumption:
a) You are now 65 years old
b) You can buy a life annuity to pay $600 a month. But this is a flat annuity.
c) You can buy an annuity that increases by 2% every year to cover inflation. However, your starting annuity is $500 a month.
d) Both annuity yield 4% p.a.
e) You are in good health and you do not need to leave a legacy for your children - or maybe you provided for them separately.
Which annuity do you choose?
a) You are now 65 years old
b) You can buy a life annuity to pay $600 a month. But this is a flat annuity.
c) You can buy an annuity that increases by 2% every year to cover inflation. However, your starting annuity is $500 a month.
d) Both annuity yield 4% p.a.
e) You are in good health and you do not need to leave a legacy for your children - or maybe you provided for them separately.
Which annuity do you choose?
In this example of course I'll choose increasing.
ReplyDeleteHowever for CPF Life version, they are very conservative and will start much lower than $500.