Retirement products are not bad
There has been much debate about the of retirement products recently. Although this debate i s necessary, the perception it is creating is that retirement products as a whole are bad.
The reality is, most South Africans are unlikely to retire well without saving through a retirement product! I t is almost impossible to save enough for retirement without using the tax that retirement products offer.
Research shows that you have to save around 15%-17% of your gross salary throughout your career to retire well. Retirement products already allow you to save this before paying tax. If you do not t ake advantage of t ax breaks, you will have to save significantly more (depending on your tax rate). In addition,
This means that
In addition, our retirement savings industry is highly developed and well regulated. It is among the best in the world and offers a variety of sophisticated products to choose from.
I have advised private clients for almost twenty years – those with retirement products have almost always saved more. Why? Because it is hard to ‘get out’ of these products. They force investors to save in a disciplined manner over a long time. Rather save using a somewhat expensive product (the costs are already declining) than not save at all.