Retirement always seems like a lifetime away and it is easy to put it off, especially when you are in your 20s, 30s or even 40s. Most people believe that retirement will always sort itself out, but is this always the case?
Retirement will mark the end of your career that has been built over the years through sheer hard work. Conducting meetings, giving presentations and attending to clients is soon replaced with long holidays and spending time with family. Although many people look forward to this idea, a lot more get worried about losing a steady income source.
Why do you need a retirement plan?
A good retirement plan will help alleviate any stress that you may be having with regards to retirement. Your CPF LIFE payout will help boost your income during this period and assist you acquire your basic living needs.
You should, however, not expect the CPF Life cover to give you a luxurious life. But why do you need a retirement plan? Ask yourself the following questions.
- Do you wish to maintain a high or stable income with lower workload as you age?
- Are you making preparations for sustaining your financial lifestyle once you retire?
- Do you feel the need to maintain a specific lifestyle even as costs increase daily?
- Do you want to do things that need discretionary spending such as traveling overseas when retired?
- Do you consider predictability and stability to be important when choosing a financial product to maintain your stream of income during your retirement period?
If you have answered yes to a majority of the questions then you may need to take up a retirement plan to ensure that you always have a steady flow of revenue.
What are some of the best retirement plans in the market?
Although CPF Life is a great retirement plan that ensures you have a fixed stipend at the end of each month, it may not be sufficient to fulfill a luxurious lifestyle. As mentioned before in our CPF life article, the amount that you will get will be sufficient to cater for your basic needs but will not accommodate further luxuries. The CPF Life also falls short on other factors when compared to other retirement plans in the market. For example, it does not cater for old age needs such as increased risks of sicknesses or even disability.
Moreover, CPF Life lacks the flexibility to allow you to tailor the sums of the payout along the way or to choose a lump sum instead of the monthly payout. To avoid these challenges, it is recommended that you combine CPF Life with other private annuity/retirement plans. It is worth noting that the retirement plans you choose are complimenting products from both the government and the private insurer. They are not competitors. When paired together, the retirement plans or annuities and the payouts from your CPF life will ensure you can supplement your income when you retire. With these, you can double your payout multiplier due to disability or when you can’t perform a minimum of 2ADLs (Activities of Daily Living).
With that being said, there are a lot of commercial retirement plans. Each of them has different offerings and benefits but work to ensure you can maintain your lifestyle even after retirement. Most of these plans are based in paying a fixed premium term that you wish, a maturity period and a payout period. But first things first…
How do we choose the best retirement plans?
There are a lot of factors that informed our top choices for some of the best retirement plans on the market. What was most important was, however, the fact that all these plans are capital guaranteed and also include an extra non-guaranteed benefits component. What does this mean for you? As long as you follow the outlined policies then you are likely to receive more monthly payouts than the amount you save. Aside from the extra monthly payments, each of these plans comes with a protection component. This may include a death benefit and a payout in case of disability. Here are some of the things we considered when picking 3 Best Retirement Plans in Singapore In Terms of Coverage, Guaranteed Returns and Flexibility;
- Guaranteed and non-guaranteed rate of financial returns and even payouts
- Flexibility with regards to payouts and no minimum age required
- The features of riders that complement health coverage (Additional guaranteed payout)
- Unique product features in each retirement plan
- Leniency in claim in the event of illness or disability
- Policy flexibility available for period of income payout
Here are our top picks for some of the best retirement plans in the industry.
1. Best Retirement Plan for Disability Payout – NTUC RevoRetire
The NTUC RevoRetire is a great savings plan that gives you the flexibility to tailor the retirement lifestyle that you desire. Its top features include ability to choose your monthly payouts, insurance coverage as well as leniency in the event of disability.
Why this is good for you
One of the thing that makes the NTUC RevoRetire a great option is the amount of flexible choices that you have.
First, you can select an appropriate premium term. It allows you to choose from either 5 years, 10 years or even up to 5 years before your accumulation period matures.
Second, you also get to determine your choice of retirement age. This means that you can start to receive your monthly payout after an accumulation period of 10 or 15 years. Alternatively, you can decide to get the monthly cash benefits at age 50, 55, 60 or 65.
Having the ability to set your payment terms is another benefit of choosing this retirement plan. You can choose 10, 20 or even 30 years to receive your monthly benefits. What’s more, you can change this selection anytime before you receive your first monthly benefit (desired payout age).
