If my taxable income is at 40k, and by topping up my SA account with $x (up to 7k), does it mean that my Returns is effectively 3.5% (from tax relief) + 4% (from SA)?

Hi Anon,

I would not look it that way, because your tax savings is one off, while your special account returns are recurring. Put it that way, your SA top-up tax relief benefit has to be spread as long as 55 years old (and beyond) for you to understand the true returns of such a top-up.

The closer you are to 55 years old when you top-up, the better because you get to withdraw the money earlier.

You can read more about this on this article:

https://sg.endow.us/2RPXsWv

Hi anon,

Yes, for that year. You'll get 3.5% savings on your tax plus 4% on your top up, so effectively 7.5%. This is followed by 4% on your SA in the years after that since tax relief is only granted for that year that you top up.

It's good that you are looking towards beefing up your SA. People say that the FRS amount is hard to reach, but all your need is time and compounding. You don't have to get there in 5 years or 10 years, but give yourself 20 years and you'll likely get there.