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How to plan adequately for retirement from your 20s, 30s and 40s

Starting as soon as possible is the first step.
Image: Shutterstock

Starting to save as early as possible (no matter what your age) is the best way to achieve your retirement goals. There is no substitute for this reality. The longer you’re invested in the market, the more your accumulated savings will benefit from compound interest. If you start saving at age 25, you’ll need to put aside half as much in total, compared to if you only start at age 35 (and if you start at 45, you need to save even more to catch up to have sufficient savings to see you through your golden years).

Don’t use your debt situation or low income levels as an excuse to start saving later

Many people will claim to have other priorities that prohibit them from saving. Paying-off tertiary student debt or saving for a deposit for a home loan on top of paying rent are common excuses.

As income earners grow in their career, their lifestyles change, and with that their expenditure patterns. Instead of your student debt, you’ll have the school fees of your children, more expensive holidays, and increased medical costs at later stages of your life. Lifestyle creep is almost unavoidable, and the best way to provide for the future is to make saving a priority from the start.

Step one: Draw up a budget to stick to

Once you have decided on your financial goals and where retirement planning fits in to your broader financial plan, you should commit to a budget to prioritise expenses, and make this a way of life. There should be at least five elements in your budget; paying off debt, saving for the short term, investing for the long term, living expenses and the income leftover that should go into extra savings as often as possible.

Put yourself first

The best thing you can do for those around you, is take care of yourself. Planning for your retirement is crucial if you want to be among the 6% of South Africans who can retire without taking financial strain. Currently an individual can take advantage of annual retirement provision of 27.5% of their taxable income up to a maximum of R350 000, so keep tax advantages in mind while saving too.

You may not be earning consistently to your expected retirement age. An example is Covid-19’s effects on livelihoods – setbacks in your earning potential are real. Plan for these risks, and the potential irregularity of your income stream, to provide the required savings stream for retirement.

Be realistic about your retirement income

Be careful of increasing your retirement income expectation if your salary increases, as this will fundamentally change the savings requirements you need to meet. If you have been engaging with your financial adviser for some time, your expectations of a comfortable retirement should be well positioned in your financial plan. If you are behind, it’s not too late but you’ll need to commit to improving the outlook of your retirement by acting now.

Life expectancies are on the rise: are you financially prepared to live well into your nineties?

Data from the US shows that the life expectancy at age 45 for reasonably healthy individuals from middle income households is around 95. While every person is unique, advances in medical care bode well for longevity.

At age 45 it is expected that you should have approximately four times your annual salary saved up. Most South Africans don’t even have that much at the point of retirement, so it’s essential to start seeing your bigger picture, before it’s too late to improve it. Meeting with a qualified financial advisor can help ensure you are making the most of the time at your disposal.

Nirdev Desai, Head of Sales at PSG Wealth.


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One of the main issues is the ANC. The government has a socialist mindset i.e. one of ongoing wealth confiscation and voter patronage. Accumulation of capital is difficult as the regime continually invents ways to lay claim to you assets and the income they produce. When CGT was introduced only primary dwellings such as a mansion in Clifton would fall into the net. Nowadays the average middle class home is comfortably in the crosshairs of statist plunder. The ANC by debasing the currency steals the rand in your pocket by being close to the source of fiat. Anything valued in a depreciating currency will rise nominally in price. The ANC then steal your asset value via CGT. This money is then largely stolen by the ruling politburo or ends up in some place like Dubai. The transfer of wealth from the producers to the ANC created parasitic underclass is the principal mechanism that the ANC uses to remain in power. By destruction of civil society they deny the poor any means of uplifting themselves. Generations in bondage to the grant system. It is time to dispose of the ANC with extreme prejudice.

Richard I agree with you and have tried to think up strategies to overcome this due to a huge wake up call I received after visiting Zimbabwe in 2005. The only things I have come with is to have as many / all of my investments offshore with the capital retained in a foreign country to try and prevent the ANC claiming it with EWC etc. The other partial solution I came up with was to invest my money in SA on offshore assets. The experts go on and on about timing the exchange rate to favour offshore investments whilst simultaneously informing one that it is time in the stock market not timing the market that is important. The only reason I can think of this is that they make more money from stock investments than offshore investments.

Although some parts are true, my question is why would you buy a retirement annuity and lock your savings up when you have a home to buy (loan) a car to buy (loan) children to school, all coming down the pipe???? You should only have your company pension/Provident plan! They have been selling WEAK financial products for 25 years that I am aware of and I teach these things. If 95% don’t have enough at retirement are you teaching them the correct path? NO!! Get out of debt 1st. Remember your home bond is interest only for the 1st five years. So if you are paying R 10,000 bond payment, when has your R.A. paid you R 10,000 a month in interest NEVER. You need Financial Fitness Training

Sage advice if you manage to have or get a job – but useless if you can’t find employment

I cannot fault your theory. But, I practise it is very different.
* Very few people can afford to put away 27 1/2 % of salary, regardless of the tax advantages.
* Up to the age of 45 or 50 most are repaying mortgages, raising children and then paying University Fees.
There is not much left over, budget or no budget.

Then I guess they will have to work until they die if their health allows it, or scrounge by and live in someones back yard and turn every coin over 5 times or live off their kids or off themselves.

This sounds good, but since the goal of the ANC is to become custodians of all assets in SA including pension funds, where does that leave us? Um…?

Not disputing that saving is absolutely necessary, but, increasingly, living off one’s savings is a pipe dream. Poor returns on the JSE, exorbitant fees charged by insurance companies and spiralling administered costs, such as rates and electricity, make a retirement funded only by savings the preserve of a lucky few.

I would say that, in addition to saving, your retirement plan has to include something like running your own business or doing consulting after retirement age, for as long as you’re healthy enough.

Or join the ANC and become a tenderpreneur and/or rent seeker. And don’t worry about being arrested for theft, fraud, money laundering or tax evasion, no cadres have ever spent one night in a cell for state capture, despite all the allegations and supposed arrests.

Why now Gordon?

BEE investments not turning the punted upside?

Serves well those Well people that choose color as an imporant attribute for some or other reason..

End of comments.





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