FINANCIAL FITNESS - RETIREMENT ANNUITIES BY JESSIE TAYLOR
Financial security in retirement
Get the most from your retirement annuity
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round half of South Africans have no retirement savings, according to the latest 10X Retirement Reality Report. Estimates are that only a third of South Africans have a relatively solid grasp of what is necessary to fund their retirement years. A key reason for the low savings rate is affordability, with 70% of survey respondents saying they cannot afford to save as they have nothing left at the end of the month. “The difference between what South Africans expect their retirement to look like and the realities faced by those in retirement
58| Public Sector Leaders | June 2024
and approaching it cannot be underestimated,” concludes the report. “Knowledge and information are key to closing the expectation-reality gap – in their long-term interests, South Africans need to be better informed on the importance of saving, the power of compound interest, the consequences of not saving, the additional disadvantages that women need to overcome, and the impact of costs.” The report is a sobering reminder of the importance of financial products such as retirement annuities.
A retirement annuity lets you specifically save for your retirement by putting money into a dedicated investment fund that grows your money. You can only access this fund when you turn 55, although you can continue to let it mature beyond that. A retirement annuity is a way to save so that you can pay yourself an income in retirement. With a retirement annuity, you use money you would’ve paid in tax to save. When you contribute to your retirement annuity, whether monthly or a lump sum, you’ll be able to claim back the tax on all or a portion of your contribution at the