GQ South Africa – September 2019

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gq.co.za SEPTEMBER 2019 / 63

retirementsavings,soinvesting

additionalfundsincaseyour

annuitiesrunoutis a goodidea.

‘Unforeseenmedicalprocedures

mayalsoarise,soit’simportant

tohavemedicalsavingsorfunds

topaymedicalaidpremiums,’

headds.Inaddition,consider

generalmaintenanceexpenses

onyourassets,suchascarrepairs

andhouseholdupkeep.‘Andask

yourself:if yourfamilyraninto

trouble,wouldyoubeabletohelp?’

thEImpACtonyour

fAmIlyAtrEtIrEmEnt

Thelastthingyouwantis to

bea financialburdenonyour

familywhenyouretire.Haldane

encouragesyoutoleadby

example,showingyourchildren

theimportanceofsavingin

theiryoungeryears.‘Theideal

situationis oneinwhichyou’re

abletohelp,’hesays.Onewayto

dothisis toelectbeneficiaries.

‘There’scomfortinknowingthat

if somethinghappenstoyou,

yourfamilywillbenefitfromthe

moneyyou’vesaved,’hesays.

sAVIngforrEtIrEmEnt

hAsAtAxbEnEfIt

Haldanesaysyourcontributions

aretaxdeductible– within

a certainlimit.Heexplainsthe

maximumtaxdeductionyoucan

makeina taxyearis limitedto

thegreaterof27.5%oftaxable

income,subjecttoa maximum

contributionofR350000.What

thismeansis thatyoupayless

incometaxif you’recontributing

toa retirementfund.Hegives

a practicalexampleofthebenefits

ofinvestingfroma youngage

(intheformofa table,left),

whichillustratesthedifference

inmarketvaluesatretirement

age(55),dependingontheage

youstartedsaving.‘Let’sassume

youcontributeR1 000 permonth

toa retirementfundandyour

investmentyieldsa returnof

6%perannum.Startingearlier

willhavea biggerimpact,’hesays.

AltErnAtIVEInVEstmEnt

VEhIClEs

It’simportanttonotethat

investingina retirementfundhas

certain restrictions, depending on

the investment product. Haldane

advises you can withdraw up to

one-third of your savings in

cash at retirement age. ‘You

need to transfer the remaining

amount to an income-

generating annuity. Only the first

R500 000 withdrawn in cash is

tax-free at retirement, provided

you haven’t received severance

packages or withdrawn from

a retirement product in the past,’

he says, ‘For the best return on

your investment, aim to spread

your retirement savings out

across several vehicles. Consider

alternatives such as unit trusts,

tax-free savings accounts and

offshore investments.’

ChAngEs In lIfEstylE

Due to political turmoil in South

Africa, the number of locals who

are considering emigrating is

increasing. Haldane affirms that

saving towards your retirement

could have a positive impact,

shouldyoudecidetoemigrate.

Anotherfactortoconsideris life

expectancy.‘Overtheyears,the

ideaofretirementhaschanged.

Peopleusedtoretireat 65 and

passawayatage70,’hesays.

Advancesintechnologyand

medicalresearchmeanthattoday,

peoplearestillactiveat70.Now,

youhavethingstotickoffyour

bucketlistandtheenergytodoit

all.Bemindfulofthiswhenyou’re

consideringhowmuchtosave.

Haldaneconcludesthat

buildingupsavingsfor

a comfortableretirementshould

berightontopofeveryone’slist

ofpriorities.If you’reunder

30,oreveninyour40s,he

assures,‘it’snottoolatetostart

savingforyourretirement.’

Finally,herecommendsyouvisit

a financialadvisorwho’llgenerate

a retirementplanthatwillguide

youintherightdirectiontowards

yourretirementgoals.

• thobEkA phAnyEko

If you’ve spent your life working

hard, when retirement comes, there’ll

be a list of things you want to do