Anonymous
Should we keep our SRS around 400k to minimize tax at withdrawal age? Is it possible to estimate how much I should put in SRS?
35 yrs to reach 62, plan to invest some in stocks and some with robo.
If I max 15.3k every year, it will have hit more than 400k. Is it important to monitor this amount, ie to keep it around 400k to minimize tax during withdrawal?
If it is, is it possible to estimate how much I should put in SRS each yr to keep SRS around 400k by 62? I tried using endowus and stashaway projected calculator, it seems to suggest 300-400 monthly with initial 10k to keep around 400k, unsure if i unds it correctly
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Endowus
09 Oct 2020
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Hi Anon,
This is a great question! It is ok to pay tax at withdrawal age, and let your SRS account grow (by investment and deposits) beyond $400k.
While it is great that you are trying to minimise tax, what you should do is really to maximise wealth. Do note that the tax savings that we make now, compounded till withdrawal age, can more than pay for the tax paid later on.
I actually built a financial model around this, and it shows that for most cases (at any tax bracket above 7%, if you deposit SRS even from the age of 29), it is still better than not topping up your SRS and investing the money.
You can read more about the article here