As South Africa enters National Budget season this month, it’s not only government making crucial financial decisions — individuals can also use this time to reflect on their own financial planning, particularly for retirement. While many view retirement as a distant milestone, the earlier one starts saving, the greater the long-term benefits.
“The reality is that retirement might seem far away, but the sooner you start saving for it, the more your money can grow and compound,” says Ester Ochse, Product Head of Integrated Advice at FNB. “Even small, regular contributions can make a huge difference over time. This is why Budget season is another great time to assess how your retirement planning aligns with your long-term goals.”
Start a Tax-Free Savings Account
A Tax-Free Savings Account (TFSA) is one of the most effective tools for long-term savings. It allows for annual contributions of up to R36,000, with a lifetime limit of R500,000. Returns are entirely tax-free, ensuring that every cent of growth remains in your pocket.
For instance, contributing R3,000 per month into a TFSA with an investment return of 9.5% per annum could yield substantial growth over time:
| Years | Potential Future Value |
|---|---|
| 15 | R1,154,901.74 |
| 25 | R2,975,090.86 |
| 40 | R12,300,790.74 |
If you haven’t yet maxed out your annual TFSA limit, now is the time to top it up and leverage tax-free growth for your future.
Know Your Retirement Products
South Africans have access to various retirement savings vehicles, including pension funds, provident funds, and retirement annuities (RAs). Contributions of up to 27.5% of taxable income (capped at R350,000 per year) are tax-deductible, making them an essential tool for wealth-building.
“Understanding your retirement products and how they work is vital,” says Ochse. “Don’t just contribute for the sake of it — use these savings and investment vehicles to their fullest potential. The key is consistency and maximising your contributions.”
Samukelo Zwane, Head of Product at FNB Wealth & Investments, adds, “The FNB Retirement Insights Survey 2024 shows that less than 10% of South Africans are financially ready for retirement. If you haven’t started saving yet, the time is now. Even small contributions accumulate over time, ensuring financial security in later years.”
Take Action Now
Whether you’re just starting out or have already taken steps toward retirement planning, Budget season is the perfect moment to reassess your progress. Consider increasing your contributions or taking advantage of tax benefits before the end of the financial year.
“Just like planting a seed, the earlier you start, the more your money can grow,” concludes Ochse. “The best time to start saving for retirement was yesterday; the second-best time is today.”
Feature image by Towfiqu barbhuiya on Unsplash