{
  "id": 348104,
  "title": "Here’s how to pay almost zero tax on retirement",
  "url": "https://urgent.news/2026/08/09/heres-how-to-pay-almost-zero-tax-on-retirement",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-08-09T05:00:00.000Z",
  "source": {
    "name": "The Citizen",
    "slug": "the-citizen",
    "url": "https://www.citizen.co.za/business/personal-finance/heres-how-to-pay-almost-zero-tax-on-retirement/"
  },
  "original_language": "en",
  "account": "Retirement tax planning can be surprisingly simple, according to Kananelo Matela, a Junior Investment Consultant at 10X Investments. The key lies in understanding three aspects of South Africa's tax system: an income threshold that retirees can stay below to avoid tax, a Tax-Free Savings Account (TFSA) that allows withdrawals to be tax-free, and medical scheme credits that directly offset tax liability.\n\nFor retirees under 75, the income threshold is R153,250 per year, or about R12,770 per month. Those over 75 can earn up to R171,300 annually, or R14,275 per month, before incurring any tax. However, once income exceeds these amounts, other tax-saving strategies become valuable.\n\nOne of these strategies is withdrawing from a TFSA rather than a living annuity. Since TFSA withdrawals are completely tax-free, they allow retirees to keep more of their income without increasing their tax bill. The annual contribution limit to a TFSA is R46,000, with a lifetime maximum of R500,000. This is an important contribution to make before retiring.\n\nAnother tool is medical scheme tax credits. For the 2027 tax year, these credits amount to R376 per month for the primary member, R376 for the first dependent, and R254 for each additional dependent. A retired couple with medical aid could accumulate R9,024 in credits per year, which directly reduces their tax bill. If the tax liability before credits is R12,000, applying these credits would reduce it to R2,976.\n\nFinally, even returns from discretionary investments can be structured to minimize tax. Capital gains tax only applies to the growth portion of these investments, and there is an annual R50,000 CGT exclusion for individuals and special trusts.\n\nTo illustrate the impact of these strategies, Matela presents a hypothetical retiree named Margaret. She draws R14,500 per month, consisting of R8,000 from her living annuity (which is taxable), R3,500 from her TFSA (which is tax-free), and R3,000 in fixed deposit interest (which is exempt from tax for those over 65). Her medical scheme credits, amounting to R9,024 per year, further reduce her tax liability. In this scenario, her total annual income is R96,000, which sits comfortably below the R153,250 threshold. As a result, she pays no income tax.\n\nMatela emphasizes that understanding and combining these strategies is crucial for maximizing tax savings in retirement. By carefully structuring income sources and withdrawal rates, retirees can ensure that more of their accumulated wealth remains in their pockets. While these mechanisms can work independently, their true potential is realized when used together in a deliberate, coordinated manner.",
  "summary": "The starting point for any retirement tax conversation is the age-based tax threshold.",
  "key_points": [
    "Retirees under 75 must stay below R153,250 annual income to avoid tax",
    "TFSA withdrawals are completely tax-free, allowing income growth without tax",
    "Medical scheme credits reduce tax liability by R9,024 annually for a retired couple"
  ],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}