Salary.sg – Your Salary in Singapore

$52,350 is the median income of all resident taxpayers for YA2008, which I calculated based on the numbers in IRAS annual reports.

You can use this income comparison tool to see which percentile you belong to.

However, the main objective of this article is to show how much the median income has grown over the years, as inspired by the Singapore Budget Speech 2010 (more on this later).

For YA2004, which assessed your income earned in 2003, the median assessable income of all resident taxpayers was $48,450.

This grew to $49,100 in 2004, then to $49,850 in 2005. It subsequently increased to $50,800 in 2006, and finally to $52,350 in 2007 (i.e. YA2008).

Over the 5 years from 2003 to 2007, the median income grew by about 2% per year on average. The figure for 2007 is about 8% higher than that for 2003.

However, in the Budget Speech 2010 given by Finance Minister Tharman Shanmugaratnam, the “median income” apparently grew at a faster rate, from an index value of 103 for 2003 to 116 for 2007. This is a 12.6% increase.

What gives?

Note that Mr Tharman uses median income per Singaporean household member. Further, as stated in a footnote, the data “refers to non-retiree Singaporean households” and “excludes households consisting solely of non-working persons over 60.”

As an aside, we do not know if “Singaporean households” refer to households consisting of purely Singapore citizens, or a mix of citizens and PRs. To me, it is technically correct either way. Let me know if you think otherwise.

Without more details, we can only make educated guesses.

First, household sizes may have decreased over the years. Besides falling birth rates, we also have more foreigners arriving here to work. I do not think the typical foreigner brings along many dependents here. Perhaps Mr Tharman can also provide a corresponding chart that shows the median household sizes over the years.

Second, is there a special reason to exclude retiree households? We know that Singapore has an ageing population and that many baby boomers are now entering retirement. Many of these retirees depend on somebody else’s income to get by. It will be good if Mr Tharman can provide an additional chart to show the number of retiree households over the years.

Anyway.

Was your income in 2007 (or YA2008) more than $52,350?

It’s common knowledge that there is a salary ceiling of $4,500 for both employer and employee CPF contributions.

If you earn more than $4,500, you only need to contribute $900 (=20% x $4,500) to your CPF.

Even if you make $20k a month, you still contribute $900. Your employer contributes $652.50 (=14.5% x $4,500). The rates are lower if you are above 50 years old.

But do you know there’s also a ceiling for bonuses?

It is known as Additional Wage Ceiling, or AW Ceiling in short.

The key idea is this: Your total wages subject to CPF cannot exceed $76,500 for the entire year.

This means: If you earn more than $4,500 per month and receive a huge bonus for 2009, only $22,500 of that bonus is subject to CPF.

Why? Because your ordinary wages’ CPF already amounts to $4,500 x 12 = $54,000. So this leaves $76,500 – $54,000 = $22,500 for your bonus’ CPF contribution.

When did you first hit the $76,500 limit?

If you have been working for some years, you should have a rather significant amount of money in your CPF Special Account.

The savings in your CPF SA currently still earn a 4% interest rate, totally risk free. There’s also an additional 1% interest paid to the first $60k of OA+SA.

The interest is high enough to make it unattractive to some people to use the SA money for investments. Fund houses and unit trust marketers may think otherwise, but it’s not hard to see why they are biased.

Another reason, though less compelling, is that your CPF SA serves as an approximate proxy for the total income you have earned so far.

By looking at your CPF SA balance, you can roughly* have an idea of the total income you have made in your working life thus far. You can use it as yet another way to compare your earnings. (This is of course assuming that you did not use your SA for investments under CPFIS-SA.)

On the other hand, comparing the Ordinary Account is harder because most people use part or all of the OA money for their HDB or private property loan payments.

Without further ado, login to CPF and find out how much you have in your CPF Special Account (apply for Singpass if you don’t yet have one – where have you been?!). And compare with others:

*Factors affecting your CPF SA balance include: the number of years you have worked, the bonuses you have received, and whether your wages exceed the contribution limits.

Congrats on your new condo purchase. It’s a significant milestone in your investment journey.
You diligently studied the property market and got in at what you think is the right time.
And now, all that’s left to do is to find a tenant. Yes, you’re renting out your spanking new private apartment, fully furnished.
As a person who’s [...]

When I posted about graduate couples having no problems saving $1 million, I used an investment return of 3% in my calculations.
If you can consistently generate a 3% return every year, you will turn $100,000 into $103,000 in 1 year, and then make that $103,000 become $106,090 in 1 more year. With such compounding, your [...]

We can reasonably expect Singapore to plunge back into recession at the end of this quarter. If it does, we will be the first country in Asia, and possibly the world, to experience a double dip recession in the aftermath of the global financial crisis.
Our economy first dipped into a technical recession in Q3 2008.
Advance [...]

9.2% of resident taxpayers made $100k to $150k in YA2008, up from 7.8% in YA2004. The increase has been gradual and consistent through the years.
In fact, all income tax brackets above the $80k mark saw a similar increase.
In contrast, it was a decreasing trend for the lower income brackets between the $25k and $50k levels.
These [...]

The average expenditure of all Singapore households is $4,388 per month. This is according to the Household Expenditure Survey (HES) report released last month by the Singapore Department of Statistics.
Households staying in 5-room and executive HDB flats spend an average of $4,926 per month, while those in 3-rooms and 4-rooms spend $2,482 and $3,551 respectively.
Families [...]

If you and your spouse are working professionals making median salaries, it’s not hard for both of you to accumulate $1 million before you reach 45 years old.
Suppose both of you started working at age 25, and always save and invest one-third of your income. If your savings and investments earn just a 3% rate [...]

One good way to achieve financial success (i.e. make lots of money) is to do business. This is a view shared by one of the (few) millionaire forummers at Salary.sg Forums:
“- If I want to be rich, what’s your advice for me?
It seems to me that the only way to be rich for most who [...]