SRS and CPF life combi happy meal

My SRS

In the tail end of my career, I was fortunate enough to be earning a decent income, and that comes with its corresponding high income tax rate (20-22% range). In order to reduce the cashflow out due to income tax payment each month, I maxed out my SRS contribution which is $15,300 for 4 years. This cuts my income tax repayment per month by close to $300, which is better than nothing. I was paying $6000-$7000 per month of income tax back then for a few years (You are welcome, SG govt)

My SRS account was opened when the withdrawal age was 62. This meant I can start penalty-free withdrawal when I reach age 62, and only 50% of it will be considered income taxable. And once I start to withdraw, I'll have 10 consecutive years to empty it. 

So, my input into SRS = $15.3k x 4 = $61,200

Started in 2020. (Before that I was an idiot, as I didn't think of using SRS), and I stopped after 2024 since I retired by then. 

Essentially, I used almost all my SRS funds to buy only 1 thing, the STI ES3 ETF. And whenever dividends (2 times a year) are deposited into SRS, I'll use it to buy more units.  So basically, I have reinvested about 6.5 years of dividends so far. 

A minor % was also used to buy Amundi US funds, which has since appreciated by 20%

So, as of now, my SRS account is worth about $133k, not too shabby right? lol

Moving forward, I plan to rotate out from STI to US fund and leave it as-is until I am 62 years old. For a period of 10-11 years, I estimate it will reach around $200-240k. (must have hope ok?)

What about CPF life?

I think I talked about it before in previous posts. My CPF SA already exceeds today's FRS amount, and thus it will definitely meet FRS when I am 55 years old, since SA compounding at 4% is faster than the FRA rate of increase per year. 

If I have extra cash from my investments, I will top up to ERS, but let's assume I am just going for FRS

SRS + CPF Life combi (Age 65-75)

My plan is to only start SRS withdrawals at age 65, coincide with my CPF Life payout start age. Assuming SRS account has $240k, I will take out $24,000 per year, which doesn't attract payable income tax since I don't think I will be working again at that age lol. 

CPF FRS payout, let's assume its $1700 per month.

So, starting from age 65 and until age 75, I will have monthly cashflow of $3,700. My wife doesn't do SRS (since she is a working mother, her tax deductibles already maxed out at $80k given that we have 2 kids). 

Assuming she is also FRS for CPF life, this means as a couple, we will draw about $5,400 per month when we are 65 (she's a little younger). 

So, what does $5,400 buy us? Below are numbers for 2 pax combined:

- $1000 for housing (condo fees, property tax, utilities)

- $1500 insurance premiums

- $2900 for basic expenses (food and public transportation)

I think is a very comfortable base level income flow for our 65-75 age time.

Don't forget that this isn't the only cashflow we will have. I estimate we can have close to $10,000 combined in cashflow from our investments + retirement fund drawdown per month, which means we can probably have some luxuries in life, including continuing to own a private car (I'll probably stop driving after 70), having plenty of vacations overseas (go Japan shopping, Wagyu etc), with no stress. 

What happens after age 75?

SRS will be depleted since we have 10 years to take it all out. So the base level cashflow (guaranteed for life) is $3,400 per month. This means CPF life alone only gives us about $900 per month for basic expenses.

However, I expect our private investments and funds to continue to give us $10k per month or maybe more as we are older and can be more aggressive in drawdown if markets are kind to us. 

BUT, I think when we are 75 or older, especially after 80, our expenses for travel and luxury will significantly be lower compered to when we are in our 65-75 range, so I am not too worried about the loss of $2000 per month input from SRS.

The only catch is if we get hit by some serious illness that requires very costly expenses. But we do our best, live a healthy life. That's all. 

Summary

I think the 65-75 range is awesome, because the very decent safety baseline from our SRS+CPF Life combi cashflow. This covers our basic housing and living expenses easily, and gives us confidence to enjoy our retirement years while we are still in our go-go age.

We still have at around 14-15 years from now still this era of niceness. This period is critical, as we juggle out finances against housing commitments, and providing for our children. But I think it's doable, and we will figure it out. 

I am just glad that we can use SRS + CPF combo this way. 

Hope this gives you some ideas.

Cheers