Secure your future with a retirement annuity

Prepare for retirement, save on taxes and grow your money over time with a retirement annuity.  

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Want to save for retirement and pay less tax now? A retirement annuity helps you do both.

Retirement should be a time to enjoy life, not worry about money. But to get there, you need to start saving early.

A retirement annuity makes it easier by offering 2 big benefits:

  1. It helps lower your tax while you’re working
  2. It grows your money over time, so you have more when you retire

What is a retirement annuity?

A retirement annuity is a smart way to save for your retirement and pay less tax. You put money into a special savings account for retirement, which grows your money over time.

Your savings are protected from people or companies you owe money to (called creditors). Most of your retirement annuity can only be accessed from age 55 onwards. This helps ensure a steady income after you stop working.

How does a retirement annuity work?

You can contribute monthly or make a once-off lump sum payment. The money you put into your retirement annuity reduces the part of your salary that gets taxed. You can claim up to 27.5% of your income each year, with a limit of R350 000. This means you may pay less tax or even get money back from SARS.

Your money grows over time, and you don’t pay tax on the interest it earns or on any profits from your investment. This is thanks to compound interest, where your money earns interest and then that interest also earns interest. Over time, this helps your savings grow even more.

Since 1 September 2024, a new rule called the two-pot system has been introduced for retirement savings. It splits your money into two parts when you contribute:

  • Two-thirds go into your main retirement savings. This money is only available from age 55
  • One-third goes into a savings pot. You can take money out of this once a year before retirement if needed

Example: If you contribute R900, then R600 goes to your main retirement savings and R300 goes to your savings pot.

If you contributed money before 1 September 2024, it stays in the old system, which means you can’t withdraw it early.

When you retire (at 55 or later), you can take up to one-third of your savings as a tax-free lump sum up to R500 000. The rest of your money is used to give you a regular income during retirement.

What are the benefits of a retirement annuity?

  • Pay less tax now: Reduce the part of your salary that gets taxed and possibly get money back from SARS
  • Grow your savings tax-free: You don't pay tax on the money that you earn on your investment
  • Your savings are protected: Creditors can’t take your money, and you can’t access your savings early (except your savings pot)
  • Access a portion if needed: You can withdraw money from your savings pot once a year for emergencies
  • Works with other retirement funds: You can open a retirement annuity even if you have a pension or provident fund
  • Compound interest grows your money: Your savings earn interest, and that interest earns more interest
  • Balanced investing: Your money is invested across shares, bonds, property and cash to manage risk and maximise returns
  • No fixed end date: You can keep growing your savings until you’re ready to retire

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