Retirement Annuity

By Drum Digital
29 March 2014

The younger you are when you open an RA, the more you can use compound interest to your advantage.

A retirement annuity (RA) can be described as your own private retirement savings plan. The general rule of thumb is that you should start investing towards your retirement as soon as you start working.

Investing in an RA early (around the age of 25) means you only need to start saving about 15% of your income, whereas someone only starting to save for retirement in their late 30’s could have to put away as much as 30% of their income to get the same maturity value.

Depending on the organisation you work for, they may offer a pension or provident fund  contribution as part of their benefits offering. If this is the case, find out if there is the option for you to supplement this monthly payment, or if not, it is imperative that you speak to a financial adviser to set up the most suitable RA option for you.

While you may be eager to reward yourself on the achievement of your first big job, why not keep the momentum of new beginnings and use your first pay check to invest towards a brighter future.  “Make a habit of putting away a set amount of money each month for saving and investing. The sooner you start, the bigger your rewards will be” concludes Dubois.

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