Under-30s’ retirement planning

Wouter Fourie

By all statistical calculations, you’ll probably live much longer than your parents and grandparents. However, you must prepare for a much longer life in retirement and ensure your savings are sufficient. Consider using these steps to ensure you’re ready for a relaxing and truly enjoyable life after retirement. 1. Retirement annuities (RAs) are a way of investing money that gives you certain benefits, as you’re investing for retirement. You can contribute up to 27.5% of your taxable income to an RA, then deduct that payment from the income you pay tax on. You can also withdraw up to R500 000 tax free when you reach 55 years or older. By investing in RAs, you save money for retirement and save the tax you would’ve paid on that money. 2. Tax-free savings accounts allow you to invest up to R30 000 per year and R500 000 in your lifetime in a savings account where the interest earned is tax free. This gives you additional growth equal to the tax you save and is often invested offshore, giving you exposure to international growth. Try to get to the R500 000 savings cap as soon as possible, but don’t exceed your R30 000 annual allowance, or you’ll pay penalties. 3.

Googling “retirement planning” and “investment advice” is confusing, and doesn’t consider your specific needs, retirement goals and the life stage you’re in. On the other hand a certified financial planner receives strict post-graduate training and they’re governed by the professional and ethical rules of the Financial Planning Institute.

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This article was first published on Ascor’s blog.