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RETIREMENT
Your decision to start saving and investing for your retirement is possibly one of the most important decisions you’ll ever make. Investing in your retirement today will help you get a whole lot closer to your retirement goals.
START SAVING FOR YOUR RETIREMENT
By planning for your retirement today, you can maintain your standard of living in your retirement years. You want to be financially independent when you retire. It is possible to have enough money to afford the lifestyle you’re used to, and be able to choose how and where you want live.
Financial Backup for Emergencies: When you are no longer working, the unpredictability of life can be frightening. Preparation for such situations is one of the crucial benefits of retirement planning. By securing a sizeable lumpsum for your retirement, you can ensure that you and your partner remain protected during financial emergencies. Such benefits of retirement planning also allow you to head into the golden years of life with dignity. In the face of a crisis, you can depend on the savings to meet life demands.
Returns on Investment: Investing in a retirement plan instrument can help you save and grow your money over
Benefits of investing in your retirement today:
time. Depending on your financial profile, you must decide which investment tool is more suitable for you. The returns from such an investment will be better when you plan them at the right time.
Tax Benefits: Several financial instruments are available to create a sound retirement plan for you and your partner. When you choose to invest in a suitable plan, it enables you to reduce your taxable income, as per the current tax laws.
Cost Savings: Cost of retirement planning can be reduced in various ways. When you envision the retirement planning benefits for yourself at a younger age, you can begin investing earlier. Any long-term investment plan is more fruitful when you give it the required time. Furthermore, a younger individual can enjoy the benefits of compounding interest over many years. Whereas, if you invest later in life, it is harder to play catchup and decreases the period of investment, resulting in substantially higher amounts having to be invested to reach the same goal.
Peace of mind: Having a strong investment portfolio will give you the confidence to step into a new life phase without worry. The older you get, the need for financial support becomes more apparent. With the benefits of retirement planning tools, you can enjoy financial independence without compromising your dreams.
Inflation: The cost of living and value of money is going to evolve. Every day, it becomes a little more expensive to maintain your lifestyle. It can be challenging to fulfil the financial expectations of life in the future when you have retired from your job. The benefits of retirement planning include fighting inflation rates. As an investor, you must consider this while making investment decisions in the present to have enough for the future.
Source of income for Private Sector Employees with No Pension: If you are working in the private sector with no provision for pension, consider the benefits of retirement planning on your own. You can choose the investment vehicles to save your earnings on your terms for retirement. When the time comes, the retirement planning benefits will replace income and provide a comfortable lifestyle for you.
Legacy Opportunities: Your priorities may go through a transformation with age and time. Among the benefits of retirement planning, the legacy opportunity is one that can cover such possibilities. You can leave behind a large sum of money for your heirs or for a charitable cause that you prefer. Hence, begin planning early for retirement to save as much as you can and assign it as per your wishes in the future.
Early Retirement Option: If you wish to retire earlier in life, you can rest assured that the retirement planning benefits will cover your needs.
Protection of Assets and Property: Retirement may seem like many years down the line, but it may not be as far as you think. If you wait several years before planning for retirement, you may not have enough time to do it well.
Many people resort to selling their properties and assets to meet life's expenses after retirement. You can eliminate the need for that by preparing an investment plan at a younger age, thereby acquiring the maximum benefits of retirement planning.
QUESTIONS & ANSWERS
WHY IS RETIREMENT PLANNING SO IMPORTANT?
Retirement planning allows you to put away enough money to maintain the same lifestyle you currently have. After all, no one wants to work right up until the end. While you may work part-time or pick up the odd job here or there, it probably won't be enough to sustain your current lifestyle. That's why it's so important to have a viable plan that allows you to get the maximum amount of money when you retire.
HOW DO I START PLANNING FOR RETIREMENT?
Retirement planning isn't difficult. It's as easy as setting aside some money every month—every little bit counts. The easiest way is to start contributing through an employer-sponsored plan if your company offers one. You may also want to consider talking to a professional, such as a financial planner or investment broker who can steer you in the right direction. The earlier you start, the better. That's because your investments grow over time by earning interest and compounding growth, essentially you'll earn interest on that interest.
WHAT IS AN RA, HOW DOES IT WORK, AND HOW DO I GET MONEY BACK?
Before we go further; let me remind you what a retirement Annuity is. A retirement annuity (RA) is essentially a private pension plan - an investment that is specifically designed to help you save for retirement.
When you turn 55 (or an age thereafter, if you prefer) it pays out a 1/3 lump sum and then the remaining two thirds will effectively buy you a pension for future
Retirement Annuities are a tax efficient way to save for your own retirement. In short, you pay less tax no. Money that you put into a retirement annuity is deducted from your taxable income currently which is a great incentive
WANT TO RECEIVE MORE TAX BACK AND LOOK AFTER YOUR RETIREMENT AT THE SAME TIME?
Were you aware that the Government this year made a fundamental change in the taxation on Retirement funding, and YOU, as the taxpayer, can now get a significant amount more back from the taxman, than previously?
If you didn’t know this, and want to get more tax back, then a retirement Annuity may be the answer for you!
HOW EXACTLY DO THEY “PAY” YOU?
Firstly, you can now deduct contributions (up to 27.5 percent of your gross income, was previously 15%) to your RA from your taxable earnings. (Up to a maximum deduction of R350, 000 per year)
For example:
Joe earned R240 000 per year and contributed R36 000 (15 percent of R240 000) to his RA last year. He would’ve got taxed as if he had earned R204 000 per year.
Joe would have had to pay R35 053 in tax (2015 tax tables) if he didn’t pay into an RA. However, because he contributed to an RA, he would have only been liable to pay R26 053 and would’ve received a nice, fat rebate of R9000. In essence, the government would’ve paid him R9000 to invest R36 000 towards his own retirement!
Now, with the new legislation changes as of 1 March 2016, If Joe earned R240 000 and he made no contributions this year, he would pay R44 320 in tax. If Joe uses the full allowance and contributes 27.5% (R66 000), he would now pay tax of only R31 320 (a massive saving in tax of R13 000 for the year! )
In addition, with any other investment’s you have to pay capital gains tax; not so with your RA.