When Mr Andrew Cheang opened a Supplementary Retirement Scheme (SRS) account at POSB last October, he initially intended to leave the funds in the account for his retirement.

However, he realised that he could potentially earn better returns by investing his SRS funds and still enjoy the benefits of such an account. It would also help him address his retirement goals.

Said Mr Cheang: “My peers and I constantly think about our retirement as living and healthcare costs are increasing over the years.”

The 53-year-old chose an SRS account after exploring several savings products. “SRS is stable and it offers the flexibility of putting any amount of money (up to the maximum of S$12,750 annually for Singaporeans and PRs) at any time within a given year. It’s another source of retirement funds. In addition, it helps me enjoy income tax relief,” he said. This is because the money deposited into an SRS account each year enjoys tax relief in that year.

The civil servant opened his SRS account with an initial deposit of about S$10,000, with the intention of depositing the maximum permissible amount in future.

A VERSATILE SAVINGS OPTION

SRS funds can be invested in a variety of products, including unit trusts and insurance products. Mr Cheang, who considers himself to be a risk-averse investor, chose a unit trust.

“I opted for a fund that offers dividend payments every six months. I look for investments that have long-term stability and as little risk as possible. I feel that potentially greater returns equate to greater risk, and I am not comfortable with that option.”

“I plan to save more money in my SRS account in subsequent years. Hopefully, it would give me better returns,” he added.

SRS account holders will not be taxed on the dividends from their SRS-linked investments.

A PROACTIVE APPROACH TO RETIREMENT PLANNING

The SRS account is a part of Mr Cheang’s and his wife’s toolbox of retirement savings options. To build up his retirement fund, he has also bought other options, such as endowment plans, fixed deposits and savings plans. In part, Mr Cheang was inspired by his father.

“When my dad retired 30 years ago, he was able to plan to take care of his health and living costs.

“To date, he maintains his own finances and pays for his own medical costs. I want to follow his example to make sure I am financially independent when I retire.”

Mr Cheang is aware that this includes adjusting his lifestyle since he won’t be earning a regular monthly income. “One of my retirement priorities is that both my wife and I are financially capable of taking care of ourselves without burdening our children.

“We will take public transport and cut down on our holiday expenses, perhaps by only visiting nearby destinations for a quick getaway.

“The other goal is that both my wife and I can enjoy each other’s company in our golden years and age gracefully.”

This is the 11th story in a 15-part collaboration between TODAY and POSB. To read this story online, visit www.todayonline.com/posb.