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Eight reasons why a retirement annuity is a good idea

19 February 2021 Glacier

For many years retirement annuities (RAs) have formed part of investors’ retirement savings plans.

These products have increased in popularity and you should probably consider having one in your investment portfolio. In these times of profound economic uncertainty, Roenica Tyson, Investment Product Manager at Glacier by Sanlam, says it’s never too early (or too late) to start saving and adding an RA to your retirement savings plan. It could mean that you can retire with confidence.

We’re just not saving enough for retirement

The reality is that most people who have a retirement benefit at work, opt to make the minimum contributions that the retirement fund allows for, and it may not be sufficient. People who invest in an RA as well as their employer retirement fund, create a larger pot of retirement savings, which means they have more to invest to secure a better income during their retirement.

Why investing in a retirement annuity from Glacier makes good investment sense

1. It provides a kickstart to your retirement savings plan. Whether you are a full-time employee, or self-employed, an RA can propel you on your retirement savings journey – as a standalone solution, or as part of a retirement savings plan.
2. It offers flexibility. You can pause or reduce your RA contributions if you need to do so.
3. You can enjoy tax benefits. A portion of your contributions is tax deductible, and you also don’t pay tax on interest or capital gains within an RA.
4. It ticks many retirement savings boxes. An RA potentially offers you the opportunity for investment in a wide range of funds, risk-profiled solutions and share portfolios, customised to suit your needs and risk profile.
5. It’s affordable. A small monthly investment can make a big difference in your retirement savings outcome years from now.
6. Your savings are protected from your creditors. Your retirement annuity investment is protected from creditors – they won’t be able to take from your savings. This ensures that your savings will be available when it is most needed and for what it is intended – saving for retirement.
7. You can’t touch it. Well, not until you’re at least 55. Once you invest in an RA, it’s for the long haul. Years from now, you’ll be so thankful for committing to an RA until you reach retirement age.
8. It’s all about you. The underlying investment options of your RA are selected based on your particular risk profile. Every investor has different needs, a lifestyle and risk appetite that can change over time. Establishing your risk profile, based on your life stage and financial needs, is a critical first step on your retirement savings journey.

It’s prudent to appoint a qualified, appropriately authorised financial adviser to help you make decisions regarding your investments, including a retirement annuity. Their expertise in financial planning and its many tax implications, will go a long way in enabling you to invest with confidence. Talk to your financial adviser about the best option for you, based on your lifestyle and needs.

Glacier Financial Solutions (Pty) Ltd and Sanlam Life Insurance Ltd are licensed financial services providers.

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