Your Retirement Annuity (RA) is an important aspect in terms of your personal life and that of your business.
Before we can jump into a RA, we must know what the purpose of such an investment is.
What is an RA? A RA helps you to build up investment during your working years so that you have enough income to enjoy the same standard of living when you retire. An RA is a contract between an individual and an insurance company. The individual contributes an agreed-upon amount and the insurer promises to pay money back, with interest, at some future date, normally at retirement.
So now that you are familiar with the context of this investment, let’s discuss its benefits.
Why invest in an RA? Some of us might already have pension or provident funds (pension and provident fund you can only join through the company that employs you. Your money is managed by the trustees of the fund), which we use to save, but this might not be enough to retire on and receive a monthly income at retirement. You can make up the shortfall by investing additional contributions into an RA.
With an RA you can make monthly contributions to a retirement fund to boost your income for when you retire, which will enable you to live the life you dreamed of or, at the very least, maintain your lifestyle and not have to worry about the future. The earliest age you can retire from the fund and make withdrawals is at the age of 55.
One of the biggest benefits of an RA is the tax breaks and deductions you receive. Investing in a retirement annuity policy means you can deduct your contributions from your income tax due at the end of the year (up to a certain limit).
Changing of jobs – should you change jobs, you don’t have to terminate your investment you simply continue contributing to the retirement fund.
Further benefits – you can give your loved ones financial support even when you’ve passed on by nominating them as beneficiaries on your policy.
Insolvency – your money is safe in the retirement fund, as your creditors cannot seize the fund benefit.
Executor’s fees – no Executive fees are payable on retirement annuity benefits. Beneficiaries do not have to wait for the estate to be wound up before they have access retirement annuity benefits.
Various investment options – with the new generation RA’s offer you a transparent savings vehicle with a variety of underlying investment options so that you can spread your risk over time.
Now that you have found out a bit more about RA’s, what they are and the benefits of them, it is best to seek professional help to set one up that not only takes care of your future, but also takes your current situation into account to provide the best possible solution for your unique life.
Contact Counteractive to discuss how you can maximise your tax deductions based on your RA contributions.
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