13 Oct 2021
How do i know which is better? I just started working and intend to give my parents monthly allowance, but i feel like it will just be left in the bank account instead. My dad is turning 65 next year, will he benefit more from the CPF life payout if i do RSTU?
This would depend on your parents and their views on CPF.
When I started working, I gave my parents their allowance in cash. Mom likes to have the 'feel' of having the money and dad was working so we stuck with this arrangement. I wasn't earning much then so hard cash was important.
Fast forward to today, as my mom's CPF LIFE starts in 3 month's time, and Dad is on the older MS scheme, I have switched to a combination of cash and topping up both their CPF with RSTU. Tax relief is more significant now and I have finally managed to get both my parents to understand CPF for what it is.
Eventually, once the payouts start, I may just do RSTU top ups if they find the payout sufficient, and give them cash on an ad hoc basis. Personally, I think that RSTU has more combined benefits (tax relief for you, 4% for him) but the trade off is liquidity which the older generation may not be willing to accept.
Do the maths and you should be able to find out what works for your situation.
Great question! I am in a similar boat as yourself.
I think there's 2 questions you need to ask ...
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