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SRS Explained: Save on Taxes and Grow Your Wealth

Maximize Your Savings: How the Supplementary Retirement Scheme (SRS) Can Help You Save Tax and Invest Smartly

In today’s financial landscape, planning for retirement is more crucial than ever. One effective way to do this while maximizing your tax benefits is through the Supplementary Retirement Scheme (SRS). The SRS is a voluntary scheme designed to encourage individuals to save for retirement. Contributions to the SRS are eligible for tax relief, investment returns are tax-free before withdrawal, and only 50% of the withdrawals from the SRS are taxable at retirement.

3 Things You Need to Know About SRS

  1. Voluntary Contributions: SRS contributions are voluntary, allowing you to save at your own pace. You can contribute up to a certain limit each year (currently capped at S$15,300 for Singapore citizens and S$37,740 for foreigners). Contributions are eligible for tax relief, effectively reducing your taxable income for the year.
  2. Tax Benefits: For every dollar you contribute to your SRS account, you can claim a dollar-for-dollar tax deduction, which can lead to significant savings during tax season. This is especially beneficial for high-income earners looking to reduce their tax burden. For instance, if you earn $100,000 a year and contribute $15,000, you will only be taxed based on $85,000.
  3. Investment Options: The funds in your SRS account can be invested in various financial instruments, including stocks, bonds, unit trusts, and fixed deposits. This flexibility allows you to tailor your investment strategy according to your risk tolerance and financial goals.

Contribution Limits and Withdrawal Rules

Withdrawals from your SRS account can be made from the statutory retirement age, but they will be subject to tax. However, only 50% of the withdrawal amount is taxable, allowing you to optimize your tax liabilities during retirement.

  • For Singaporeans & Permanent Residents:
    • Maximum SRS Contribution: $15,300 per year.
    • Withdrawal: At statutory retirement age (currently 63).
    • Withdrawal Method: Spread over 10 years.
    • Annual Tax Savings: If you contribute $15,300, you can save $3,060 annually based on a 20% tax bracket.
  • For Foreigners:
    • Maximum SRS Contribution: $35,700 per year.
    • Withdrawal: 10 years from the SRS account opening date.
    • Withdrawal Method: In a lump sum.
    • Annual Tax Savings: Contributing $35,700 yields tax savings of $7,140 annually at a 20% tax bracket.

Read more about Supplementary Retirement Scheme Here

SRS Explained: Save on Taxes and Grow Your Wealth — Engage

How SRS Can Help You Grow Your Wealth

  • For Singaporeans & Permanent Residents: By setting aside $15,300 per year for 20 years at an assumed 5% annual return, you could accumulate approximately $505,000!
  • For Foreigners: Similarly, if you set aside $35,700 per year for 10 years at an assumed 5% annual return, you could amass around $450,000!

While reducing your taxes, your SRS contribution can also be put to more efficient use by investing in a wide range of retirement solutions, including institutional funds.

Benefits of Institutional Funds

  • Low Expense Investments: Institutional funds are designed for large institutions and Accredited Investors (individuals with an income exceeding $300,000 per year or net assets over $2 million).
  • Exclusive Access: These funds are not readily available on retail platforms or banks, providing opportunities to diversify from your current investments.

Read more about Institutional Funds Here

Conclusion

The Supplementary Retirement Scheme (SRS) offers a powerful way to save for retirement while reducing your tax burden. By understanding how the SRS works and leveraging its benefits, you can make informed decisions to invest wisely and secure your financial future.

If you have questions about the SRS or want personalized advice on your financial planning, I offer a free consultation to discuss your financial priorities and goals. Feel free to reach out HERE!

Together, we can develop a strategy that aligns with your retirement goals and financial aspirations.

“Plan today for a brighter financial tomorrow.”

Important: The information and opinions in this article are for general information purposes only. They should not be relied on as professional financial advice. Readers should seek independent financial advice that is customised to their specific financial objectives, situations & needs. This advertisement or publication has not been reviewed by the Monetary Authority of Singapore.

Published By:

Magdalene Joanne Lee

Hi! I’m Joanne, a passionate financial planner dedicated to helping individuals and families achieve their financial goals and dreams.

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  • Financial Alliance Pte Ltd ( “FAPL”) is licensed by the Monetary Authority of Singapore (“MAS”) and allowed to conduct financial advisory activities in accordance with the Financial Advisers Act (Cap. 110) (“FAA”) and the Securities & Futures Act (Cap. 289) (“SFA”) within the jurisdiction of the Republic of Singapore and in accordance with the licenses granted by MAS
  • 鑫盟理财私人有限公司( “鑫盟理财”)持有由新加坡金融管理局(“MAS”)所颁发的牌照，并许可在新加坡共和国境内依据财务顾问法（第110章）和证券与期货交易法（第289章）进行财务咨询等相关业务
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In compliance with the Personal Data Protection Act, Financial Alliance Pte Ltd (“FAPL”) seek your consent to collect and use your personal data (e.g. name, NRIC, contact numbers, mailing addresses, email addresses and photograph) for the purposes of and in accordance with FAPL’s Data Protection Policy, which can be found on FAPL’s website at https://fa.com.sg/data-protection-policy/.

根据《个人数据保护法》，鑫盟理财私人有限公司征求您的同意向您收集并使用您的个人信息。鑫盟理财将根据公司的个人数据保护政策所阐述的用途使用您的个人资料（例如姓名，证件号码，联系电话，邮寄地址，电邮地址和照片）。 该政策可在本公司网站上查寻，网址为 https://fa.com.sg/data-protection-policy/.

By submitting this form, you are deemed to have read and understood FAPL’s Personal Data Policy.

提交此表格，即表示您已阅读并理解鑫盟理财私人有限公司的个人数据政策