Save for your retirement and save tax with SRS
The Supplementary Retirement Scheme (SRS) is a voluntary retirement savings vehicle that allows you to save for your retirement and reduce your taxable income. As long as you are above 18 years of age, you can contribute to SRS, and you can withdraw your SRS savings from age 62 and only 50% will be subject to income tax.
Reduce Your Tax with SRS Contributions
SRS contributions can reduce your taxable income by the amount that you contribute. Singaporeans and Permanent Residents can contribute up to S$15,300 each year and foreigners (expats) can contribute up to $35,700. The chart below illustrates how you can effectively save for retirement and reduce your taxable income by using SRS.
Case Study – Save for Retirement and Cut Tax with SRS
The Situation
Adam and Katherine are currently living and working in Singapore, having been here for 3 years. Adam is currently the Regional Director of a manufacturing firm, and Katherine is the HR Director for a logistics company. They are planning to stay in Singapore for the next 3 – 5 years and have sought our guidance on strategies they can utilise to reduce their taxable income, while saving for their retirement. Adam is currently earning $250,000 per annum while Katherine is earning $180,000 per annum.
The Solution
After reviewing Adam and Katherine’s personal financial situation and their long-term financial goals, we were able to determine that an SRS strategy would be an ideal fit for them. This would allow each of them to make tax-deductible contributions into their own SRS accounts, which would be invested based on a diversified investment portfolio we structured for them. Having reviewed their cash flows, we determined that both Adam and Katherine could afford to save the maximum contribution, $35,700 each year, into their SRS accounts.
Scenario
Adam contributes $35,700 each year into his SRS, reducing his tax payable by over $5,500 and making a significant contribution to their retirement savings. Katherine is able to do the same and reduces her tax liability by over $5,000.
Discuss how you can use SRS to save for your retirement
Click on the buttons below to arrange a time to discuss how you can utilise SRS to save for your retirement on reduce your tax bill.