What to consider and what to look out for at retirement ?

Income from annuities will be taxable. SARS allows for a maximum lump sum of one third (1/3) of your retirement savings value ate retirement. The first R 500 000 is tax free, therefore tax is applied according to SARS retirement tax table (see tax table below). This benefit is available only once in your lifetime.

Two thirds (2/3), or more of the fund are transferred to a compulsory annuity to provide you a regular income. You have the option between living and fixed annuities ( see the difference between the two below ). Income from annuities will be taxed.

Our advice: If possible, limit your lump sum to R 500 000.

Pros:

  • You are enabled to utilise the full tax0 free lump sum.
  • You will earn a greater monthly income opposing to taking the full one third lump sum.

Compulsory Annuity Options:

Living Annuity 

  • Risk lies with YOU
  • NO Guarantees
  • Income limited to between 2.5% and 17.5% per annum
  • Residue to heirs (capital will remain in the family when you die)
  • Ongoing attention and advice needed
  • Possible to convert to fixed annuity

Fixed Annuity 

  • Risk lies with insurer
  • Guaranteed
  • NO residue (capital is lost when you die)
  • Once off and no changes possible
  • No option to convert to living annuity

 

 

 

 

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73 Kariba St, Lynnwood Glen, Pretoria, 0081

Telephone:

+ 27 12 348 1386

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+ 27 12 348 3706

Email:

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Contact info

Physical Address:

73 Kariba St, Lynnwood Glen, Pretoria, 0081

Telephone:

+ 27 12 348 1386

Fax:

+ 27 12 348 3706

Email:

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