By: Ester Ochse and Samukelo Zwane
While we tend to focus on retirement as something far in the distance, it’s crucial to start thinking about it early.
In fact, starting to save for retirement as soon as possible, even in your 20s, is one of the smartest financial moves you can make. The earlier you start, the more time your investments have to grow—especially with the power of compound interest.
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. Even small, regular contributions can make a huge difference over time. This is why the Budget season is another great time to assess how your retirement planning aligns with your long-term goals.
Start a Tax-Free Savings Account
One of the most powerful tools at your disposal is the Tax-Free Savings Account (TFSA). This account allows you to contribute up to R36,000 annually, with a lifetime limit of R500,000. The best part is that the returns on your investment are completely tax-free, allowing you to keep every cent of your growth. This is a perfect way to save for retirement in a tax-efficient manner.
For example, if you contribute R3,000 per month to a TFSA with unit trust exposure that aims to return CPI +5% 9.5% return, you could see significant growth over time. Compound interest allows those early contributions to grow exponentially, creating a powerful nest egg for your future.
E.g. contributing R3,000 per month to a fund that potentially returns 9,5%, the potential returns could look like this:
| Number of years | Potential future value |
| 15 | R 1 154 901.74 |
| 25 | R 2 975 090.86 |
| 40 | R 12 300 790.74 |
Take a moment to review how much you’ve contributed to your TFSA. If you haven’t maxed out your R36,000 annual limit, now’s the time to top it up and let your money work for you.
Know your retirement products
Pension funds, provident funds, and retirement annuities (RAs) are essential vehicles for retirement savings, offering both tax deductions and long-term growth. You can contribute up to 27.5% of your taxable income to these products, with a cap of R350,000 per year. If you contribute in excess of the allowed limits, the benefit will roll over to the next year. Understanding your retirement products and how they work is vital. 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, especially as we head into the new budget year.
Retirement planning doesn’t have to be complicated, but it’s something that requires attention and consistent discipline. 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 can accumulate over time to ensure you are prepared when retirement arrives. This is why FNB encourages you to make the small changes now in your financial planning so you can see and experience the long-term benefits.
Take action now
Whether you’re just starting out or you’re already a few steps into your retirement planning journey, now is the perfect time to assess your progress. Consider how much you’ve contributed to your retirement products and whether you can maximize your tax deductions. Even if you start with small contributions—such as R300 per month—you’re laying the foundation for a financially secure future.
Budget and end of tax season is an opportunity to make smart financial decisions, and this includes planning for your retirement. Just like planting a seed, the earlier you begin saving, the more your money can grow. The best time to start saving for retirement was yesterday; the second-best time is today.
* Ochse is the product head of integrated advice at FNB, and Zwane is the head of product at FNB Wealth & Investments.
PERSONAL FINANCE