Retirement

Our best advice when it comes to saving for retirement is to start saving early, add to your investment whenever you can afford to, and not to dip into your retirement savings when you change jobs. While retirement may seem like a goal too far in the future to affect you if you are under 30, or you may feel like you have missed the boat if you are over 40, it is never too early to start. Let us help you to get started.

Why Save for Retirement?

The South African government’s old age grant is R1500 per month. Could you live on that?

This amount is less than many of us currently pay towards our cars, or a monthly grocery shop, or a weekend getaway. Unless you think you can survive on this meagre amount, there is no time like the present to start saving for your retirement.

Let SARS help you pay for your Retirement

The South African Revenue Service (SARS) wants to help you pay for your retirement.

The way in which they do this is by offering generous tax deductions when you make contributions to your retirement annuity (RA), pension or provident fund. On 1 March 2016, the tax deductions for retirement savings increased from 15% to 27.5% - which means you can now save more for retirement and get back more from SARS.

What else has changed?

You are now able to deduct your contributions to all retirement funds, with the maximum tax deduction you may make in a tax year limited to the greater of 27.5% of taxable income or remuneration, subject to an annual ceiling of R350 000. Contributions above this limit made directly by your employer are also now taxable as a fringe benefit in your hands. If you contribute more than the limits, your excess contributions can be used to increase the value of any tax-free lump sum you take before or at retirement or to reduce the taxable portion of your living annuity income in retirement. Excess contributions in one year can also be carried over and deducted in the next year. Remember that even if you are a member of company pension or provident scheme you can set up a retirement annuity to supplement your existing contributions.