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A Fin24 user wants to boost his retirement plan before he retires in about eight years' time. He writes:
Currently, I belong to a provident fund, which has an investment of R2.4m.
I contribute approximately R6 500 per month. I also have a retirement annuity (RA), which has an investment value of R300 000 and I contribute R3 800 per month with an escalation linked to inflation.
I have eight years left to retirement. Is my retirement plan sufficient to cover my needs when I retire?
My bond will be paid off next year and I will be debt free. What can I do to boost my retirement plan over the next eight years?
A spokesperson for Absa responds:
Without having been informed of your underlying asset allocation and fund selection in the provident fund and RA, it would be difficult to make a recommendation on what to do to boost the retirement plan.
We also do not know what your income requirements are after retirement and we do not know your risk profile.
Given the caveats above, here are some options:
Once the bond is paid off, contribute as much of your discretionary savings into a savings vehicle such as a unit trust fund.
Keep some aside in low risk investments such as money market or fixed income to cater for a rainy day.
Place the rest in a range of active or passive balanced funds in line with your risk profile to grow your retirement plan.
The option of placing the funds into an RA could be considered, given the tax benefits.
Remember, however, costs are a consideration as well as that once the RA matures at retirement, the funds flow into an investment-linked living annuity, which is subject to certain withdrawal thresholds.
- Fin24
Do you have a pressing financial question? Post it on our Money Clinic section and we will get an expert to answer your query.
Currently, I belong to a provident fund, which has an investment of R2.4m.
I contribute approximately R6 500 per month. I also have a retirement annuity (RA), which has an investment value of R300 000 and I contribute R3 800 per month with an escalation linked to inflation.
I have eight years left to retirement. Is my retirement plan sufficient to cover my needs when I retire?
My bond will be paid off next year and I will be debt free. What can I do to boost my retirement plan over the next eight years?
A spokesperson for Absa responds:
Without having been informed of your underlying asset allocation and fund selection in the provident fund and RA, it would be difficult to make a recommendation on what to do to boost the retirement plan.
We also do not know what your income requirements are after retirement and we do not know your risk profile.
Given the caveats above, here are some options:
Once the bond is paid off, contribute as much of your discretionary savings into a savings vehicle such as a unit trust fund.
Keep some aside in low risk investments such as money market or fixed income to cater for a rainy day.
Place the rest in a range of active or passive balanced funds in line with your risk profile to grow your retirement plan.
The option of placing the funds into an RA could be considered, given the tax benefits.
Remember, however, costs are a consideration as well as that once the RA matures at retirement, the funds flow into an investment-linked living annuity, which is subject to certain withdrawal thresholds.
- Fin24
Do you have a pressing financial question? Post it on our Money Clinic section and we will get an expert to answer your query.
Disclaimer: Fin24 cannot be held liable for any investment decisions made based on the advice given by independent financial service providers.
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