Retirement Planning

Posted in Communication   |   March 17th, 2020

When you retire or resign from a Pension Fund, Provident Fund or Retirement Annuity Fund, certain crucial decisions need to be made that will affect retirement planning. Careful consideration and planning should be given to your investment portfolio after retirement.

The following summarizes the process that should be followed;

• Establish how much cash you need to withdraw and how to invest the balance of your funds.
• A cash withdrawal will attract a certain amount of tax in accordance with the income tax act.
• The balance of funds with be transferred to your elected Preservation or Compulsory Annuity Fund without attracting any tax.  
•  Your election is then conveyed to your employer, who in turn instructs the administrator of your Retirement Funds of your election.
•  After applying for a tax directive, the administrator pays the after tax cash to you personally and the balance of funds is transferred to purchase your Compulsory Annuity, or the Total to the elected Preservation Fund. Please note that the tax directive is a provisional tax payment  which is included in your final tax assessment for the Tax year.

 In the process of constructing your ideal retirement portfolio, you need to follow the following steps:

• Calculate how much tax you are going to pay on the withdrawal of  the fund
  • Establish the education and experience of the financial advisor that will be assisting you. Is he/she compliant and a registered financial planner, preferably a Certified Financial Planner.

Ensure that the Investment Company is registered with the FSB and is a reputable company

• Negotiate your initial and annual fees payable.
• Decide on the Annuity Product type
• Consider the performance patterns of certain asset classes
• Consider the economic cycles and the affect of these on the asset class
• Decide on the right investment portfolio

Your investment portfolio should ideally meet your short- , medium, and long term needs and goals.

These decisions are daunting and could lead to ruin if the investor does not seek professional advice and guidance.