I have completed the annual contribution of $15,300 to my Supplementary Retirement Scheme (SRS) account today.
This feat is achieved before end of 1Q 2024 and now I can focus on building up war chest and long-term investment for the rest of the year.
The main benefit of SRS 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 (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is a penalty incurred for withdrawing funds from SRS prior to retirement age, on top of being slapped with tax on the withdrawn amount.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 will be beneficial for people who are earning income qualifying at least in the 7% tax bracket.
I have already contributed $8.4k to SRS earlier.
Yes, agree not for everyone but need to "cheop" the retirement age to be as low as possible. So at 18 years old, should put a minimum deposit in and that will lock the retirement age to be what is the legal retirement age as at that time. Otherwise, if open the account later, the retirement age will get later and later (with Spore raising retirement age over time).
ReplyDeleteYes this is right. Retirement age will set to increase to 64 wef Jul 2026 with employment up to 69. It will be harder to withdraw from SRS in future penalty-free and fuss-free.
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