today is the last day for topping up CPF/SRS and Jan 1 is the first day to top up again

[PNGMK]

The banks usually default to $1000 and you can adjust that in the online banking app. It is quick and easy to do, takes effect immediately.

Yes I tried awhile ago and couldn't but I'll try again.

[PNGMK]

Just a reminder that we are entering the last 5 weeks for SRS and CPF top ups for the 2021 tax year.

SRS Limits:
15,300 for SC PR.
35,700 for expats.

CPF contribution limits:
37,740

Cheques take time to clear. Don't miss out. If your MA is low, top that up first as it is 100% tax deductible (MA limit is $63,000 this year) to $7,000.

1st Jan don't forget to top up your RA (with external cash) if you're retired and have CPF for a maximum interest effect. I don't know what the new limit is going to be but forecasts are around 3 x basic limit (96k) = 288k.

In 2022 the tax deduction for VC (for self and family members) will be raised to $8,000 - a total of $16,000 is available.

If you're approaching 55 and have CPF, look into "shielding schemes" to maximize your SA account for the maximum interest before CPF grab it and shove it into RA.

[GSM8]

Great reminder, thanks PNGMK. An additional nuance comes to mind. If your MA is already maxed at 63k, then top back up to 63k as soon as there is a withdrawal, for example, when your IP or MediShield plan deducts, but before your next employment monthly contribution is made (else it will be channeled into MA if below 63k at that point in time)

[PNGMK]

Great reminder, thanks PNGMK. An additional nuance comes to mind. If your MA is already maxed at 63k, then top back up to 63k as soon as there is a withdrawal, for example, when your IP or MediShield plan deducts, but before your next employment monthly contribution is made (else it will be channeled into MA if below 63k at that point in time)

Yes good point.

[malcontent]

My wife is an SRS virgin, thought of popping hers open this year so that she can unshackle by 62. The problem is… I’m just not totally convinced that the juice is worth the squeeze.

Being restricted to Singapore investments adds cost that eats up the tax savings over time. This is especially true if we are not resident in SG during retirement and have to pay 15% nonresident on half, effectively 7.5%.

You would be surprised what an extra 0.5% annual investment fee over a decade or more can do. It’s a bit like having a termite problem.

[PNGMK]

My wife is an SRS virgin, thought of popping hers open this year so that she can unshackle by 62. The problem is… I’m just not totally convinced that the juice is worth the squeeze.

Being restricted to Singapore investments adds cost that eats up the tax savings over time. This is especially true if we are not resident in SG during retirement and have to pay 15% nonresident on half, effectively 7.5%.

You would be surprised what an extra 0.5% annual investment fee over a decade or more can do. It’s a bit like having a termite problem.

Absolutely depends on her tax bracket IMO.

If she's in the 20% bracket as I suspect she is that is a $3,000 pa saving. Even just doing that for 10 years into a low interest but capital guaranteed fund is a good return IMO.

[malcontent]

Just a 0.5% higher costs will eat up around 3% of the tax savings in 10 years, 6.5% in 20 years, and 10.5% in 30 years.

I believe the SRS investment with the lowest expense differential is SGX listed S27 which has a TER+WHT of just under 0.5% versus the best non-SRS equivalent, London listed CSPX which has a TER+WHT of 0.25%.

With this most optimistic 0.25% higher cost, it eats up 5% in tax savings over 30 years, or 2.5% in 15 years. In this scenario, it might be worthwhile, and each subsequent year will be slightly better - with less time for those costs to compound and do their damage.

I guess it might be worth it in this narrow case.

[PNGMK]

The other psychological reason is that the incentive for SRS is quite strong IME. As the year draws to a close the thought of paying 3k extra in tax looms and I find it easy to find the $15,300.

[ProvenPracticalFlexible]

How does the familymember donation work for retirees?
I'm now looking to maxing the 7k to my inlaws, she's over retirement agent, so will she automatically start getting higher payments from cpf next year if I just do it now? or is there something needed to be done at receiving end cpf account profile.

[PNGMK]

Ok guys. Next week you have until Friday to top up SRS and CPF. Don't forget that cheques take time to clear for SRS. You can top up CPF online with Paynow and it is an immediate deposit.

[malcontent]

Ok guys. Next week you have until Friday to top up SRS and CPF. Don't forget that cheques take time to clear for SRS. You can top up CPF online with Paynow and it is an immediate deposit.

Good reminder. With such low interest rates, using CPF as the bond substitute in your portfolio really gives you a big advantage compared to investors who have no CPF and are stuck with very low yields at the moment.

Note also, this is the last year you can do VC to MA with tax relief (to the extent your mandatory contributions are under the limit and you are below BHS). Next year, MA top ups will be combined into RSTU and limited to $8k total, up from $7k this year.

[malcontent]

Another deadline for any US persons out there, if you haven’t already gotten your $10,000 limit of Series I Bonds for calendar year 2021, you might want to set up or log into your Treasury Direct account and purchase these bonds immediately (ideally within 2 days of the last day of the month, to be safe).

These are inflation protected bonds, and the latest annualized rate they are paying is over 7% for the next 6 months. That means you are guaranteed at least 3.5% for the minimum 12 months holding period, even if there is zero inflation or deflation at the next adjustment. It is a truly unbeatable deal for a guaranteed rate of return at the moment. You can buy another $10,000 for 2022 in Jan.

[PNGMK]

Very interesting Mal - I may get my wife to look at that as she has quite a lot of money sitting doing nothing.

[PNGMK]

for the records CPF balances as of tonight are:
OA 276,927
SA 4,739
MA 63,000
RA 290,281

I'll update once the interest hits. I encourage all PR's to fully utilize CPF. It really is a world class scheme.

[malcontent]

Very interesting Mal - I may get my wife to look at that as she has quite a lot of money sitting doing nothing.

Even if you didn’t make it in time for calendar year 2021, it’s still a fantastic deal in 2022. Setting up a Treasury Direct account is easy, and you will still get more than 7% annualized for the first 6 months if you buy Series I bonds before the next rate change - believe it’s in May 2022. The only restriction is you must hold them for a minimum 12 months, and you only sacrifice the last 3 months interest by getting out early. So once the interest isn’t worth it, just liquidate. The rate never goes below 0% so you can’t lose.