The Retirement Annuity

Retirement Annuity (RA)
Does the thought of `retirement’ send shivers down your spine? Ever considered what it would be like reaching the age of retirement and not being able to retire? This is reality and something that every one of us will face at some stage in life.
Most people have goals of achieving financial freedom at retirement but in order to attain this, it requires strategic financial planning and discipline. Nobody would like to work an 8-5 job at that age or to be financially dependent on others. One also has to consider the rising costs of medical healthcare which is above the annual inflation rate.
A stepping stone to achieving your goal is to consider taking out a retirement annuity policy, which would be the perfect saving vehicle for a comfortable future. So, the question that most of you might be asking is, what are the benefits and why should I consider it?

  1. The RA investment policy is not restricted and is suitable for anyone wanting to accumulate funds for retirement in a tax-efficient way.
  2. Most RA platforms commence with the minimum monthly contribution of R 300 making it accessible for many.
  3. Investors are allowed to invest up to 27.5% of their taxable income which is subject to the R 350 000 per year annual limit and the best part is that your monthly contributions are tax-deductible.
  4. Your RA policy does not form part of your estate which means that the funds paid out are not subject to estate duty or executor fees.
  5. Upon reaching the age of retirement (55 years) investors are allowed to withdraw one-third of the total value of which the first R 500 000 is tax-free.
  6. No initial fees or exit penalties.

An individual after careful consideration should plan their monthly spending and try to maximise their retirement savings which in return would benefit them in the long run. Remember it is never too late to save – better now than never!
To find out more, contact our 118 team by emailing us at

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