Office Badger | Retirement Annuity
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Retirement Annuity

06 Nov Retirement Annuity

Retirement Annuity

Retirement Annuities commonly referred to as RA’s are an investment vehicle designed to save for (as the name says) retirement. They are an alternative to pension funds however it is possible to have both.

Positives:

  • Contributions are tax deductible
  • Forces you to save for retirement
  • Legislated by amount of risk your investment can have

 

Negatives

  • Can only access money at 65
  • If you withdraw early you will incur massive fees
  • Can only take 1/3 of the amount cash at retirement and will need to invest the other 2/3 in an income annuity
  • Legislated by amount of risk your investment can have
  • Pay massive tax if you try to move out of the retirement annuity vehicle
  • You pay tax when you withdraw the funds

 

Advice:

  • While you are young it is advisable to have a riskier portfolio and then to reduce the risk as you get closer to retirement.
  • Explore Tax-Free savings investments before you consider a Retirement Annuity
  • Most people start saving for retirement too late. Compound interest works better the earlier you begin saving. Even R50 makes a difference over the long run.

 

(NOTE THIS IS JUST FRIENDLY ADVICE AND IS NOT ADVICE GIVEN BY AN ACCREDITED FINANCIAL SERVICES PROVIDER)

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