Why an RA specifically, and not just any savings
Contributions to a retirement annuity are tax-deductible up to a set percentage of your income each year, which effectively means SARS contributes toward your retirement alongside you. The trade-off is limited access before retirement age — which is precisely what keeps the money growing undisturbed.
- Tax deduction: contributions reduce your taxable income now, within SARS limits.
- Locked-in growth: funds generally can't be accessed before age 55, protecting them from being cashed out early.
- Estate planning: RA proceeds typically fall outside your deceased estate, which can mean a faster payout to beneficiaries.
The cost of starting late
Financial advisers commonly point to needing 10 to 15 times your final annual salary saved by retirement to maintain your lifestyle. The earlier contributions start, the more of that target is built by compound growth rather than by the size of the contribution itself.
Can I access my retirement annuity before I retire?
Only in limited circumstances, such as emigration in specific cases. It's designed to stay untouched until retirement age, which is part of why it works.
How much can I deduct from tax each year?
Contributions are deductible up to 27.5% of the greater of your remuneration or taxable income, capped at an annual limit set by SARS — worth confirming the current figure with a provider.