It is 45 days before the end of the year. Have you accomplished your 2020 goals? Whether it is a financial goal or a fitness goal, the good news is that we have another 52 days left.
In the 6 Levels Wealth Karate, we talked about many strategies while you embark on your wealth management journey. Today, I want to congratulate each and every one of you for being invested in your financial journey. If my blog has helped you, I would appreciate if you could comment how you have benefited in the comments below.
If you have not started, it’s okay. This article will be the easiest way to start to start.
Supplementary Retirement Scheme (SRS)
Previously, I have already talked about SRS. In this semi viral article, I described the 5 things you need to know about SRS when you are 40 and older. Personally, I believe that SRS may be suitable for someone who is 40 years old and above.
This is because it is likely that your income is more than $80,000. There will be great substantial tax savings. Plus, we might need liquidity for housing/renovation/marriage/children purposes before that. This will post an liquidity issue. Someone 40 and above might fit into such a category.
In the “best case scenario”, you will be withdrawing $40,000 per year and that income will be tax-free (assuming you are not working).
Please read the above post to learn more about the details.
The $1 SRS Strategy
This strategy is the most important strategy of all. This is because we need to first start!
Yes. Most goals failed because they have not even started. Think about it, did you “renew” your 2019 new year’s resolution in 2020 because you didn’t accomplished it in 2019? It need not be a financial goal. What about your fitness goal? What about your learning goal? If this seems like the case, you have the opportunity to change now. By doing so today, you will shave off up to 3 years of your retirement age. If that is not enough, all it takes is $1.
How is that possible? Let’s gather a few facts.
You can make penalty free withdrawals from your SRS on or after the statutory retirement age (currently at 62) that was prevailing at the time of your first SRS contribution. In 2019 National Rally Speech, PM had announced the retirement age to be raised to 63 in 2022 and 65 in 2030.
This will mean that if you still refuse to open your SRS account by 2022, your penalty free withdrawal will increase by 1 year. If you still refuse to open your SRS account by 2030, your penalty free withdrawal increase by 3 years.
The minimum that you can contribute is a grand total of $1. If you are above 18, all you need is to contribute $1 to “lock in” your retirement age to be 62.
Your 1 Minute Opening Guide
You no longer need to go to the physical bank branch to open up your SRS account anymore. All it takes is 1 minute.
This is the way I do it. My personal SRS account is with DBS (for convenience sake). You can also open your SRS account with OCBC or UOB. It is only 2 steps, click click and you will have an SRS account. If you are unsure how much to contribute, you can always contribute $1 to your SRS account first to “lock in” your retirement age.
This guide serves to let you under how $1 can lock in your statutory retirement age. In fact, do it now! Log into your DBS/OCBC/UOB internet account and do it now!
What can you do with your SRS account?
By popular demand on my Telegram group, I’m currently writing on how to invest using your SRS account now. If you have any questions that you want to be addressed in that article, do drop me a comment and I will include that in the article.
Otherwise, this is one question that is commonly asked: 3 things you need to know about SRS if you plan to leave Singapore. This is for people who wants to live in another country during retirement.
Final thoughts by Wealthdojo
We wish you the very best in your 2020 goals. Otherwise, we hope that this will be your first financial milestone.
Chengkok is a licensed Financial Services Consultant since 2012. He is an Investment and Critical Illness Specialist. Wealthdojo was created in 2019 to educate and debunk “free financial advice” that was given without context.
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The views and opinions expressed in this publication are those of the author and do not reflect the official policy or position of any other agency, organisation, employer or company. Assumptions made in the analysis are not reflective of the position of any entity other than the author.