Why are retirement annuities important?

Most people save less that 15% of their salary in a retirement fund.

Most people save less that 15% of their salary in a retirement fund. Fund administrative costs further reduce the amount you are saving. This means that even if you are on a company retirement fund, you may not have enough money to retire comfortably. A retirement annuity is the ideal way to increase your retirement fund. They also have many advantages:

  1. Tax Benefits
    The government want to encourage people to save for their retirement and have introduced many tax savings. Because of this retirement annuities remain one of the most tax-efficient ways of saving.
    1. Your contributions are tax deductible up to a certain amount.
    2. Due to recent government legislation there will also be no tax payable on the underlying assets of the investment. This will improve the growth of your retirement annuity.
    3. At retirement a certain amount of your lump sum will also be tax free.
  2. Independent of your Employer
    A retirement annuity is independent of your employer so your retirement fund is not affected if you change jobs.
  3. Protected from Creditors
    Your retirement annuity cannot be taken in a legal proceeding against you, to pay off debts. So your retirement is safe, even if something goes wrong financially in your life.
  4. Additional Payments
    You can make ad-hoc payments to your retirement annuity based on your income to maximize the tax deduction you may claim.

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