Statistics show that only six percent of South Africans will be financially independent when they retire. This is purely because of a lack of planning and because of people not saving enough for their retirement.
Research shows that the standard pension fund will not be sufficient to financially sustain the member upon retirement. More money should therefore be invested for one’s retirement.
Starting early is better. You'll give your retirement funds more time to grow and hedge your savings against future upsets. One study found that six out of 10 people in their 50s and 60s experience a job loss, illness or other income-shattering calamity.
Preparing in advance and contributing sufficiently toward your pension is vital. It is never too early to start saving and you should review your status every few years to make sure your retirement plans are on track.
A number of contributing components make up a good financial plan. Olemera's Financial Planning Process will put you in an informed position to plan all your current and future financial requirements.
Understanding your needs and planning accordingly is an essential part of successful financial planning. (Also see the video "A lifetime of life insurance.")
For a complete personal needs analysis and financial planning assistance, contact one of our Financial Planners or adviser.
Retirement planning within the context of wealth creation refers to the long-term process of planning for your retirement while you are still earning.
This process includes a highly structured approach to your retirement needs and the formulation of a personalised plan to achieve your retirement goals.
In addition, it includes a focus on retirement fund management, to ensure that you make the right decisions with your retirement investments.
The success of the retirement planning process depends on regular review, specialist advice backed by a solid knowledge of the applicable legislation and tax implications, and a long-term relationship with a retirement planning specialist.
Be realistic about your retirement needs and set a goal. Experts recommend you sock away at least 10% of your gross income each year for retirement. Retirees generally need at least 75% of their previous income to continue their standard of living (more if they want to travel or indulge expensive hobbies).
Take advantage of your workplace plan and save at least enough to get the full match from your employer. Don't be tempted to withdraw your money before age 60.
A factor which is often forgotten is , how long should one plan for post retirement. With medical technology the chances for surviving longer than expected may well cause your funds to run out, while you still have a few years to still live.
The Life Expectancy Calculator can be used to give you some indication. It is recommended that you add at least 5 (five) years to the figure you get.
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