Retirement annuities are not only an investment product that you acquire at retirement age with your pension fund payout to purchase an income for the rest of your life but are products often invested in by small business owners or self employed individuals who do not contribute to a pension fund. It is also an investment which many people who plan well for their retirements, invest in to top up their retirement savings.
For self employed people, the maximum you are able to invest in an RA is 15% of your taxable income before tax implications make it better to seek out alternative high yield investments. A lot of self employed individuals are not contributing to the maximum and taking advantage of the tax breaks provided for by Government and effectively paying tax on money they need not pay. We must always remember that the SA Government is on a drive to help people fund their own retirement and not become a burden on the state finances so take every possible tax deductible allowance you are able to.
There are many different types of Annuities that have differing underlying investment structures but the very nature of the investment is a lower risk investment. Life Insurance companies and financial service providers are best consulted when considering an investment in retirement annuities and of course it is essential in today’s environment to check that the financial adviser or the company that you are talking to about a retirement annuity investment is in fact an authorized financial service provider by the FSB.
Pension funds are often misunderstood by employees and when the time comes to retire find themselves in a position where the pension fund that they have been contributing to is not going to yield sufficient income to enjoy a similar lifestyle at retirement. Invest in a retirement Annuity or RA as they are know in the industry to bolster your retirement planning.