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8 Ways to Plan for Your Retirement

Planning for retirement can be complex, but here are 8 key Q&A’s to guide you:

1. Start of Retirement Annuity:

Begin when income exceeds the SARS tax threshold, signifying tax payment initiation.

2. Monthly Investment Amount:

Deduct up to 27.5% or the higher of taxable income or remuneration, capped at R350,000 annually. Contribution benefits reduce tax paid, aligning with financial goals. Consult a qualified financial planner for personalized advice.

3. Identifying Trusted Retirement Funds:

Governed by the Pension Funds Act, Retirement Annuities, Pension Funds, and Provident Funds undergo rigorous regulation. Managed by qualified trustees, trust lies in selecting underlying funds suitable for goals, guided by risk and the remaining period to retirement.

4. Increasing Monthly Contributions:

Evaluate increases case-by-case with a Qualified Financial Planner. Annual inflationary boosts ensure consistent investment growth aligned with salary or income increases.

5. Recommended Increase Percentage:

Consider annual inflationary increases, aligning with SA CPI.

6. Withdrawing Retirement Products:

No withdrawal before 55 from Retirement Annuity. Pension or Provident fund members can withdraw on resignation, facing tax consequences. Withdrawal triggers harsh taxation and penalties, lowering the retirement lump sum to 0%.

7. Staying Ahead of Inflation:

Beat inflation in long-term savings using well-diversified solutions, adjusting risk to meet financial goals.

8. Retirement Fund vs Tax-free Savings Account:

Retirement funds offer tax deductions; at retirement, options are limited. Tax-Free Savings Account caps annual and lifetime contributions at R36,000 and R500,000, respectively. No tax on returns, providing discretion in utilization.

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