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While saving for retirement may not be a top priority during tough times, preserving and adding to your retirement savings remains key. Retirement annuities (RAs) offer a host of benefits – Roenica Tyson, Investment Product Manager at Glacier by Sanlam, explains some of the reasons to use an RA. Here’s what you should consider.

1. An RA is a surprisingly flexible option

An RA offers flexibility and, with the help of your financial planner, you can generally decide if and when you want to invest in an RA, how much to invest and the underlying investment choices you would prefer.

2. It provides a kickstart to your retirement savings plan

Whether you are a full-time employee, on a fixed-term contract, or self-employed, an RA can propel you on your retirement savings journey – as a standalone solution, or as part of a retirement savings plan.

3. You’ll enjoy a bunch of tax benefits

A portion of your contributions is tax deductible (currently up to 27.5% of the higher of taxable income or remuneration, up to a limit of R350 000 per year). You also don’t pay tax on any interest or dividends and no capital gains tax is applicable.

4. An RA ticks many of the right retirement savings boxes

An RA potentially offers you the opportunity for investment in a wide range of funds, risk-profiled solutions and share portfolios, customised to suit your needs and risk profile.

5. It’s affordable

A small monthly investment can make a big difference in your retirement savings outcome years from now.

“A small monthly investment can make a big difference in your retirement savings outcome years from now,” says Roenica Tyson, Investment Product Manager at Glacier by Sanlam.

6. Your savings are protected from your creditors

If you are in the process of insolvency, your retirement annuity investment is protected from creditors – they won’t be able to take from your savings. This ensures that your savings will be available when it is most needed and for what it is intended – saving for retirement.

7. You can’t touch the investment until you are at least 55 years old

Once you invest in an RA, it’s for the long haul. Committing to an RA until you reach retirement age is sensible, and if you struggle with self-discipline, having your money ‘locked in’ like this may actually be of benefit; 60-year old you will be grateful!

8. You can customise your RA to meet your needs

Every investor is different with different needs, lifestyles and risk appetites that change over time. This is why consulting a financial planner is critical. Appoint one to ensure your RA best matches your needs.

Still need convincing?

The table below is an example of the retirement savings outcomes for three investors who each invested R500 per month in an RA.

Please consult with a financial planner before you take any action regarding your savings and investments

Glacier Financial Solutions (Pty) Ltd and Sanlam Life Insurance Ltd are licensed financial services providers

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Sanlam Life Insurance is a licensed financial service provider.
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