The year is drawing to a close and most of us are already on holiday, in spirit if not in person. This is also the time of the year when some of us are fortunate enough to receive an end-of-year bonus or a thirteenth cheque.
You may have already decided to allocate this extra capital to some desirable appliance, toy or getaway. Some may wish to pay off some lingering debt and others still will save this money. While not necessarily at the top of your list we would encourage you to consider contributing at least some of your bonus to a Retirement Annuity.
The benefits of the Retirement Annuity are two-fold.
- The capital invested will be able to grow unimpeded by capital gains tax, dividend tax and tax on interest.
- 15% of taxable income from non-retirement-funding employment excluding any severance benefits, or R 3,500 less current contributions to a pension fund, or R 1,750, whichever is the greater. Any excess may be carried forward.
This means that you will not only be increasing your retirement provision but could also be lowering your annual tax burden.
It should be kept in mind though that any contributions to a Retirement Annuity are not accessible until the age of 55 or thereafter when one retires. At retirement a maximum lump sum of a third of the capital invested in the Retirement Annuity can be withdrawn. The balance of the capital will purchase an annuity income.
If you do not have a Retirement Annuity at present or would like to discuss whether your portfolio is allocated correctly to achieve your investment goals, we would be happy to discuss this with you. One of the most important considerations with any investment is ensuring that you minimise the ongoing costs that you pay as these can have a significant effect on the value of your retirement capital over time. As independent financial advisors we are able to scour the market for the most appropriate products, funds and solutions for all your investment needs.
Contact:
021 913 8865
