I received this email from a reader recently:
Hi Mr. Tan,
I stumbled upon your blog and read about your analysis on the inflation-adjusted retirement plan. currently, I have a term plan and am currently considering on a retirement plan, which I have recently signed.... And it is the above-captioned one.
I am 35 and based on this plan, I expect to retire at 55 and this plans covers me up to 70.
I will be paying total premiums of $70,875 for 15 years,
In which there will be a 5-year accumulation period.
Thereafter, my total guaranteed retirement income is $115,875 from age 65 to 70.
If I assume the inflation rate from now is 3% p.a., I should expect my guaranteed payout to be $115,171.88 for 15 years. Which seems like the plan is marginally palatable. But now that you got me thinking about the returns on my capital, it looks like I am losing the returns during the 5-year accumulation ...
...
