To be part of the 6% of South Africans able to retire comfortably, you need to actively plan for a better retirement. Apart from starting as early as possible, Jac de Wet, national head of sales at PSG Wealth says there are six steps you can follow to maximise your retirement savings, giving you a better chance of ending up on the right side of the statistics.<\/p>\n
1. Save more<\/strong><\/p>\n Cutting back on expenses by making small adjustments to your standard of living could allow you to add more to your retirement each month. \u201cIncrease your retirement annuity by R1 000 per month by means of a debit order to make it easier,\u201d de Wet said.<\/p>\n \u201cAn extra R1 000 into your retirement annuity will go a long way over time.\u201d<\/p>\n 2. Use your age as a guide to growth assets<\/strong><\/p>\n Allocating a higher percentage to growth assets (like equities) is a great long-term strategy, but how do you know how much exposure you should have?<\/p>\n \u201cA rough rule of thumb is taking 100 as the age to which you will live and deducting your current age from it. The result is the percentage of exposure you should have to equities,\u201d de Wet said.<\/p>\n \u201cSo, at age 40, you should have 60% in equities; at age 60, you should have 40% in equities, and so on.\u201d<\/p>\n This method helps to manage risk as you can\u2019t really afford a 20% market crash at the age of 70, but at age 45 you have time to recover more easily.<\/p>\n 3. Consult a professional financial planner or wealth adviser<\/strong><\/p>\n You don\u2019t want to make any uninformed decisions on such an important part of your financial planning.<\/p>\n \u201cAn adviser helps to take the emotion out of investing, which can be tough in volatile markets, and can help keep you on track towards your saving goals, following a financial plan tailored to your unique circumstances,\u201d de Wet said.<\/p>\n 4. Preserve your retirement funds consistently<\/strong><\/p>\n Never take the option to cash out your pension benefits when you change jobs or get retrenched. \u201cDon\u2019t be tempted to use your retirement savings for anything other than retirement. You can\u2019t get back the years you will have accumulated saving already, which means losing out on compound interest\u2019s magic.\u201d<\/p>\n 5. Be tax savvy<\/strong><\/p>\n All contributions to retirement annuities, pension funds or provident funds are tax deductible up to 27.5% of your taxable income, up to a maximum of R350 000 a year, and de Wet advises you make the most of this.<\/p>\n 6. Work for longer<\/strong><\/p>\n \u201cBecause we are living for longer, it makes sense to continue working for longer \u2013 even if it is part-time after \u2018formal\u2019 retirement.\u201d<\/p>\n It is becoming common practice for people to continue working into their seventies. Even if we will be working for longer, it makes sense to save more money than what we need, rather than to have too little to live on.<\/p>\n Following these steps consistently can really help you achieve the goal of a comfortable retirement, joining the 6% who already get there, or increasing the odds.<\/p>\n \u201cConsistency and truly making the most of time can ensure your savings will go the distance,\u201d de Wet said.<\/p>\n
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