Start at 18, 25 or 35: what the tax-free savings account does with time
The same R1 000 a month into a tax-free savings account can be worth R7.7 million or R1.7 million at 65 - the only difference is the age you start.
In 30 seconds
- From 1 March 2026 you can put R46 000 a year into tax-free savings, up from R36 000, with a R500 000 lifetime limit.
- R1 000 a month from 18 grows to about R7.7 million by 65 at 9% a year - starting at 35 gives about R1.7 million.
- The lifetime limit makes an early start worth even more: once R500 000 is in, only time can grow it.
The rules, in plain numbers
A tax-free savings account (TFSA) is not a product. It is a tax wrapper - interest, dividends and growth inside it are never taxed.
| Rule | 2026/27 |
|---|---|
| Annual contribution limit | R46 000 |
| Lifetime contribution limit | R500 000 |
| Penalty on anything above a limit | 40% of the excess |
The annual limit rose from R36 000 to R46 000 in Budget 2026. The lifetime limit did not move. SARS: tax-free investments · Budget 2026 Tax Guide
Two traps catch people:
- Unused limit does not carry forward. Miss a year and that R46 000 of room is gone.
- Withdrawals do not give the room back. Take out R20 000 and put it back, and SARS counts R40 000 of contributions.
Why the start age matters so much
Compounding means growth earns growth. The longer the money sits, the bigger each year's growth becomes - the curve bends upward late in life.
At R1 000 a month and 9% a year, all three savers below put in a similar amount. The difference at 65 is almost entirely years:
| Start at | Paid in | Pot at 65 |
|---|---|---|
| 18 | R500 000 | R7.7 million |
| 25 | R480 000 | R4.2 million |
| 35 | R360 000 | R1.7 million |
The 18-year-old pays in only R140 000 more than the 35-year-old, yet ends with about R6 million more.
These are nominal Rands, before inflation. 9% is an illustration, not a promise - move the slider to see a lower growth rate.
The lifetime limit changes the strategy
Because you can only ever put in R500 000, the question is not just how much but how early. Every Rand of that limit used at 20 compounds for 45 years; used at 50 it gets 15.
At the maximum R46 000 a year you hit the lifetime limit in under 11 years. After that the pot keeps growing tax-free - you just cannot add to it.
If you are 35 or older
- It is still worth doing. Tax-free growth beats taxed growth at any age.
- Use more of the annual limit to make up for fewer years, if your budget allows.
- Help a child start. A TFSA can be opened for a minor - but every Rand counts against their R500 000 lifetime limit.
How MaxWealth helps
The MaxWealth tax-free savings tool runs the same arithmetic on your own numbers: slide your age, monthly amount and growth, and watch contributions and growth stack up to retirement within the R46 000 annual allowance.
Sources
- Annual R46 000, lifetime R500 000, 40% penalty, no carry-forward: SARS - Tax-free investments (checked 15 Oct 2026).
- Limit increase in Budget 2026: National Treasury - Budget 2026 Tax Guide.
- Growth figures: our own calculation (monthly compounding, 9% a year), shown in the calculator above.
Education, not financial advice. This post explains how the rules and the arithmetic work. It does not recommend any financial product, and your own situation may differ - speak to a registered financial adviser or tax practitioner before you act. Figures were checked against the linked sources on the date above.