Fun with SRS. A retirement Tap

 Fun with SRS

1. Why SRS saving?  Putting some reality scenario helps.

Each year savings:
* Topup SRS yearly: $15,300
* Tax saving @10% bracket + Div %5%
* Daily meal (bf + lunch): $12

By year-1 SRS saving:
((15,300×0.05)+(15,300×0.1))÷(12)÷365 = 6mth free daily meal (bf n lunch: $12)

By year-2 SRS saving:
((15,300×0.05x2)+(15,300×0.1))÷(12)÷365 = 7mth free daily meal (bf n lunch)

By year-3 SRS saving:
((15,300×0.05x3)+(15,300×0.1))÷(12)÷365 = 9mth free daily meal (bf n lunch)

By year-4 SRS saving:
((15,300×0.05x4)+(15,300×0.1))÷(12)÷365 = 12-mth free daily meal (bf n lunch)

By year-5 SRS saving:
((15,300×0.05x5)+(15,300×0.1))÷(15)÷365 = 7mth free daily meal (bf n lunch: $15)

~~~

2. Before age 45,
* personal tax bracket not high,
* salary not high,
* commitment high

3.
E.g. Age 45 to 54
By Year-10, total SRS savings:
$15,300 x 10 = $153,000

E.g. Age 55 to 64
By Year-20, total SRS savings:
$15,300 x 10 = $306,000

~~~~

4. Retire at age 65:
Cash Drawdown for age 65 to 84:
$306,000 ÷ 20 = $15,300 p.a. (or $1,275 p.m.)

In fact, instead of cash drawdown, $300,000 @5% dividend/return = $15,000 p.a. (= $1,250 p.m.) perpetually.

~~~

My Takeaway
Whatever the reason for not topping up SRS for Tax Saving, Tax saving + Dividend/Return payout will provide us a retirement Tap + daily spending.

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