If you are going to pay income tax, THEN READ ON!
You can contribute up to 27,5% of your declared annual income to all your PENSION PLANS every year.
Have you SAVED your full allowance (up to R 350,000) for the year?
A retirement annuity offers significant tax advantages to investors who are committed to investing their money until they are at least 55 years old.
What do you want to do when you retire?
What you do NOW will decide what your retirement will be like!
Only 9 out of every 100 South Africans have enough money for a pension! Why?
You MUST start planning for your retirement when you receive your first pay cheque.
It is an ongoing process, not a once-off event. Make it a habit!
How do you plan for retirement?
A retirement annuity is a disciplined savings plan, offering you the following benefits:
How Retirement Annuities Work
Say your income is R 10,000 per month. That is R 120,000 per year.
Your marginal tax rate is 18%,so you owe R 21,600 in the 2016 income tax year.
You can contribute a maximum TAX-DEDUCTIBLE contribution of 27,5% of this income or R 33,000 per year (R 2,750 per month.)
So you start a RA with a premium of R 2,750 per month (the R 33,000 SARS allowed per year)
Your new income tax liability is now:
Income earned R 120,000 less R 33,000 (your RA savings) = R 87,000
Your marginal tax rate is 18%,so you owe R 15,660 in income tax.
You pay R 5,940 less in tax AND have an investment of R 33,000!
Looking at it another way, you invest R 33,000 in your RA - but it really only cost you R 27,060 (less the R 5,940 SARS "paid" into your RA)
That R 27,060 you invested, is Immediately worth R 33,000 - a 21,95% return BEFORE THE INVESTMENT EVEN BEGINS!
That's a return you cannot beat!
Over the longer term, these tax savings will have a considerable boost effect on your investment.
Along with the power of compound interest, THERE IS NO OTHER INVESTMENT THAT CAN MATCH THE RETURN OF A RETIREMENT ANNUITY!
But that's not all..
If your RA grows at say 10% per year, ANY OTHER INVESTMENT MUST GROW BY MORE THAN 34% to equal your RA!
This is because your actual contribution is less, as a result of the exemption from SARS.
You don't get that exemption with any other investment!You work for yourself - You are an entrepreneur.
You own your own business. You don't depend on others to provide for your retirement.
Your future is in your hands.
If you do not plan for your future - WHO WILL?
You need a flexible retirement plan that offers the best tax benefit whilst allowing you to vary the contributions during the term.
A Retirement Annuity offers you all of this.
Reap the full benefits of a lifetime of working for yourself!
A RA is nothing more than a one-person pension plan. They are the main savings vehicle for self-employed persons to save a pension - in a tax-efficient way.
Salaried employees, who belong to pension funds, use them to make up a shortfall in their pension plans.
TAX SAVINGS - You can deduct (from any income tax you pay SARS):
The tax savings, combined with flexibility as to retirement dates and contributions and the choice of investment and guaranteed options,
make the RA an ideal investment for retirement planning!
SAVE ON TAX AND RAISE RETIREMENT CAPITAL WITH YOUR OWN BUSINESS!
... by employing your wife and paying her a salary, with which she takes out an RA.
Employ your wife and pay her a salary, which is tax deductible for your business.
Your wife then pays the maximum contribution to her RA. After this deduction, ensure that the balance of her salary is below the taxable threshold,
thus no tax is paid on her income!
Income paid to your spouse must be reasonable in relation to services rendered.
NOW, That's something to seriously consider!
What if you're forced to retire a few years earlier than you expected?
What if you find at age 60 that you haven't enough to retire on? It's then too late.
And what if you can't retire because you don't have enough?
Surely, it makes sense to do something NOW?
An additional investment today can buy you a whole lot of added peace of mind.
DO YOU PAY INCOME TAX EVERY YEAR?
WELL, YOU CAN REDUCE THAT LIABILITY BY USING YOUR RETIREMENT ANNUITY.
Why not pay yourself your hard earned money instead of paying the Receiver?
Get YOUR gift today - Talk to me NOW.
And if you do not have a RA, even more reason to call me!
As a certified financial planner, I would like to help you make sure that you will enjoy your retirement and make your life as comfortable and carefree as you dream it will be - no matter what the circumstances.
The sooner the better, because when it comes to financial planning only you can make the difference.
If you would like an indication of what you should be saving for retirement, please complete the RETIREMENT SAVINGS REQUEST FORM and mail it to me.
I will reply with some values for you.
Medical aid pays healthcare costs.
What if a disability STOPS your income?
Last update: April 13, 2021
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