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Good question, but a tricky one! We consulted DBS Head of Financial Planning Literacy, Lorna Tan, for this. Here's what she has to share:
"Hi Kurropy! 'Sufficient' means different things to the individual, depending on their lifestyle, income, and dependents. But there are a few guidelines that can help you.
Let's start with SRS. Like what @EthanLoh mentioned below, SRS is a tool that people use to defer taxes in the following Year of Assessment. This is helpful for those in the higher-income tax brackets in your peak-earning years, because you can invest your SRS savings besides enjoying some tax savings. Furthermore, as you can only start to withdraw them at age 62 (the earliest), you get to enjoy the magic of compounding over the long-term investing period! Don't leave them idle, for they only generate low annual returns of 0.05%.
Therefore, how much to put in is up to you - how much tax do you need to offset? Will you be investing the money? Do consider those questions!
FYI. The current prevailing cap is S$15,300 a year for Singaporeans and permanent residents (S$35,700 for foreigners)
Now, moving onto CPF. Some 'hacks' you can utilise to game the CPF system:
- Shielding your SA Account
- Topping up to Enhanced Retirement Scheme (ERS)
- Use the CPF voluntary contribution scheme
- Topping up CPF accounts of your spouse and parents...
and more! Check out this new article on 8 CPF Hacks by DBS Head of Financial Planning Literacy, Lorna Tan for the full details.
SRS itself is a tax planning tool (a way to reduce income assessible to IRAS, so you can reduce your income tax).
Hence, there is no such thing as "sufficient or not". Unless you are talking about investing your SRS with REITs, in which you may face an issue when the REITs have a subscription to rights etc etc.