LIVING WELL IN RETIREMENT OR SURVIVING IN RETIREMENT

The future “you” can be a scary thing to imagine. While no one knows the future, it is still challenging to think of a more frail, impoverished version of yourself. The question that will dictate your decisions, is whether you only want to survive in retirement or whether you want to live well after retiring.

Susan Warren

Susan Warren
Insurance Specialist,
CFP® Professional

The glaring reality of inadequate retirement savings

South Africans are notoriously slow to savings initiatives. In 2020, leading fund administrators and advisory practices confirmed that less than 10% of South Africans have sufficient savings stored away to fund their retirement. They further stated that 50% of all pension plans have fund values of R50 000 or less, which is not nearly enough to purchase an annuity or pension income to sustain you. The consequences of lockdown could push these numbers down even further as individuals dig deeper into their pension monies.

This sloth-like approach to addressing retirement needs, means that South Africa could face a retirement crisis in the coming years. Conventional employee retirement solutions are outdated because employers do not put enough emphasis on staff contributions. It is further debatable whether the South African government should have taken harsher measures to ensure that locals save for their old age.

Does your post-lockdown retirement planning reveal an impoverished self?

Since the start of the pandemic, there has been many business closures and countless job losses. Government support systems were slow and vexatious, offering little support when it was already too late. Before long, South Africans felt the pinch at home. Their uncertainty gave birth to a systematic savings drain. Those who had reserves, burned through it in no time, then they turned to their retirement savings to make ends meet.

Whether you encountered financial setbacks during lockdown or not, it is a good idea to relook your savings and to get your planning back on track. Retirement annuities, pension funds, provident funds, or endowments are some of the investment vehicles to consider when doing your planning, though each one has its own pros and cons.

Plan to live well in your retirement

Human resources departments often view retirement planning as an integral component of employee benefits. While HR administrators are not qualified to give financial advice, it is often better to get a professional advisory practice to assist with group schemes and employee benefit structures. They can then do professional assessments of each employee and guide them through their retirement planning.

When sitting down with your financial advisor or HR manager, ask yourself these 5 questions:

  • Do I know how much I have available in my fund?
  • Do I know how much I will need to retire?
  • Do I understand the difference between the two?
  • What are my retirement goals?
  • How can I plan towards these goals?

Even if your goals seem unattainable on paper, it is still better to start saving sooner rather than later. Every month that passes by, only places more pressure on your future self.

Calculating your current investment fund values and determining future requirements can become needlessly complex, which is why you always need an adviser at hand to assist with your retirement planning. With the correct advice you can re-evaluate your circumstances and make changes to your savings plans to address your needs at retirement.

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