Save for your Retirement, and Save on your Taxes, altogether!

As we embark on the final Quarter of 2017, we would like to suggest to our readers to review your tax obligation, and perhaps, explore some ways to optimise your tax dollars. Arguably, one of the most effective ways to do this, is via the Supplementary Retirement Scheme (SRS). Through contribution to the SRS account, the Tax-Payor adopts a "one-stone-kills-two-birds" kind of strategy and hence, enhances the effectiveness on his/her tax dollars.

SRS is part of the Singapore Government's effort to address the financial needs of our greying population. It began in 2001 and is operated by the private sector. As the name suggests, the scheme aims to supplement and/or complement the various solutions in our current CPF system, ie. CPF LIFE, Minimum Sum, & etc.

The SRS offers attractive tax benefits. Contributions to SRS are eligible for tax relief. In another words, each dollar of contribution into your SRS account reduces your chargeable income by the same value in the that particular year of contribution. You can invest the savings in your SRS account in several investment instruments. Moreover, your investment returns are accumulated tax-free and ONLY 50% of the withdrawals from SRS are taxable at retirement (this is commonly referred to as "50% tax concession"). For more information on how withdrawals will be taxed, you may like to refer to IRAS' website.

The current annual SRS contribution cap is:

(i) $15,300 for Singapore Citizens & Permanent Residents;

and,

(ii) $35,700 for Foreigners.

Although it does not require a Tax resident to be on a super pay scale to feel appropriately incentivised/motivated to introduce and infuse SRS as part of his/her retirement income solution, just in case some of you might like to study this "mathematically", we have written another article to shed some light in that perspective. And for the keen readers who are hungry for information, you can find everything you need to know about SRS here.

Putting your money away in your SRS account is one thing; the next thing that you would need to consider is how to grow the money in your SRS account. Do stay tune for our subsequent newsletter as we would like to share with you on some of these viable options available in the market currently.