I just topped up $4.5k into my mum's CPF Retirement Account.
Let me share 5 reasons why I did so instead of giving her cash.
- Tax Relief
For selfish reason, I would like to enjoy tax relief of up to $7k per calendar year for topping up my parent's CPF Retirement Account under the Retirement Sum Top Up (RSTU) scheme.
Assuming my tax bracket is at 7%, a relief of $7k will save me $490 of taxes in cash, which is enough to eat more than 100 boxes of $3 cai png (vegetables rice) at the coffeeshop.
The tax relief is also applicable to family members such as parents-in-law, grandparents, grandparents-in-law, siblings and spouse.
- Compounding growth at 4%
In today's low interest environment, the value of cash is eroded by inflation and stifled by poor interest rates offered by banks' savings accounts.
CPF Retirement Account yields at least 4% and up to 6% for senior folks risk-free and guaranteed by the Singapore Government....