Annuity Plan — A Cheat Code To Retirement
Annuity plan, retirement income or whatever else they call it; It just means a guaranteed source of lifetime income. It can be used as part of a retirement strategy.
I never believed in saving plans when I was younger, let alone an annuity plan! A retirement plan is not sexy at all! Reaping the benefits only at 65? Gosh that’s just ridiculous!
Or is it?
We all hear about how we should start saving/investing early, go for long term and your money will grow.
You know, I found this statement hard to believe because it is exactly what sales agents would say just to get your signature on the dotted line to close the deal!
20 WAS NOT A GOOD AGE.
At 20, I thought I figured life out (lol). At that stage of life, why would I even think about retirement at 65? I was a smart ass.
As a result, I felt invincible. I was like Mr Annoyingly Positive. If you watch anime, I was the real life Naruto. Heck, I remember declaring to my poly lecturer that I want to retire by 30!
9 years later, at the time of writing this, I’m still nowhere near retirement.
On hindsight, I should have gotten myself an annuity plan when I was younger. Why? Because of The power of compounding interest. As Albert Einstein said, it is the 8th wonder of the world. Not going into the technical stuff, just simple math. Imagine this:
All we need is $2,000 a year and a 25-year commitment to secure a decent stream of income during retirement. In other words, pairing it with our CPF Life, I can easily receive upwards of $3,000 a month during my golden years! (These figures may vary according to many factors)
$2,000. TWO THOUSAND FREAKING DOLLARS! That is $166.67 a month, $5.48 a day.
It’s not even a pint of beer at the bar.
I WISH I COULD TURN BACK TIME BUT IT IS IMPOSSIBLE.
At 20 years old, I was in the army. An allowance of $480 a month was not a lot of money. I was a stay out soldier, therefore, transport took a portion of my allowance. Being a soldier, I guess I ate more as I am more active. I enjoyed eating maggi goreng from the canteen so much that eventually, it was understandable why I was broke after NS. If you serve National Service in Nee Soon Camp, you will know that the maggi goreng is da bomb!
After I ORDed, I was too eager to get into the workforce and start having fun in the outside world. Blowing hundreds of dollars in the pub/bar seems to be the rite of passage to becoming a cool adult. Subsequently, I blew my money on a problematic BMW. Honestly, I thought I was cool.
Truth is, no one really cares what car you drive! And guess what? The running cost of the car was over $2,000 a month.
And $2,000 a year was expensive for an annuity plan?! Come on, Al!
$2,000 a year to secure your retirement, regardless if you screw up your life before 65? I think it’s hella cheap.
If you are in your 20s, don’t miss the boat. That is to say, don’t be like some of the customers I met back when I was working in the bank. Customers in their 40s walk into the bank asking for annuity plans, only to find out that they need upwards of $10,000 a year to secure a good enough income with their annuity.
DO YOU SEE IT NOW?
If you are in your 20s, then time is on your side. If you are in your 30s, then you better act fast. 40s, then time is your enemy. 50s, have not plan anything? Then you need serious help.
Now, I am not asking you to go commit and sign a retirement plan immediately. Speak to a trusted financial consultant first. Let the professionals assess your financial needs and do their magic. Above all, see if there are better alternatives to help you grow your wealth faster.
Remember, financial products shouldn’t be sold. It should be professionally prescribed.
