facebookI want to use my SRS funds to purchase a single premium endowment. What exists currently and what would you recommend? - Seedly

Anonymous

04 Jan 2021

āˆ™

General Investing

I want to use my SRS funds to purchase a single premium endowment. What exists currently and what would you recommend?

I have 22.3k in SRS now, which are deployed in stashaway. My thinking is that it will be easier to stage out my SRS withdrawal and plan for future SRS top ups if I buy an endowment plan which has predictable returns. Iā€™m 27 this year. Looking for 4-5% returns.

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Elijah Lee

04 Jan 2021

Senior Financial Services Manager at Phillip Securities (Jurong East)

Hi anon,

There are many single premium endowments that exist currently and we will also have to plan around your desired age of cashing out your SRS (it could be 62 at earliest, but sometimes people also defer to 65, it all depends) in a way that eliminates having to pay any tax on the withdrawals.

Many single premium retirement income plans exist, such as Manulife RetireReady Plus (II), NTUC SAIL, TokioMarine Retirement (SP) etc. There are also single premium endowments such as Manulife ReadyBuilder, AIA Smart Wealth Builder, etc.

There are many factors to consider when evaluating such plans, such as the guaranteed returns, projected returns, and any other fringe benefits that may prove useful in your retirement.

If an endowment fits your requirements due to your desire to plan and optimize your SRS withdrawal, you might want to speak to an independent financial advisor to understand the options available to you as well as the choices of plans available from the different insurers.

I will caution against expecting 4%-5% returns, 3%-4% is more realistic.

You can invest very consevative with SRS, no need to be too aggressive with 35years of compounding.

Because:
1) you can only withdraw at 62 to avoid 5% penalty
2) you will be taxed 50% of your withdrawl. Mean you must withdraw no more than $40k a year to avoid tax.
3) you must withdraw everything within 10 years.

4% just put in you SA is a wiser choice. Guaranteed, risk free. & escape any current and future tax.

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