About Annuities Part 1

The biggest concern for most who have already planned for retirement is “Will I outlive my resources?”

Most people fall into the trap of planning for too short a period – someone at 35 now may think he will only live till 75. In fact not many people believe that their life could actually be longer that they think. Planning for a shorter provision may be a fatal step to a situation of downgrading one’s lifestyle to nothing left but a 1 room apartment, discarded funiture, work and charity help.

And so something was created to give the person an assurance of an income for life. This was an annuity. Then slowly annuities improve and start to have room for growth.

How does one solve this problem of outliving one’s resources? – The answer is in annuity, nothing else.

Income for life, stability and security. These are features that need to be found in an annuity. However in order to buy an annuity, a capital sum needs to be created. Most annuities should offer 5% returns each year of the invested capital. This is reasonable as higher rates may indicate some sort of link to market performance or some link to a ponzi-scheme.

Beware of ponzi-schemes in the market as they show off fantasitic guaranteed returns. They could be legally created however they are not regulated by MAS. More information could be found on http://www.moneysense.gov.sg/publications/quick_tips/Consumer_Portal_Alert.html

Annuities are here to stay due to the fact that it solves the problem of outliving resources and futhermore it is being regulated here by MAS. Annuities are very widely accepted overseas as the main component in the income decumulation phase.

There are many such annuities in the Singapore market such one which offers income for life is Manulife’s Secure Retirement Plus. Other companies also offer annuities but there are none that offer income for life.

Next post will discuss about the various types of annuities and their strength and weaknesses.

Bringing Dreams to Life

I was reading thru a colleague’s internal publication called “The Best of Times” and encountered this power statement from Andrew Goh, a motivational speaker.

Abraham Maslow, father of modern motivational theory, once referred to ‘…capacities clamoring to be used which cease their clamor only when they are used sufficiently.”
We have the capacity to think big. Ask children what they want to be. Few would choose small, unexciting roles. Most declare they want to be President, or Superman, or the richest man on earth.

Somewhere along the way, dreams take a bashing and it becomes convenient (and professedly realistic) to think small. No wonder there’s so little excitement in adult lives compared to how children greet each new dawn!
Andrew Goh

Dreams are as such – as chidren we grow up with big dreams, no one tells us not to dream big dreams, we share our big dreams openly. Slowly as we enter the university of Hard Knocks, adults start to dispise our dreams, we are told to be “real”, we are told it will never happen. In due time, we slowly accept these into our believe system and we lose sight of a possible future for us and no longer dream anymore.

Our retirement is our enjoyment, we do not stop living a life we have worked for even when we have stopped working. Retirement is a destination we are destined to move to, the only difference between everyone is whether or not a person arrives at that destination with much or little.

Financial planning can create the desired retirement destination for you.  If you know exactly what you want for your retirement, take the necessary action to arrive there, not everyone is able to plan for themselves, therefore financial planners are there to assist you, because like consulting a doctor, you need that someone who is trained to prescribe the correct medication to effectively cure you. Like a house builder, he or she is someone trained to correctly build a house with all that is needed for you to live in.