This plan also includes a death benefit that offers a 105% pay-out of all net premiums paid while also adding a 100% of terminal bonus if the insured person dies during the accumulation period. Guaranteed acceptance also means that the plan does not need any medical underwriting. This plan offers the best disability benefit for a number of reasons. For example, it offers a waiver of paying any premiums for the remaining period. You also get a lump sum benefit worth six month of benefits in the event that any of the following occurs.
1. Losing the use of one limb.
2. Loss of sight of both or even one eye
3. Loss of hearing
4. Loss of speech
Why it may be unsuitable for you
While this is the best retirement plan for disability payouts, it also has some features that may make it unsuitable for you. For example, the choice of payout term is mostly limited to 10, 20 or 30 years and this may not be convenient for all individuals. The guaranteed income under this retirement plan is also lower as compared to Manulife and Aviva. The payment term is also limited to 5 years or 10 years, or regular pay.
Furthermore, the earliest retirement age with this plan is 50 years and the retirement age is fixed at intervals of 5 years. This means that you can only retire at 50, 55, or 60 years etc. This cover also lacks a single premium and SRS options.
Flexibility to change payout terms
With an annual premium of $9,641.15, your guaranteed yield to maturity stands at 2.12% although the non-guaranteed yield is projected at 4.29%. This plan also allows you to choose a cash benefit option where you can accumulate your cash benefit and bonus at 3.5% interest per annum. You can change the pay-out terms at any time before you get your first monthly cash benefit.
2. Best Retirement Plan for Lifelong Annuity & Guaranteed Income – Manulife RetireReady Plus
This is also a flexible savings plan that promises you a guaranteed monthly income for life among other key benefits. The Manulife RetireReady Plus will ensure that you can get a steady income even in your retirement years while giving you an allowance to tailor your retirement plan according to your needs. Even if they change.
Why it is a good choice?
As highlighted above, you get a guaranteed return of up to 2.60% per year with a total income of up to 4.43% over the duration of this retirement plan. You also get an annual bonus even before you choose to retire and a cash bonus once you select your age of retirement. With Manulife RetireReady Plus, you get to make two flexible choices. This includes the choice of a limited premium term that includes a single premium, 5, years, 10, 15 and even 20 years. You also get to choose your retirement age from 50 up to 70 years but at five year intervals. There is also flexibility in your payout term as the retirement plan allows you to choose a payout term of 5, 10, 15, 20 or even a lifetime payout.
Other essential benefits include a disability benefit that waivers all future premiums in case the insured is unable to carry out a minimum of 2 out of 6 activities necessary for daily living. This includes an additional guaranteed 1x Monthly Income benefit in case you lose independence in your retirement payout period. The plan does not need any medical underwriting and is payable via a supplementary retirement scheme.
Why it may be unsuitable for you
What makes this an unsuitable retirement plan for you? A number of significant factors may make this an unsuitable plan for you. For example, the lifetime annuity option starts at a very low income payout with the earliest retirement age being 50 years. Moreover, the retirement age is set at intervals of 5 years starting at 50/55/60 years while the payout is limited to intervals of 5 years too.
The Supplementary Retirement Scheme option
Manulife RetireReady has another great option that allows you to use funds from your Supplementary Retirement Scheme (SRS) as a single premium. SRS is a savings plan that can complement your CPF savings while also allowing you to enjoy tax deferment once you transfer it to your retirement plan.
3. Best Retirement Plan for Flexibility & Guaranteed Income –Aviva MyRetirement Choice
Do you wish to have a retirement plan that not only offers you high flexibility but also a guaranteed income? With Aviva MyRetirement Choice, you get a retirement plan that understands your needs and will work to offer you the best retirement experience.
Why is this a good choice?
This retirement plan offers a guaranteed return of up to 2.63% per year. This retirement plan was chosen to be one of the most flexible in the market as it offers you a lot of choices. For example, you get to choose the limited premium term that starts from five years and goes up to 25 years in five year intervals. You also get to choose the choice of payout term starting from 5 to 35 years. A death and terminal illness is also included in the coverage.
Its disability benefits offers a waiver of all future premiums if the policyholder becomes permanent or partially blind. The disabled person also gets 2 times monthly guaranteed income if they are unable to carry out 3 of the 6 daily activities.
Why it may not be suitable for you
This may not be the best option if you are looking for a good disability payout retirement plan. This is because it has the stringiest plan as compared to the other retirement plans. It does not also allow you to pay a single premium, which means that it does not have an SRS option.
Like all retirement plans, each of these schemes has their own advantages and benefits. While it is important to consider the maximum payouts when choosing a plan, you should also ensure you consider life circumstances and your specific financial plans.
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