Start saving for retirement today

By Staff Writer

You don't need a financial planning tool to tell you the best time to start saving for retirement - it's TODAY!

The tip comes from the South African Savings Institute (SASI) as National Savings Month comes to an end, savings awareness ticks higher and South Africans realise they are not saving nearly enough.

The challenge for many people is the lack of long-term savings, specifically for retirement, says SASI chief executive officer Elizabeth Lwanga-Nanziri.

She says some wealth management experts estimate that only 3% of South Africans will be financial independent on retirement - a big concern for the remaining 97%.

Another eye-opener is an estimate that those on an employer-backed pension fund may still need an extra 30% to 70% on top of their retirement pay-out. That is; if they plan to live comfortably after retirement.

The extra can only be provided by personal saving.

Some sophisticated financial planning models have been developed to show what people need to save at what stage in their lives or careers.

But there are three rules of thumb for retirement saving that anyone can apply, says SASI...

1. Start saving today
2. You're never too young to save, and
3. You're never too old to start

Elizabeth Lwanga-Nanziri points out: "Lifestyles differ, objectives are different and circumstances change so rigid formulas are not always appropriate.

"The factors that are always important are a commitment to start, the foresight to develop a savings plan and write down goals and budgets and the determination to see things through.

"Regular, long-term saving is always appropriate and becomes more vital by the day as life expectancy continues to grow for those who stay fit and healthy into their 50s and beyond."

Longer life expectancy is one of several trends affecting retirement planning.

Improved nutrition, better exercise and smart lifestyle choices like non-smoking mean many people stay active well into their 70s and 80s. This enables some seniors to defer retirement.

Another trend is to semi-retirement when active seniors with in-demand skills choose to work part-time or take on consultancy roles.

A less positive development is high healthcare inflation and increased need for prudent provision.

Equity market volatility is also a concern.

"Many factors and trends affect retirement planning," says Elizabeth Lwanga-Nanziri. "But some things don't change - like the need for prudent retirement provision and the advisability of starting today and not putting things off until tomorrow."

Recent Articles

Featured What are the benefits of living in a “Zoom Town”?

With many careers moving online, work-from-home employees have realised they can live in smaller suburbs or towns at a lower cost and enjoy the benefits of a slower lifestyle, while keeping their jobs.

You can’t cash cheques anymore in South Africa – we find out why

In November 2020, the South African Reserve Bank (SARB) announced that cheques would be discontinued from 1 January 2021. But what guided this decision? We have a look at what the pitfalls have been of using cheques, and the consequences of removing them from the payment system.

The perks of investing in student accommodation

With the constant influx of new students entering tertiary institutions, there’s usually a steady demand for student accommodation. As an investor who’s interested in the property market, should you consider student accommodation?

Are you financially secure enough to buy your first home?

When you buy your first home, you need to make sure you’re in a secure financial position so that you can stay afloat in spite of your increased financial responsibility. But are you aware of all the costs you’ll have to carry?

Deals

Rouge Day Spa Tuesday Special

Price: Available on request
When: Tuesdays
Where: Cape Town

Monte Vista Two Nights Special

Price: Available on request
When: Until 31 December 2021
Where: Montagu

Century City Hotel 4 Nights Special

Price: From R1100
When: Until 31 January 2021
Where: Cape Town


Latest Guide

Guide to debt rehabilitation solutions