After years of saving towards a comfortable retirement, many South Africans may consider themselves to be financially secure. However, this may not be the case and leads to the question: are you one of the many South Africans in denial about a comfortable retirement?
Speaking on behalf of Ecsponent Financial Services, Christine Marincowitz, says that in their experience, it is likely that you will fall short of achieving your goals if you don’t review your decisions regularly.
Here are three tips from Ecsponent Financial Services to retire fret-free:
Regularly review your retirement plans and adjust your savings when necessary
Considering that statistically, only a quarter of South Africans can maintain their standard of living once they retire, it’s important to keep your financial advisor informed of any life-changing events.
A change in circumstances such as a retrenchment, or changes to your health or marital status could affect your retirement contributions. As these change, your goals must adapt too.
Even in the absence of life-changing events, it’s important to review your retirement plans annually to ensure your retirement income keeps up with inflation. It may be necessary to increase the amount of your retirement savings, or switch between funds to meet your retirement objectives. A qualified financial advisor will be able to give advice and recommend funds that will generate a reasonable return on investment.
Increased longevity means retirement savings need to last longer
Due to ongoing advancements in medical technology, people are living longer than ever before. This is even more reason to plan carefully for retirement so that you don’t outlive your money. If you work from the age of 20 to the age of 60, you will earn 12 times 40 paychecks or 480 in total. If you live to the age of 80, you will need 12 times 20 paychecks. That is 240, or half the number you earned up until retirement.
When you consider these numbers, the necessity to save from an early age and prioritise the contributions is clear. Additionally, you can extend your earning years by postponing retirement beyond the official date – either through formal employment or starting a venture that can support your earnings beyond retirement.
It’s never too late to start or revise retirement plans
The good news is that it’s never too late to start saving for retirement.
So, even if you haven’t done so already, a financial advisor will help you identify the most appropriate retirement investment vehicles to suit both your goals and your pocket.
Ultimately, you need to be realistic and ask yourself whether the nest egg you started accumulating when you first started working will be enough to sustain you for 20+ years. If your plans tick all the boxes, you’re on the right track. If you’re falling short, it’s important to act now and set yourself on the right path towards retiring comfortably.