Supplementary Retirement Scheme (SRS)
Asked by Anonymous
Asked on 15 Jun 2019
Based on my situation, what are the pros and cons of opening an SRS account?
While your tax savings are minimal at this point if you contribute to SRS, opening the SRS account now will enable to lock in the withdrawal age for your SRS monies at the prevailing retirement age (62) for this year. If the retirement age is raised in future, you will still be able to withdraw at 62. Also, this allows you to get your SRS account set up for the future, when your income will likely be higher and the usefulness of contributing to SRS is more pronounced. It is a quick and painless process as you can open online and put one dollar in to start the account.
Just some simple answers based on the lack of information in your question!
No, because you're only paying $70 in taxes it's not worth it.
But yes, using $1 if you're expecting your salary to increase beyond $80k annually in future, because the withdrawal age is locked based on when you open the account.
Based on last week's news, the government is reviewing and may increase the withdrawal age in September.
It depends. No one can provide you with a clear answer without knowing what you want to use your SRS for. But if I was in your shoe, I wouldn't do it. The tax savings does not justify the inflexibilty caused by contributing to your SRS. Also, how much do you need to contribute to your SRS to lower your income bracket? If the amount is only a few thousand dollars, it is slightly meaningless as once again you are limiting yourself to a few investment strategies which are usually lump-sum based.
Yes if you have spare cash willing to invest and not planning to take it out until after retirement, would be good to start some srs contribution now.
Aside from locking in the withdrawal age, you can contribute enough to eliminate your taxes of 70 bucks entirely. This may seem small but if compounded until your retirement, it will still be a good tidy sum.
Treat this as a forced savings if you want.
In any case, srs rules may change depending on gov policies and directions. You can make the first move now based on current known rules. Every penny saved will come in useful.
Importantly, know also how to make full use of your srs contribution. You are in no better position if you let your srs contribution sit without investing it for higher interests. The interest given for srs funds are minimal at best.