Make your money outlast you

Last updated on 5th December, 2018 at 02:44 pm

Stats show that the life expectancy of people all over the world is increasing. Great news as you’ll be able to spend more time with your loved ones… on the flipside you might not have saved enough for the extended golden years. Make sure your money outlasts you with these tips…

Tip 1: Personal responsibility

Over the last 10 years there has been a huge shift to defined contribution schemes, in which employees bear all the investment risk. The good news is that defined contribution schemes offer you a lot of choice, providing you with a range of investment products from which to choose. But that means you need to make well-thought-through investment choices, so it’s important you do some advance planning, you do it right and you start it right now.

Tip 2: It’s not the good old days

The days when people spent all their years with one employer and achieved the retirement income level of 75% of the income they were earning before retirement are gone. Today, people start working later, live longer, change jobs, don’t preserve their savings and are generally members of a defined contribution fund. This is a recipe for retirement disaster unless you plan properly.

Tip 3: Don’t touch your savings

When you move to another company, resist the temptation to cash in your retirement savings. You’ll end up paying the tax penalty and simply wasting a large amount of it.

Tip 4: Failing to plan is planning to fail

The earlier you start planning for your retirement, the better off you’ll be. Compound interest will be your biggest friend and your retirement savings will gather momentum as you continue investing month after month.

Tip 5: Knowledge is power

When it comes to making important investment decisions, it is always best to get professional advice from people who have the required skills and training. But it doesn’t stop at finding a good accredited financial adviser. You’ll need to evaluate your current financial position, set realistic goals, implement recommendations and monitor them. Get a second opinion. And be informed – check benefit statements, investment performance, default options, vote for trustees and take responsibility.

Tip 6: Keep your paperwork

Keep all the paperwork of your policies, Will and personal documentation updated. During regular appointments with your financial adviser, review your policies and update changes in your personal circumstances.

Tip 7: Get a part-time job

Studies indicate that many people prefer to work at least part time during retirement. Sometimes it is due to financial necessity, but often also to give them a sense of purpose in life. Post-retirement employment is an important source of additional income, which means that members can withdraw less from their nest egg in the early years of their retirement.

Tip 8: Plan for your medical aid

Your golden years typically bring with the higher medical expenses. If your employer covers your medical contributions, that’s going to end. So ensure you’re planning and saving for your medical aid expenses. It may be worth considering taking out healthcare insurance.