As the New Year begins, many South Africans find themselves reflecting on their financial future, particularly their retirement planning options.
A tax free savings account and retirement annuity has its unique benefits and drawbacks, it is pivotal for potential investors to consider their individual financial goals, tax situations, and retirement plans.planning options while your new-year good intentions are still intact can put you in a good position, according to Linda Kleynscheldt: head of Actuarial and Product, PSG Wealth.
Kleynscheldt said that this means that you can actually save on your tax liability by contributing to an RA. "However, they should also be aware that they could be liable for additional taxes if they withdraw funds from this pot, as these will be taxed at their marginal tax rate." "However, withdrawals from TFSAs cannot be added back to your annual or lifetime limits. Withdrawals from these products will thus reduce the capital amount available to compound over time, resulting in lower returns over the long term."For a TFSA, the funds become part of your estate if you pass away, but it can incur estate duty and executor fees.
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