3 top tips to help you save for your retirement

Fsp Invest, 10 Sep. 2013

Tags: retirement, saving for retirement, how to save for your retirement, sars, retirement annuity, ra,

It’s never too early to start saving for your retirement. The earlier you start, the easier it will be for you to achieve the nest egg you need for your golden years. Read on to find out three top tips to help you save for your retirement…

Thinking about your golden years can be a scary thing, but the sooner you start putting money aside, the better as the team of experts at The South African Investor explain…

How to achieve the retirement you want

The following three tips will get you on course to putting enough aside for your retirement…

#1: Get SARS to fund your retirement!
Ensure you’re contributing a full 7.5% of your retirement funding income (i.e. your salary) into a pension fund or a provident fund.

You don’t pay tax on retirement funds - giving you the best after tax return you can get.

So encourage your employer to contribute another 10% tax-free on your behalf.

#2: Make sure you get inflation beating returns
Look at all your existing funds. Are your returns exceeding inflation?

Make sure they do when you choose your retirement fund.

If they don’t, consider switching to one that does. But be warned: Switching non-retirement unit trust funds can be a dangerous sport.

You need to take into account the Capital Gains Tax (CGT) implications, as well as the manager’s long-term performance, before you take this step.

#3: Put 15% of your non-retirement funding income into a retirement annuity
Retirement funds are the most effective ways to save money because they aren’t taxed in the fund and the government gives you between 18c and 40c extra as a reward you for every rand you put in.

There’s also no CGT if you switch fund portfolios. And these are just two of the many reasons why you should put 15% of your non-retirement income into a retirement annuity (or RA).

RAs come in two distinct varieties:
  • Unit trust funds, which have no penalties if you stop payment,
  • And policies, which have a minimum mandatory contribution period of five years or you’re whacked with penalties.
So there you have it, three top tips to help you save for your retirement.

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Sbusiso Biyela 2013-09-18 11:16:14

this is a much needed information for a 50 year old like myself, who needs to now look deepely to the issue of retirement...



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