As careers progress and lives take shape, investing for retirement can feel easy to defer. This in‑between phase – typically your 30s and 40s, when you are no longer at the beginning of your career yet not close enough to retirement for it to feel urgent – is when accumulation goals feel toughest. Life tends to be a balancing act, with priorities competing for their share of time and wallet. With widely cited statistics from 10X Investments and the National Treasury stating that only 6% of South Africans are likely to retire with sufficient income to maintain their standard of living, the decisions you make during these years can materially shape long‑term outcomes. Tebogo Marite shares some pointers that can help turn this phase into meaningful progress towards retirement.
Understand your current retirement position
For many working professionals, investing for retirement begins with an employer‑provided group savings arrangement, such as an umbrella fund. Contributions are typically deducted before take‑home pay is received, which means they might not be considered as part of a monthly budget and commitment is somewhat passive. Membership is usually a condition of employment – i.e. contributing is mandatory while you are employed, at a level you determine, and you cannot continue to contribute when you leave your employer. Many realise, too late, that their contributions have been insufficient.
A widely used rule of thumb suggests that a retirement income of around 75% of one’s final salary is needed to maintain a comfortable standard of living. For many working South Africans financial pressures, including rising living costs and competing demands, may make it difficult to consistently work towards this target, but it serves as a reference point. As you work towards this goal, an annual review of your investments can help you to identify gaps early enough to address them through practical adjustments, such as investing in supplementary products.
Optimise supplementary products
Using available supplementary products can help you get on track with your retirement savings and provide further optionality at retirement.
Retirement annuities
Consider investing in a retirement annuity (RA). You can think of an RA as a personal retirement savings vehicle designed specifically to help you build an income for retirement.
Unlike employer-provided retirement funds, nothing changes in your RA if you change jobs or careers, as the investment is in your own name. The product is deliberately structured to ensure that the savings you set aside for retirement remain invested for their intended purpose, with access historically restricted until at least age 55, even in the event of resignation. While two‑pot legislation introduced limited annual access through a savings component (currently one-third of all contributions), the broader design and intent remain unchanged. The bulk of your investment (currently two-thirds of all contributions ) is restricted until retirement. Other reasons that make an RA an excellent supplementary product are:
- They are governed by South Africa’s retirement fund legislation, meaning that while you can choose your underlying funds, the overall structure is regulated to support appropriate diversification and risk management.
- Monetary contributions of up to R430 000 per tax year can be deducted from your taxable income, which means you may pay less tax while you are investing. This not only improves your chances of having enough at retirement but also strengthens your financial position along the way.
- They offer meaningful tax advantages as tax is only triggered at certain points – at retirement, early withdrawal and when you start drawing an annuity income.
- While the best results are achieved through consistent contributions, you can pause and resume contributions if you need to.
- You are entitled to take up to one-third of your accumulated savings as a lump sum at retirement, of which the first R550 000 (a lifetime cumulative limit) is tax-free.
Tax-free investments
A tax-free investment (TFI) is another complementary product option. You can currently contribute a maximum of R46 000 per year up to a lifetime maximum of R500 000; there is a tax penalty of 40% if you exceed the annual limit. Although contributions are made with after-tax income, you pay no tax on the growth of your investment (interest, dividends and capital gains). In addition to this, there are other benefits:
- TFIs offer a high degree of flexibility, with no restrictions on when you can access your money. However, withdrawals should be approached thoughtfully, as any amounts taken cannot be replaced due to the lifetime contribution limit.
- TFIs can be a source of tax-free cash in retirement, which can be used to supplement your annuity income.
- TFIs can help manage your overall income strategy more efficiently. If you still have outstanding debt or once-off expenses going into retirement, your TFI can help you settle these without placing strain on your ongoing income.
A boost from the 2026 Budget
This year’s investor-friendly budget made supplementary investments even more appealing, with higher contribution limits: From 1 March, the annual TFI limit increased from R36 000 to R46 000 (although the lifetime limit remained the same at R500 000), while the tax‑deductible cap for retirement fund contributions increased from R350 000 to R430 000.
For TFIs, the higher annual limit allows investors to reach the lifetime cap around three years earlier, giving contributions more time to compound, tax-free. The higher retirement contribution cap is particularly relevant for higher‑income earners with annual income above R1.27 million who maximise contributions, as well as others currently contributing above the deductible threshold. In these cases, tax relief that was once deferred can now be accessed in the same year, improving overall tax efficiency. Shaun Duddy explores these dynamics in detail in a recent article.
Create a safe space for your long-term money to grow
Plugging your retirement investment gap is important, but equally important is ensuring you will not be reliant on these long-term investments in a crisis. The best insurance for your retirement funds and TFI is an emergency fund. A commonly accepted guideline is to set aside three to six months’ worth of expenses in an investment designed to preserve capital while remaining easily accessible. Low‑risk options, such as a money market or interest fund, are well-suited to this purpose. Without an emergency fund, unexpected expenses such as a burst geyser or a temporary loss of income can force you to dip into your long-term investments or take on costly debt.
Building your future piece by piece with the end in mind
For many of us, our retirement investment is the most long-term endeavour we will undertake. While each life stage brings its own demands, it also presents opportunities. Arguably, the in‑between years offer the advantage of learning from past financial trial and error and adjusting your plan if needed.
Gaining a realistic understanding of where you are today is an important cornerstone of knowing what should come next in your building process. Partnering with a trusted financial adviser can help you make informed decisions as your needs evolve. Tackling potential obstacles early and maximising the available investment vehicles gives each component the best chance to come together into your desired long-term outcome.