Posts
My voluntary contribution in 2015 to CPF is done:
With this, I will enjoy the risk free interest rates of 2.5% to 4.0% earlier.
Sit back, relax and wait for the magic of compounding to do its work.
Related post:
Retirement: AK is buying a AAA rated bond.
Bloggy Award
17 comments:
HI AK,
Happy New Year to you.
My time of VC(to SA) is unfortunately over. I have to wait till July, when they raise the minimum sum to 161K, to top up my RA.
Meanwhile, I will do my SRS contribution for this year soon.
All in the name of retirement planning. Cheers!
I think, for you, retirement adequacy is not about money. It's about what would you do with all that time.
Hi..my yearly emmployment cpf will likely hit the cap. Can I top up some now to take adv of the higher int.
By the time employment cpf cones in and hit cap...the excess will be refunded to me or to my employer.
Hi AK,
hope to seek your opinion here. Suppose one has 21K which he intends to top up his CPF SA. Should he
(1) Top up the whole 21K on the first yr or
(2) Stagger the top-up into 3 yrs (i.e 7K per yr)?
Pro of
(1) - magic of compounding works earlier
(2) - enjoy tax relief of 7K for the next 3 yrs as compared to 1 yr if option (1) is chosen
We were talking about market volatility at the office today. For instance, the sudden drop in oil prices and default of some high-yield bonds have resulted in the holders some financial grief. During the penny stock saga (Blumont etc), my boss says he knows of a friend's father who lost $1.6million - his retirement monies.
So, I think those people who think they can manage their money better may want to think twice. as for me, I'll have different portfolios, one of which I prefer to be 'locked away' at CPF -- because I'm human history, human beings are really not that disciplined in financial investments. And unless you are a Li KaShing, some government assistance is probably not a bad idea.
Hi Sanye,
It means that you have hit the MS now and will be hitting the MS again soon. Congratulations. :D
As for the SRS, I usually make my contribution at the end of the year in November or December. Unlike the CPF, there is no attractive risk free interest rate in the SRS. ;p
Hi athulican,
Very perceptive. The title of this blog post seems to be about me but it is actually more to encourage readers to consider using the CPF as a retirement planning tool. :)
Hi ying,
If your earned income is so high as to hit the CPF annual contribution cap, then, don't bother with VCs.
You have to remember that VCs are not tax deductible while mandatory contributions are tax deductible. ;)
Hi betta man,
This is where a bit of comparative analysis comes in.
Will the annual tax savings on the $7K top up be more than the interest earned? If the tax savings will be more, then, it would make sense to do a yearly MS top up of $7K to max out the tax savings. ;)
Hi Ana,
I always like to go for low hanging fruits first and, in my opinion, the CPF is one such fruit.
There should be an element of predictability when it comes to retirement planning. We should look at our CPF savings as safety nets if everything else should fail.
VC is not tax deductible? I remember reading somewhere it is for the first 7k or so?
Hi BP,
VC is not tax deductible unless it is VC to the CPF-MA (tax deductible for recipient only).
MS Top Up to the SA up to $7K is tax deductible. This is different from VC which is governed by the annual cap of mandatory contributions + VC of $31,450 for 2015.
Hi Sanye,
Wow :) Another inspirational maxed SA.
Looking forward to maxing mine as well in another estimated 4 years time. No rush, slowly and steadily, sensibly.
The maximum tax relief for cash top-up to the SA is $7,000.
What about the maximum tax relief for cash top-up to the MA? Is it $3,000 or $5,000? I remember reading it somewhere but I just could not find the article anymore!
Hi MaoMao,
Individuals will be able to claim tax relief for voluntary contributions that they make specifically to their own Medisave Account up to the annual contribution cap ($31,450 in 2015) less mandatory contributions.
Modified from CPF website. ;)
Hi AK,
Thanks! I wonder why the tax reliefs for MA cash top-up cannot be made crystal clear at their website. Haha.
Hi MaoMao,
Maybe, they could consider hiring me. Would be a nice part time job for me in my retirement. ;p
Post a Comment