Don’t let the thought of being locked into an agreement scare you
Posted in Broker In Your Pocket on Oct 31, 2023
Most people are wary when it comes to being locked into contracts, agreements and investments in case something goes wrong, and this includes signing up for retirement annuities. People express concerns around access to a retirement investment only at 55 and poor investment performance.
But when it comes to retirement funds, the only anxiety should be around being able to retire comfortably when the time comes.
Contributions to retirement annuities are tax deductible, earning rebates from SARS based on your personal income tax rate. This means that while you are busy contributing to your retirement to ensure your future financial comfort and security, these rebates can be used either to boost your savings or to plan your next holiday. You can even re-invest these amounts back into your retirement fund to top up any gaps.
If you compare the compounding effect of your RA without the rebates with what it would look like if you re-invest them, the difference is literally millions of Rands. By putting more money into your RA you may become one of the few (statistics show only 6% of the population) that will reach their retirement goals and be able to retire comfortably. By taking advantage of this benefit and utilising it to the fullest, your tax rebates can boost your short-term savings or help you enjoy the retirement that you deserve!
Without proper retirement planning, retirement goals will remain unattainable. Whether your own goal is to travel the world or simply to be comfortable at home, it’s important to begin planning for your retirement from as early as possible.