One of the last financial tasks for 2021 is to complete the maximum contribution of $15,300 to the Supplementary Retirement Scheme (SRS) account.
The main benefit is to save taxes aka cash outlay to the taxman next year.
Another benefit is to build up a cannot-touch ultra-long term portfolio using SRS funds.
There are also other options of endowment or insurance plans, annuity plans, bonds, funds or robo-advisor investment portfolios that we could invest with SRS funds.
However, SRS savings may not be for everyone because of the long lock-down period. We can only withdraw up to $40k from SRS tax-free for 10 years from the first penalty-free withdrawal, upon reaching the statutory retirement age (62 in 2021 and 63 w.e.f 1 Jul 2022). There is a penalty incurred for withdrawing funds from SRS prior to retirement age, on top of being slapped with tax on the withdrawn amount.
I believe SRS is only beneficial for people who are having income at least in the 7% tax bracket.
I have already contributed $4.8k to SRS early this year, leaving remaining $10.5k.
See related post: 2nd Top-Up To SRS in 2021
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