Take out or top up an RA

Weekend Argus (Saturday Edition) - - PERSONAL FINANCE -

Even if you are sav­ing for re­tire­ment through an em­ployer-spon­sored pen­sion or prov­i­dent fund, you are prob­a­bly not sav­ing enough to pro­vide you in re­tire­ment with the in­come to which you may be ac­cus­tomed.

Re­gard­less of how old or young you are, make 2010 the year in which a suitably qual­i­fied fi­nan­cial ad­viser checks the sta­tus of your re­tire­ment sav­ings and tells you how your sav­ings will bear up in re­tire­ment. The sooner you do so, the less painful any po­ten­tial reme­dies are likely to be.

In all like­li­hood you are not sav­ing enough. In that case, con­sider tak­ing out a re­tire­ment an­nu­ity (RA) or in­creas­ing your con­tri­bu­tions to an ex­ist­ing one to the max­i­mum amount you are al­lowed to claim as a tax de­duc­tion. An­nu­ally, you can deduct from your tax­able in­come con­tri­bu­tions made to an RA to a max­i­mum of the higher of: R1 750; R3 500 less your cur­rent pen­sion fund con­tri­bu­tions; or

15 per­cent of your non­re­tire­ment-fund­ing in­come (that is, the in­come on which your pen­sion fund con­tri­bu­tions are based).

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