Pieter Albertyn, Head of Product Solutions at Momentum Savings, justifies the excitement.

Why is everyone jumping up and down about the end of the tax year? You would swear there won’t be another one.

Top up your retirement savings. Top up your tax-free. Scrape your purse for any loose rands. As if anyone still carries cash. And all this must happen before the last day of February every year.

The reason why actuaries like myself are so adamant about tax year ends, is because we know there are two things that affect how our savings grow and our investments prosper. The one is to keep costs as low as possible, and the other is to propel growth as much as you can.

Let’s think of it like a nice tub of water to relax in after a long day. You can compare the hot water with growth and the cold with costs. The costs cool the growth a little, and if you can keep costs as low as possible, you need less electricity to keep things comfortable.

You can see tax as part of the costs. It depletes growth. This means the lower we can keep the tax, the better. That is why so many people say there is hardly a better investment for long-term savings than retirement savings or a retirement annuity. Firstly, you get tax breaks, and secondly the growth is tax-free. This means you get to use two leverages to catapult your growth faster.

Yes, there is a limit to the tax breaks, but they kick in at very high levels of contributions to retirement savings. But every year you have this window of opportunity, and every year that you start saving earlier, is a year that you will rejoice about later.

A little money now has lots of time to grow over time. Later, you will need a lot of money because you have little time for growth.

The tax break is as big as the tax rate you usually pay on your income. This is a far bigger and easier incentive than the meagre money we make from trying to do 10 000 steps a day or using a supermarket coupon.

The first goal is to make sure that our money grows faster than inflation. Those stories that your parents tell about how much a packet of chips cost when they were little? We’re going to tell the same stories. And we’re going to weep if we don’t put away enough money now that can grow faster than the monster that gobbles up our buying power.

Let me remind you of a second, more powerful goal: To let compound interest do the legwork. When we earn growth on our growth, the bread dough keeps rising because of this yeast of time in the sunny market:

Sy Tumiso (30) earns R30 000 a month and contributes R4 500 to a retirement annuity. Also say the money grows at 12% per year before fees and his salary and contributions increase by 5% per year.

Over 25 years:

• Scenario 1: He pays 12 contributions every year.
• Scenario 2: He pays 12 contributions plus a 13th cheque every year.

If we round the retirement value off to the nearest million:

• Scenario 1: His money will grow to R21 million.
• Scenario 2: His money will grow to R32 million (or 53% more).

This means an extra 13th cheque adds incredibly value.

This kind of extra value alone allows even an actuary to behave like a two-year old again.