Have you thought about retirement and how much you should be saving towards it? Most people leave thinking about retirement until it’s too late to save a substantial amount or think that what they already have in place is sufficient. People are living longer, which means more money is needed in retirement to ensure you can support yourself and not have to rely on family and the meagre government grant.
If you want to retire at the age 60 and you haven’t started saving yet, the recommended premiums you need to contribute in order to retire on an estimated R6 500pm for a period of 22 years are:
- If you are between the ages of 25 – 30 = R528.00 pm(escalating at 15% pa)
- If you are between the ages of 30 – 35 = R811.00 pm(escalating at 15% pa)
- If you are between the ages of 35 – 40 = R1 277.00 pm(escalating at 15% pa)
- If you are between the ages of 40 – 45 = R2 086.00 pm(escalating at 15% pa)
- If you are between the ages of 45 – 50 = R3 621.00 pm(escalating at 15% pa)
If you are over the age of 50, I would urge you to make an appointment to come see us so we can complete a comprehensive retirement planning report to see where you stand financially. Most people by this age HAVE not saved enough but are unaware of this fact.
To save for retirement, a retirement annuity is the best vehicle. Don’t delay. Any start is still a start towards your retirement goal. The minimum premium for a retirement annuity policy starts at R150pm.
The later you leave it, the more you will have to start saving!
Tax Benefits at Retirement
as of 01 March 2014, the following tax benefits are applicable for retirement lump sum benefits:
The tax calculation of lump sum benefits from retirement funds is:
- R0 – R500 000 (tax free)
- R500 001 – R700 000 18% of the amount over R500 000
- R700 001 – R1 050 000 R36 000 + 27% of the amount over
- R1 050 001 + R130 500 + 36% over the amount of R1 050 000
Tax Benefits on contributions
Contributions to a retirement annuity, Pension or provident fund is tax deductible up to 27.5% of taxable remuneration.