Estate Living Magazine Retirement Living - Issue 40 April 2019 | Page 56

L I v E
S M A R T
FEATHERING
YOUR RETIREMENT NEST
There are many ways to invest for your retirement
years and, even though you may contribute to a
compulsory company pension or provident fund, you
should most definitely not be content with just that. A
terrible reality is that only around 6% to 10% of South
Africans are on track to retire comfortably (different
surveys give varying results), and the mainstream
idea of contributing to a single fund needs to be
reconsidered.
It’s a jungle out there, and making financial decisions is difficult,
even if you are not about to retire. As Fedgroup’s Dimeon van
Rooyen says:
Each person should adopt an investment strategy that is tailored
to their personal needs, goals and personality. Good, professional
financial advice is therefore essential. That said, the stock market
in the country has delivered poor returns over the medium term, so
investors might well want to consider other opportunities that provide
good, predictable returns, without compromising on capital security.
For example, our Secured Investment has proven very popular with
retirees, many of whom choose the income option, so they get a fixed
monthly income while their capital portion remains secure.
Tax-free savings account
If you’re aged 40 or younger, and are able to contribute the
maximum annual amount of R33,000 to a tax-free savings account
(TFSA) each year, then this could be a great way to supplement your
retirement fund. The lifetime contribution limit of R500,000 will be
reached in the 16th year of investing, and the tax benefit will already
become evident in around the sixth or seventh year, depending on
the growth and other investments you may have. Considering that
the first R23,800 of your overall interest earned in a year is tax-free,
any interest above that is taxed at your current tax rate. This implies a
huge saving in a TFSA, especially if you leave your money untouched
for 20 years or more as the compounding growth remains tax-free. If
you’re in one of the higher tax brackets, this will make a noticeable