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.