Want to retire earlier? Get ahead of your retirement planning with this simple life hack that will only cost you $1.
However, if you want to reap the benefits of this hack, you need to be quick.
The first thing you'll need is a Supplementary Retirement Scheme (SRS) account.
What is an SRS account?
The SRS scheme is part of the Singapore government's multi-pronged strategy to encourage us to start saving for our retirement early.
The scheme is entirely voluntary. If you're a Singapore citizen or permanent resident above 18, you can contribute any amount, subject to a cap of $15,300 yearly. Foreigners have a higher cap, at $35,700.
There are several benefits to making contributions to the account.
Firstly, you'll reduce your income tax as you'll enjoy a dollar-for-dollar tax relief on your contributions.
If you choose to invest your SRS monies, the investment returns credited directly to the account, tax-free.
Why make your first deposit now?
You can withdraw from the SRS account at any time, but according to the Ministry of Finance, waiting till you're of retirement age to withdraw your savings will mean that only 50 per cent of it will be subject to tax.
In case you didn't know, the statutory retirement age will be raised from 62 to 63 on July 1.
That means if you only open the account on or after July 1, you will only be able to withdraw your savings (with the tax concession) at 63 instead of 62.
So opening your account now and making your first deposit is crucial if you plan to make use of your SRS savings in the future. Yes, even a $1 deposit counts!
How to open and top up your SRS account
You can open your SRS account with the local bank of your choice: DBS, OCBC, or UOB.
Application is a pretty fuss-free process. Just log in to your online portal and follow the directions to apply for a SRS Account instantly.
Then simply transfer $1 from your regular bank account into the SRS account and you're done!