Planning for the eventuality of retirement is crucial and it's best to start early. This is because only around 6% of the South African population are currently able to retire financially independent.
While the government does provide grants to older members of the population, namely the older persons grant and the war veterans grant, many people will invest in retirement annuities to ensure they can live out their golden years comfortably.
Belinda Sullivan from Alexander Forbes explains that it's important to have a long-term plan when it comes to saving for retirement and not be panicked by the short term economic situation in the country.
They explain that it's important for members of the population to find a retirement solution that suits them. This as some people will save through their workplace in a group saving scheme while others will make private investments.
“Most employees save through their workplace so in other words, they rely on their employers to provide appropriate solutions for them and that's where we find our occupational pension and provident funds and most of the people that we know build up their biggest asset for retirement in those vehicles” explained Sullivan.
Some retirement funds also provide individuals with tax incentives. This allows people to save for retirement while also receiving a tax relief which leaves them with some extra money in their pockets.
Many retirement funds offer individuals the opportunity to make additional voluntary contributions to retirement. This allows you to put more money away for retirement while still enjoying tax incentives up to a limit set by the South African Revenue Service (SARS).
Sullivan explained this is a good benefit for individuals who are building up their long-term savings while still receiving monthly relief on the money that they are putting away.
