do u do SRS?

[Laneige]

CPF contribution every year is capped at 102k of yr income. It's not like people who earn more get more CPF SA.
If u earn a lot, means u can treat SA as a risk free alternate 4% saving account, with immediate 11-15% interest. Good to have some less risky investment


People usually recommend 120k. Which means u need to pay $7k income tax. Every 1k is $115 saved.


but Annual income (after all the deduction) of 80k also need to pay more than 3k.Can probably start a bit.

but SRS cannot put into SA
SA is the acc if overflow, will flow out to Ordinary right?

 

[Laneige]

CPF contribution every year is capped at 102k of yr income. It's not like people who earn more get more CPF SA.
If u earn a lot, means u can treat SA as a risk free alternate 4% saving account, with immediate 11-15% interest. Good to have some less risky investment


People usually recommend 120k. Which means u need to pay $7k income tax. Every 1k is $115 saved.


but Annual income (after all the deduction) of 80k also need to pay more than 3k.Can probably start a bit.

those earning more than 120k leh
like those paying 10k n above how
confirm contributee to SRS? or the tier wont drop = no point?

 

[ringrain_78]

I would put $15.3k into SRS every year but I agree that SRS is not suitable for everyone. everyone has their own needs and requirements.

If 15.3k tax relief (capped at 80k, if I remember correctly) and by putting in SRS drops a tax bracket for you, then do it. In my employment, I have a fairly accurate idea of my taxable income / relief (doesn't change much) before end of the year, so I can decide if putting aside $15.3k is worth it.

I also find that this is not always mentioned, whatever money you put inside, can be withdrawn tax free (less than 40k per year) over a spread of 10 years. So put it simply - project what you will have inside then divide by 10 and as long as amount is less than 40k per year, then it is tax free.

Supposing you have 400k (contribution + earnings) in SRS at retirement age, then you can take out 40k per year over 10 years.

40,000/12 = 3,333 per month - I think this is decent amount to supplement income during retirement.

To get to 400k, you will need about 26 years of saving 15.3k per year, if that's the target, then one should start mid 30s.

 

[weng0202]

For high earners, SRS is worth it. Assuming you earn within the $500k to $1M range, every extra dollar you is taxed at 23%. Whereas if you put it into SRS and withdraw it later, even if you withdraw before 62 years old (assuming you set up an SRS account when retirement age was still at 62 years old), you only need to pay 5% penalty. So if your goal is to FIRE, maybe work income becomes zero and just need to pay the penalty (which is still much cheaper than the 24% in taxes). Of course if you earn lesser and pay lesser income tax, the benefits of SRS might not be worth it

I think if earn more than 500k, 15.3k of tax savings won't be much to bother them.

 

[grevq80o]

SRS only make sense if you are paying at 11.5% income tax... means your assessable income after all the eligible deductions is >95.3K (80K + 15.3K)

 

[Elfblade]

For the high income earner I think Yes, for Tax Relief.

For moi I am still topping up the Max of $8K to CPF SA 1st, Next year will hit FRS on my SA alone.

 

[grevq80o]

For the high income earner I think Yes, for Tax Relief.

For moi I am still topping up the Max of $8K to CPF SA 1st, Next year will hit FRS on my SA alone.

wah congrats! Hitting FRS is a milestone indeed!

 

[Elfblade]

wah congrats! Hitting FRS is a milestone indeed!

Yeah, I've been topping up $8K max for the past years to get maximum Tax Relief and build up my retirement fund. With SA hitting FRS next year, I can now work towards ERS and decide which path to go when I hit 55.

 

[ringrain_78]

For high income earners, the best way is to donate - it's 2.5x and deduct directly from assessable income

 

[Heriophant]

I put in SRS... Dont want give PAP and then give me back chicken wing vouchers

 

[grevq80o]

Yeah, I've been topping up $8K max for the past years to get maximum Tax Relief and build up my retirement fund. With SA hitting FRS next year, I can now work towards ERS and decide which path to go when I hit 55.

you can't top up anymore once you hit FRS. But can continue to accumulate SA through employment or top up to the new FRS $ amount (must do it 1st Jan every year)... But your OA is going to shoot up very fast... and if you have also max-ed out your MA, that one will spill over to OA too...

 

[70niner]

a bit is how much
if really put in 7k but tax save mere hundreds then why get locked up 7k (for eg)

worse is when can only buy selected things

yr etf got chance or not
market like hmmmm

Depends on you tax bracket.

https://www.iras.gov.sg/taxes/indiv...ncy-and-tax-rates/individual-income-tax-rates

If u contribute the max 15.3k this year:

- At 7% tax bracket, tax savings = $1071
- At 11.5% tax bracket, tax savings = $1759.50

 

[twinbaby]

Only do SRS if we maxed out our CPF

 

[WarChild86]

Will you put 15.3k into SRS for 2k tax savings? Or keep the 15.3k liquid and pay the 2k tax instead?

 

[yesman2978]

I would put $15.3k into SRS every year but I agree that SRS is not suitable for everyone. everyone has their own needs and requirements.

If 15.3k tax relief (capped at 80k, if I remember correctly) and by putting in SRS drops a tax bracket for you, then do it. In my employment, I have a fairly accurate idea of my taxable income / relief (doesn't change much) before end of the year, so I can decide if putting aside $15.3k is worth it.

I also find that this is not always mentioned, whatever money you put inside, can be withdrawn tax free (less than 40k per year) over a spread of 10 years. So put it simply - project what you will have inside then divide by 10 and as long as amount is less than 40k per year, then it is tax free.

Supposing you have 400k (contribution + earnings) in SRS at retirement age, then you can take out 40k per year over 10 years.

40,000/12 = 3,333 per month - I think this is decent amount to supplement income during retirement.

To get to 400k, you will need about 26 years of saving 15.3k per year, if that's the target, then one should start mid 30s.

Need to consider other retirement income leh

If your retirement income includes taxable income sources, like employment and rent, the SRS withdrawals will add to your income tax. A bit bo hua.

 

[win_man]

Will you put 15.3k into SRS for 2k tax savings? Or keep the 15.3k liquid and pay the 2k tax instead?

Depends on how much you are paying monthly if never put into SRS. Because $2000 savings mean $166 monthly.

 

[Shawny88]

If your tax bracket is at 15% or above, then it makes sense to top up SRS

 

[FT PRIDE]

Iras have this yearly excel calculator. Pump in the figures and see if it is worth it

 

[Dividends]

Will you put 15.3k into SRS for 2k tax savings? Or keep the 15.3k liquid and pay the 2k tax instead?

Depends on how much you need the cash. If you've already settled housing, have a beefy emergency fund and don't see yourself needing it in the foreseeable future.

Meaning you will save + invest the funds for retirement anyway, then might as well top up SRS and save the 2k.

 

[Elfblade]

you can't top up anymore once you hit FRS. But can continue to accumulate SA through employment or top up to the new FRS $ amount (must do it 1st Jan every year)... But your OA is going to shoot up very fast... and if you have also max-ed out your MA, that one will spill over to OA too...

Actually not very true, every start of the year CPF MA will shift Goal Post. I will always use that chance to top up my BHS to the max for tax relief.