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The best way to make sure your retirement beats inflation

The best way to make sure your retirement beats inflation

A rising inflation and a change in the cost of living has  increased consumer pressure to sustain living on the same level of income.

As a result these changes impact expenses that one would encounter at retirement and as such directly impacts your retirement aspirations which would need to be reassessed according to Preenay Sathu, Channel Head for FNB Financial Advisory.

“When saving for retirement, inflation should be taken into consideration by means of ensuring that whatever amount is saved matches or can beat inflationary increases. This is to ensure that at retirement you have saved enough to maintain a certain standard of living,” noted Sathu.

With this in mind Sathu believes it has imperative that we match our annual premium contribution increases to at least match inflation to ensure that we can safely meet our retirement goals.

“Most financial services providers consider inflation when structuring retirement plans. However, as an investor you may have to check on a regular basis to ensure you are contributing within the acceptable inflation range.”

Besides matching your annual premium contribution increase for retirement to inflation, Sathu also highlighted the other ways South Africans should look at when trying to bulk retirement savings.

“Instead of solely relying on your employer pension scheme, supplement it with another retirement vehicle such as a retirement annuity. Another option is to diversify your investments by ensuring that your portfolio has fair weighting to different asset classes such as shares – while they may be volatile in the short-term, shares are likely to produce higher than inflation growth in the long-term.”

Sathu also pointed to other asset classes which one could have exposure to as part of the total investment portfolio including cash, bonds, property, and commodities which can be a combination of local and offshore.

“If you are fortunate enough to get a bonus from your employer, direct a portion of it towards your retirement savings on an annual basis.”

“Like any other investment, it’s important to pay close attention to your retirement savings to avoid surprises when your working life comes to an end,” concluded Sathu.


Read: Most South Africans struggle to save for retirement


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  • ***Some Text Missing***

    I invest my money at 12.5% at NedBank’s Green Bond over 5 years. Well over inflation.

    • reDDevil

      At least your not using Stanlib.

      • ***Some Text Missing***

        I take it their interest rates are bad?

        • john speck

          Give us some info ,Im doing 7% on a call account.dont think thats bad ,but answer me as any info is good info.

          • ***Some Text Missing***

            It’s called a NedBank Greenbond account. Unfortunately for that interest rate, it’s for 5 years. But your original capital grow by more than 50% over 5 years. For example, if you deposit R100,000 over 5 years, it will pay out R150,000+ Not to shabby.

      • Eben

        What’s your experience with Stanlib? I also have an investment with them, very low roi rates.

    • Mohammed Vazeer

      Excellent savings vehicle from Nedbank👍

      • ***Some Text Missing***

        Absolutely!

    • Eben

      Be careful, this is simple interest, not compound….

      • BallsToTheWall

        Only because I’m too lazy to do the calculation myself Eben :-). Any advice on some better compound interest options for a R100k over 5 years?

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