Saving for retirement

We all await the day when we can kick up our feet and take a well-deserved break. Let’s ensure that when that day arrives, we are financially prepared to live our best lives.

The time is now

The best time to have started saving for retirement was the day you started working. The next best time to start saving is today! To achieve peace of mind at retirement, knowing you are well positioned financially to maintain your desired lifestyle, we need to lay the foundations as soon as possible.

By utilising your greatest asset – “time” – we are one step closer to fulfilling your hopes and dreams at retirement.

Why we like them

There are many ways to save for retirement, but the most disciplined way is to utilise a retirement annuity (RA). RAs are a tax-efficient way to save because the contributions are tax deductible. You also earn compound interest on your savings until your desired retirement age (the minimum retirement age is 55 for RAs).

More advantages:

  • Tax benefit: the cumulative contributions to all retirement funds are tax deductible up to the greater of 27.5% of your taxable income or remuneration, limited to R350,000 per year
  • Access on retirement: one-third of the fund can be taken as a lump sum in cash and two-thirds must be used to purchase an income (in the form of an annuity). Alternatively, the funds can be accessed should you pass on or become disabled, dependent on the rules of the relevant fund.
  • Tax on proceeds: the lump sum is taxed according to the retirement tax table whilst the income purchased from the annuity will be taxed according to the income tax table
What about other savings products?

There are various solutions available to you and your current situation which may benefit your retirement planning, all with their own unique characteristics. Each of these should be considered holistically.

Why it matters when saving for retirement

A risk profile is an analysis of your tolerance towards risk. The analysis considers your ability to take on risk as well as your general attitude towards investing. A series of questions are asked to determine what your risk profile is. This is done to select funds suitable for your saving needs.

An SFP adviser can guide you on your journey to saving for retirement by helping you to first determine your risk profile.

Start your journey