Taking control of our financial future also means knowing how to plan ahead. Retirement is one of the things that can help create a financial safety net for you to fall back on when you stop working.
Planning while you still have time can also give you ample time to have enough saved for you to relax comfortably. It may seem like a long way off, but time flies. Here are a few saving options that can help you reach your goals.
Before we begin
This is a general guideline that we have put together to help you start your journey of financially planning your future and should not be taken as financial advice. Although these points are great starting points, speaking to a financial adviser will make finding the right fit easier for you.
Know how much will be enough for you
With so many plans available to start your retirement savings plan, it can be easy to become overwhelmed. Speaking to a financial planner can take out the guesswork and help you plan your path conveniently. However, a good starting point is looking at your current lifestyle and the income you earn to sustain this. If you have already started looking into ways you can comfortably retire in South Africa, you will come across a general rule of thumb that states that you need to have at least 75% of your final salary saved. It is also vital to keep inflation in mind when choosing an option that will be suitable for you.
Retirement Annuity Plan
Retirement Annuity plans are like personal pension plans. It is suitable for people who want a plan outside of the one that is provided by an employer. You can use this to supplement other savings & investments you have in place to ensure that you cover your bases. There may be some limitations and regulations depending on the insurer you choose to use.
Provident funds
These are commonly offered by employers to their employees where both you and your employer contribute towards the fund and can be seen as an affordable option for working South Africans. You can either choose to have 100% of the contributions paid to you once you retire or opt to use a portion of your savings to invest in an annuity plan. Make sure that you carefully read and understand the benefits and conditions that come with this to avoid any confusion.
Consider investments
Some people may find that relying solely on a retirement fund may not be enough. Whether you are looking for a bit more padding for you to land on when you retire or simply want peace of mind knowing that you will be financially secure, you may want to consider investing in things such as a unit trust fund. A unit trust fund essentially pools contributions from investors within a diversified portfolio that is managed by a portfolio manager that makes investments on your behalf that will give you the best return. It is also one of the viable ways in which people can invest in more than one type of asset even when you are working with a limited budget.
