Following our budget speech a week ago telling us of the increases regarding contributing to savings spaces and increased exemptions on capital gains and donations allowances and etc and so forth, I finally read a journalist saying the same thing I say: That Retirement Annuities are also tax-free investments. Which they are. And even more so than tax-free savings accounts because not only is the growth inside free of interest income tax or dividend tax or capital gains tax, (just like a Tax-Free Savings Account) but the contributions into the Retirement Annuity are an additional tax benefit in terms of reducing our taxable income. Yes, the introduction of and the label of ‘tax-free savings’ has created a lot more savings, which is good. But retirement savings is a greater crisis and I think we must call them: “Tax-Free Retirement Annuity”.
I believe in maximising our retirement contributions first, from a tax benefit point of view, before contributing to a tax-free savings account. It’s the greater benefit. Yes, there might be exceptions and people will point this out to me, but very few people maximise their retirement contribution allowance levels and they must do this first, and then if they still have the available cash flow, now contribute to a tax-free savings account.
Why is retirement savings the bigger crises…. There are already figures out regarding the number of withdrawals from retirement savings as soon as this new tax year started. Which was only Monday.
