Getting ready to retire?

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The average South African has 528 opportunities to save during their working life.

This statement assumes that a person’s working life starts at the age of 21 and continues to the age of 65. If the person starts working at school leaving age at let’s say 18, you can add 36 more opportunities to save and if they cease working at the age of 60 you can subtract 60 opportunities to save. From here on, you can do the maths.

On average, most South Africans do not see the importance of saving for retirement until they reach their mid-thirties and by that time, it is too late to catch up on the missed opportunities to save and they will be grossly underfunded to maintain their lifestyle on reaching retirement.

Reasons for the underfunding at retirement include:

Not understanding the importance of contributing to company pension/provident funds and further, understanding the underlying choices and benefits of the funds.

Not preserving the funds on resignation, retrenchment or dismissal.

Not supplementing retirement savings by means of retirement annuities and/or other savings/investment vehicles.

The above list provides the main reasons but is not comprehensive or exclusive.

Retirement is often referred to as the Golden Years and proved to be not as golden for many as they retire with so little funds to sustain their long awaited rest from their working life. Visions of spending their final years filled with recreation and relaxing hobbies fade as the stress of budgeting and cutting back on expenses in order to make ends meet become the order of the day.

This article is not meant to be depressive in any way, it is simply meant to remind us that we need to plan for retirement as soon as possible.

For those entering their working career, ensure that you start saving immediately because you have the best chance of securing a fulfilling retirement.

For those in their mid-working career, take a hard look at the savings already accumulated and make the necessary adjustments in order to secure retirement security.

For those on the cusp of retirement namely +/- 10 years from “day zero”, take a look at the 10 questions listed below and take note of your responses as they will indicate your preparedness for your retirement.

10 Questions

At what age do you intend to retire and what is your expectations regarding your life span?

  1. What percentage of your pre-retirement income will allow you to maintain your lifestyle during retirement?
  2. When you retire from the workplace, do you have any other plans to generate income?
  3. How would you rate your overall health and that of your partner?
  4. Do you have any dependants who rely on you for their welfare?
  5. How would you describe your attitude to risk with regard to investing?
  6. How good are you at controlling expenses?
  7. How would you describe your knowledge of investments?
  8. Do you fully understand your investment options on retirement?
  9. Do you have a financial advisor and/or tax consultant?
  10. Is your Will and that of your partner up to date?

Most importantly, its’ your life, your responsibility to secure your retirement and you are accountable for the outcome.

Ensure that you align yourself with a professional Life Coach or Financial Planner/Coach and become educated in your own Financial Welfare in order to make well informed choices.

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