H E A RT L A N D B OY

presents

RETIREMENT
TITLE OF THISPLANNING
CHAPTER
FOR YOUNG
SHALL GO ADULTS
HERE
T H R E E G UA R A N T E E D WAY S T O
G I V E Y O U A H E A D S TA R T
 FO R EW O R D
Earlier this year, a survey conducted by Nielsen revealed that 55% of
Singaporeans aged between 25 and 35 years old have started saving
and planning actively for their future. While a large percentage of
them consider retirement investment as part of planning for the
future, saving for retirement only becomes a priority for those above
36 years old.

Heartland Boy is heartened to know that many young Singaporeans

are aware of the importance of planning and saving for retirement
early. However, as a young adult himself, he is also aware that this is
a daunting task, and that many young Singaporeans do not know
where and when to start.

Other than seeking help from professional financial planners,

Heartland Boy has a few tricks up his sleeve to show how any young
adult, regardless of education or profession, can take charge of their
own plans for retirement.

As the title of this guide suggests, Heartland Boy would like to

present you three guaranteed ways on how young adults can start
saving for their retirement. Read on to find out how you can
confidently embark on your retirement planning journey
immediately!

The The
Master HLB HLG Disciple¹

W W W. H E A R T L A N D B O Y. C O M
 # 1: Mak e Cash Top - u ps into
You r Spe c ial Ac c o u n t

The Central Provident Fund (CPF) Retirement Sum Topping-Up

scheme allows CPF members to build up their retirement nest by
topping up their own or their loved ones’ special accounts using
cash. Your cash earns a guaranteed 4% return per annum in the
Special Account, and till today, Heartland Boy has yet to find a bank
deposit that matches the rate offered by CPF. Some people may feel
anguished at having to part away with cold hard cash, but Heartland
Boy thinks the concept of delayed gratification will eventually pay off
in the long run.

The added advantage of this scheme is that members can also

qualify for CPF Cash Top-Up Relief during the process. As at 2016,
if you are below 55 years old and your combined CPF balances
(Ordinary Account + Medisave Account + Special Account) do not
exceed S$ 161,000, you get to enjoy proportional tax relief from the
cash top up you have made to your Special Account. Talk about
killing 2 birds with one stone!

Read more about making cash top-ups into your special account
here.

W W W. H E A R T L A N D B O Y. C O M
 CASE STU DY
Oh no, Heartland Girl! Do you know that you are
eligible for a higher income tax rate this year?

What should I do, Heartland Boy?

HLB

Well, you can make a cash top-up into your CPF

HLG Special Account. You get proportional tax relief
for the amount contributed, which will reduce
your chargeable income for this year!

Wow, that sounds good!

HLB

Yes! Your cash also earns a guaranteed 4% return

per annum in the Special Account, which I am
HLG sure has a higher interest return than your Barbie
Doll® collection²!

HLB
W W W. H E A R T L A N D B O Y. C O M
 # 2 T r a n s f e r Yo u r S a v i n g s f r o m
Ordinary Account to Special
Account

Even if you have reached the Full Retirement Sum and are hence
unable to enjoy the CPF Cash Top-Up Relief, there is no stopping a
CPF member from transferring savings from his Ordinary
Account to Special Account.

The main rationale for recommending this is because savings in the

Special Account earns a guaranteed 4% interest rate while savings in
the Ordinary Account earns only a guaranteed 2.5% interest rate. By
transferring your savings from the Ordinary Account to Special
Account, that same money is now suddenly working harder for you
and generating a higher return per annum. Don’t pour scorn on the
marginal 1.5% difference in the interest rate just yet, because if you
let it compound over 30 years, you will be amazed at the difference
in the growth rates of your savings!

Read more about transferring your savings from the Ordinary

Account to Special Account here.

W W W. H E A R T L A N D B O Y. C O M
 CASE STU DY
To illustrate the benefits of transferring your savings from the
Ordinary Account to the Special Account, let’s imagine that
Heartland Girl (aged 25) made a one-time transfer of S$ 20,000
from her Ordinary Account to her Special Account.

The following table shows how much she would have at age 55 if she
had left the money in her Ordinary Account, as compared to
transferring it into her Special Account.

Age Ordinary Account Special Account

(2.5%) (4%)
25 S$ 20,000 S$ 20,000
26 S$ 20,500 S$ 21,000
27 S$ 21,013 S$ 22,050
: : :
55 S$ 41,951 $64,868

Heartland Boy says,

“The amount in the Special Account at age 55 is more
than double that of the original principle! This really
HLB illustrates the beauty of compound interest. ”

W W W. H E A R T L A N D B O Y. C O M
# 3 M a k e U s e O f Yo u r S u p p l e m e n t a r y
Retirement Scheme Account

Unlike the first two ways, the Supplementary Retirement Scheme

(SRS) probably requires a little bit more effort from you. This is
because SRS is a voluntary scheme and not a compulsory scheme
such as the CPF. One has to first apply for a SRS Account with any of
the 3 local banks - DBS, UOB or OCBC.

After opening the SRS Account, the account holder can contribute
cash into it but the contribution is capped at a maximum of S$15,300
per annum. This same contribution can be invested to boost your
retirement savings and at the same time, qualifies as tax income
relief on a proportionate basis. Upon age 62, the account holder
can start to withdraw the money from his SRS Account to tide him
over his golden years.

Young adults should definitely view the SRS as a complementary

pillar in their retirement plans. Indeed, it may not be a bad idea to
swallow the bitter pill now and set aside some cash annually to grow
your SRS account.

W W W. H E A R T L A N D B O Y. C O M
 TAKE ACTIO N NO W
Heartland Boy has just shared three guaranteed ways on how young
adults can start saving for their retirement.

If you are sharp enough, you would realise that some common
principles run across the various methods recommended. The
concept of delayed gratification, making money work harder
than you, and compounding interest are just some of the
principles that Heartland Boy often preach about on his website.

Therefore, continue to follow Heartland Boy on

www.heartlandboy.com to learn more about personal finance!

W W W. H E A R T L A N D B O Y. C O M
 IF YOU FOUND THIS USEFUL
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1 For illustrative purposes only. Heartland Girl is the boss of Heartland Boy in all
aspects in real life.
2 If you are interested in purchasing beautiful Collector Edition Barbie Dolls®,
please write to alison@heartlandboy.com.
Disclaimer: All content expressed herein are Heartland Boy's own and should not be
treated as professional financial advice or recommendation