Retirements Plans

A revised tax table has now been issued by SARS.

On withdrawal from a retirement fund the first R22 500 is tax-free. Thereafter the withdrawal amount is taxed as follows:

R0- R300000 at 18%
R300 001 to R600 000 at R54000 + 27% of the amount above R300 000
R600 001 and above at R135 000 + 36% of the amount above R600 000

The Problem: The tax-free amount at retirement will now be reduced by withdrawal benefits less R22 500.

Theses changes appear to encourage clients to preserve their accrued retirement benefits in an approved retirement fund on resignation. Preservation and retirement annuity funds are therefore even more relevant for the preservation of retirement fund benefits.

The combined interest rate cuts and tax relief for individuals from the recent budget, is an opportunity to start boosting your retirement savings

If you have visualized your retirement goal like I mentioned in my article on the 10/02/2009, but have been finding it difficult to find spare cash in your budget, this year should give you some relief from a tax point of view to put more cash into your retirement investment. If you are under 65 years of age, and earn R200 000, you will save roughly R2426 in tax compared to last year. This gives R202 per month extra every month. This means your average tax rate will be roughly 15.5%. If you have a retirement annuity and haven’t made use of your full tax-deductible premium (i.e. 15% of NRF), you could increase your RA by roughly R240 per month and it would effectively only cost you R200, as your premium is tax deductible.

Try to implement this into your budget before you spend it in other ways, and you will be on the road to a better retirement.

We need to visualize clear achievable retirement goals and pursue them.

My son is four years old, and wouldn’t sleep in his own bed past twelve o’clock at night. He would wake up and come and get into our bed, and that was the end of our comfortable sleep. It has been that way since he was about one and half years of age.

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An interesting article written by Alan Knott-Craig (MD iBurst) – to his employees ….

Hi guys,Why am I writing this email? Because I’m getting the impression there are some depressed people walking around. So let’s recap:

At the beginning of the year people were panicking about the oil price, inflation, electricity and economic recession. Of those big 4 concerns, 3 have taken care of themselves.

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…what investment vehicles you use doesn’t really matter.

I come across a lot of people on a daily basis who think that using retirement annuities and other life assurance investment vehicles are not the best way to save for their retirement, they are investing in their business and various properties. That‘s great, but do you have a documented plan on how many properties you will need to generate the required income in retirement, and what you project your business to be valued at, at retirement? Do you have some one in mind to be your successor in the business?

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1.The best time to buy is when there is blood on the streets.

2.Investing on the heels of a crisis, when investors are scared and driven by fear, represents the best buying opportunity.

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Building better lives, alleviating poverty and implementing a comprehensive social security system for the benefit of all South Africans are commendable and critical steps in nation building. Few would question these objectives. But since reform requires more than advocates, a great deal of work has yet to be done to create this holistic framework.

Although international examples abound, the challenge is not to imitate them. Rather, it is to learn from them and adapt their best features in the construction of a solution for the very unique South African social, political and business landscape.

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By Katy Marquardt

Regular contributions to an IRA or 401(k) are a good start, but accumulating money is only part of the retirement-planning equation. Securing a comfortable retirement is a tricky process that requires careful planning; a few bad moves can cost you dearly in the long run. Here are six common missteps:

1. Not having a plan: A third of adults have no financial plan for retirement, according to a recent survey conducted for TD Ameritrade. Of the remainder of those surveyed, 46 percent said they have a written retirement plan, and 20 percent said they have a plan in their head. “So many people who have undersaved choose to ignore the issue rather than sit down and create a plan,” says Joe Heider, president of Dawson Wealth Management in Cleveland. “It’s almost like a fear of going to the doctor.”

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