RA vs TFSA Comparison — South Africa
Compare Tax Free Savings Account data againts a retirement Annuity.
Last updated: May 2026
Your Details
Same amount applied to both vehicles. TFSA is capped at R3,000/month.
Needed to calculate RA tax deductibility.
FSCA limits RA drawdown to 2.5–17.5%. Applied to both for comparison.
RA leads for your situation
RA wins on projected fund, boosted by significant annual tax deductibility reducing your effective contribution cost.
Retirement Annuity
R 11 981 315
Projected fund at retirement
Tax-Free Savings
R 6 837 976
Projected fund at retirement
Projection Difference
Fund difference at retirement
R 5 143 339
RA leads
Monthly income difference
R 17 144
RA produces more income
Term
30 years
Age 35 → 65
Key Considerations
- You are approaching the R500k TFSA lifetime limit — consider splitting surplus contributions into an RA or taxable account.
- RA withdrawals are taxed at retirement; TFSA withdrawals are always tax-free — a major advantage for high earners.
- RAs lock in your money until age 55; TFSAs allow penalty-free access at any time.
- A combined strategy — maxing TFSA first, then contributing surplus to an RA — often beats either alone.
RA Growth — Year by Year
| Year | Age | Annual Contribution | RA Balance |
|---|---|---|---|
| 1 | 36 | R 36 000 | R 38 011 |
| 2 | 37 | R 38 160 | R 82 283 |
| 3 | 38 | R 40 450 | R 133 608 |
| 4 | 39 | R 42 877 | R 192 870 |
| 5 | 40 | R 45 449 | R 261 053 |
| 6 | 41 | R 48 176 | R 339 256 |
| 7 | 42 | R 51 067 | R 428 700 |
| 8 | 43 | R 54 131 | R 530 745 |
| 9 | 44 | R 57 379 | R 646 904 |
| 10 | 45 | R 60 821 | R 778 862 |
| 11 | 46 | R 64 471 | R 928 490 |
| 12 | 47 | R 68 339 | R 1 097 871 |
| 13 | 48 | R 72 439 | R 1 289 318 |
| 14 | 49 | R 76 785 | R 1 505 401 |
| 15 | 50 | R 81 393 | R 1 748 975 |
| 16 | 51 | R 86 276 | R 2 023 211 |
| 17 | 52 | R 91 453 | R 2 331 628 |
| 18 | 53 | R 96 940 | R 2 678 135 |
| 19 | 54 | R 102 756 | R 3 067 066 |
| 20 | 55 | R 108 922 | R 3 503 234 |
| 21 | 56 | R 115 457 | R 3 991 974 |
| 22 | 57 | R 122 384 | R 4 539 206 |
| 23 | 58 | R 129 727 | R 5 151 494 |
| 24 | 59 | R 137 511 | R 5 836 115 |
| 25 | 60 | R 145 762 | R 6 601 136 |
| 26 | 61 | R 154 507 | R 7 455 498 |
| 27 | 62 | R 163 778 | R 8 409 112 |
| 28 | 63 | R 173 604 | R 9 472 958 |
| 29 | 64 | R 184 021 | R 10 659 200 |
| 30 | 65 | R 195 062 | R 11 981 315 |
For guidance only. Tax figures use 2024/25 SARS brackets. Consult a licensed financial advisor before making investment decisions.
Runs your shared inputs (age, contribution, growth rate, salary, tax rate) through both the Retirement Annuity and Tax-Free Savings Account models simultaneously — and recommends which vehicle is better for your situation.
Key inputs explained
- Monthly contribution
- What you can invest each month. The calculator checks if it exceeds the R3 000/month TFSA limit and flags the excess.
- Marginal tax rate
- Your top PAYE bracket — the main driver of RA tax savings. Higher rate = bigger RA advantage.
- Drawdown rate
- Annual withdrawal rate in retirement (4% is a widely used sustainable rate).
A combined strategy often beats either alone: max your TFSA first (R3 000/month), then direct surplus into an RA for the tax deduction on contributions above the TFSA limit.
Frequently Asked Questions
It depends on your tax rate and goals. An RA gives you a tax deduction now (best for high tax brackets — 31% and above) but locks funds until retirement and forces an annuity purchase. A TFSA gives no upfront deduction but all growth is tax-free forever and you can withdraw at any time. Many financial advisers recommend maximising both — TFSA first (R36,000/year) then RA for the tax benefit.
Yes — and this is often the recommended approach. Maximise your TFSA first (R36,000/year, R500,000 lifetime), then contribute to an RA for the tax deduction. The TFSA provides liquidity and flexibility; the RA provides a larger tax-protected pool for retirement. There is no restriction on holding both simultaneously.
At RA retirement (from age 55): up to one-third can be taken as a lump sum (first R550,000 tax-free), and the remaining two-thirds must buy an annuity. A TFSA has no such restriction — you can withdraw the full amount tax-free at any age for any purpose, and the investment can remain in growth assets at retirement.
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