Refresh SRS

As we reach the mid-point of the year, let's refresh on something that might have been forgotten:

The SRS (Supplementary Retirement Scheme) account.

Why SRS?
The most important 3 reasons:
1) Setting aside a retirement account that supplements the CPF retirement account (as the name suggests). Or call it "2nd CPF".
2) Setting aside a sum of money for hospitalization/ medical insurance cost in the post-retirement years.
3) Pay less taxes (while investing for above 2 reasons).

I have set up 4 charts for ease of use, organized primarily by income ranges:

a) S$20k to S$60k

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b) S$60k to S$90kclick on image to enlarge

c) S$90k to S$150k

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d) S$150k to S$200kclick on image to enlarge

Example:

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In the example, for a chargeable income of S$68k, the income tax payable is about $3.2k before SRS. After the contribution of S$11,475 (stipulated contribution cap), the payable income tax is reduced to about S$2.25k, a savings of $950.

Now, what can $950 do? Well,
- it's about 3 months' of petrol bills (assuming $316 per month)
- it's about 2 months' of life insurance premiums (assuming $475 per month)
- it's about up to 4 years' worth of a Shield Plan (Medical insurance) costing, depending on age.
- it's about 10 months' of HDB season parking cost.
- it's about the cost of a weekend trip to Hong Kong, from Singapore (maybe?)
and many more.....

If you have just gotten your income tax notice of assessment, which not consider start paying less taxes from here onwards?

What to invest SRS monies in:-
- Stocks (D.I.Y or managed)
- Unit trusts a.k.a mutual funds (D.I.Y or managed)
- Single premium life insurance products

For all previous articles on SRS: http://www.waynekoh.com/search/label/Supplementary%20Retirement%20Scheme%28SRS%29

Contact Wayne Koh for more queries:
waynekohwg@gmail.com | +65 8288.9005 | skype: waynekohweeguan