Take a moment to imagine what your retirement will look like. It's impossible for a smile not to cross your face when you think of all the wonderful things you will be doing and a chance to relax after years of working towards your goals.
However, all of this can fall apart if you do not have a retirement plan in place.
The cost of retiring
A common misunderstanding when it comes to retirement is not knowing how much it will cost us to retire comfortably. The general rule of thumb is that you need to replace at least 75% of your final income to help maintain your lifestyle. But what does this look like while you are still working?
This means that you should be saving anything between 12% - 17% of our income from the day you start working. However, this is not always the case. According to the 10X South African Retirement Reality Report of 2020, nearly half (49%) of South Africans do not have a retirement plan in place. Furthermore, with so many expenses that need to be juggled 75% of South Africans worry that they will not have enough to comfortably retire.
Steps to take
There is no 'one-size-fits-all' solution when it comes to planning for our retirement. Therefore, speaking to a financial advisor can help us find the necessary skills and tools that we need to plan for retirement without placing a strain on our finances whilst doing so.
Starting off with the basics such as taking out a retirement annuity policy or joining an employer’s pension fund can be one of the ways to safeguard your retirement. The key is to find something that is affordable to your situation to ensure that you can make regular contributions that can go towards retiring comfortably.
Regularly reviewing your financial goals, especially when it comes to retiring can help us find ways that can safeguard our retirement. It is also a handy way to assess if we are close to our retirement goals and what needs to be changed in order for us to achieve these goals. This is why speaking to a financial planner can make it easier to navigate your way around planning for retirement.
Saving by age
To avoid being overwhelmed when planning for your retirement, knowing what you need to save for each age-related milestone can make it manageable. For example:
Aim to minimize debt
Every cent counts once you have retired. Therefore, making sure that you enter retirement having reduced your debt as much as possible is vital. Having a life insurance policy in place can be a much needed safety measure that can help you and your loved ones even after you have died.