Retirement Savings
We all look forward to the moment when we can relax and enjoy a well-earned respite. It is essential to ensure that when that moment arrives, we are financially equipped to lead fulfilling lives.
The time is now
The optimal moment to have begun saving for retirement was the day you entered the workforce. The next best opportunity to start saving is today! To attain peace of mind during retirement, it is crucial to establish a solid financial foundation that will allow you to sustain your desired lifestyle.
By leveraging your most valuable asset—“time”—you move closer to realizing your aspirations and dreams for retirement.
ABOUT RETIREMENT ANNUITIES
Why we advocate for them
There are numerous methods to save for retirement, but one of the most disciplined approaches is through a retirement annuity (RA). RAs offer a tax-efficient means of saving, as contributions are tax-deductible. Additionally, your savings will accrue compound interest until you reach your chosen retirement age (the minimum retirement age for RAs is 55).
Further benefits include:
Tax advantage: Contributions to all retirement funds are tax-deductible up to the greater of 27.5% of your taxable income or remuneration, capped at R350,000 annually.
Access upon retirement: You may withdraw one-third of the fund as a cash lump sum, while two-thirds must be utilized to purchase an income (in the form of an annuity). Alternatively, funds may be accessed in the event of death or disability, subject to the rules of the relevant fund.
Tax on withdrawals: The lump sum is taxed according to the retirement tax table, while the income derived from the annuity will be taxed according to the income tax table.
ALTERNATIVE SAVING SOLUTIONS
What about other savings options?
A variety of solutions are available to you, tailored to your current circumstances, which may enhance your retirement planning. Each option possesses its own distinct characteristics and should be evaluated comprehensively.
PENSION, PROVIDENT & PRESERVATION FUNDS
What is their impact on my retirement planning?
Pension and provident funds are mandatory components of your employment agreement with your employer. It is essential to incorporate the values and contributions of these funds into your retirement strategy. If you resign from your position, the accumulated fund value can be retained to support your retirement objectives.
YOUR RISK PROFILE
Why it is significant for retirement savings
A risk profile evaluates your willingness to accept risk. This assessment takes into account both your capacity to endure risk and your overall investment mindset. A series of questions are posed to ascertain your risk profile, which aids in selecting appropriate funds that align with your savings requirements.
A WealthShore Capital adviser can assist you in your retirement savings journey by first helping you identify your risk profile.
Are you prepared to enter retirement.
Maximize the advantages of your retirement savings through a well-structured plan tailored to your requirements.
ADDRESSING YOUR INCOME REQUIREMENTS
Strategizing for your retirement phase
With your professional career concluded, it is essential that your savings generate an income that sustains your lifestyle (taking inflation into account) while also addressing potential expenses that may arise more frequently during retirement, such as healthcare costs.
The amount you withdraw from your savings as income will depend on your financial necessities.
RETIREMENT CHECKLIST
Key considerations to reflect upon
What are your retirement requirements?
Evaluate whether you will need a lump sum to clear debts or if you can utilize your entire savings to acquire an annuity.
Do you possess adequate savings?
It is crucial to determine if your savings strategy is sufficient to fulfil both your cash and annuity requirements.
How should I prepare for the coming decades?
Contemplating whether you wish to leave a financial legacy for your family is a significant factor in establishing your plan, as well as understanding how it will affect the monthly income you will need from the annuity.
SELECTING YOUR SOLUTION
Creating a personalized plan
When you are ready to begin utilizing your retirement annuity, preservation fund, pension, or provident fund, it is necessary to transfer these funds into a solution that generates income to support your retirement.