Johannesburg - Retiring early is no longer an option, Johan van Zyl, CEO of
Sanlam and chair of the Association for Savings and Investment
South Africa (Asisa) said on Tuesday.
His advice was part of Asisa's tips from captains of industry to
consumers on how to make personal finance part of their New Year's
resolutions.
"Considering that the average monthly pension in South Africa is
less than R3 000, I would advise people to work longer to preserve
their capital for as long as possible.
"Given the fact that we tend to live longer, retiring early, at
age 55 or 60, is simply no longer an option for most."
Van Zyl added that another savings tip was to resist buying a
new car.
"A car is never an asset - don't spend your life funding a
liability.
"Rather use spare cash to pay off debt or invest the money
sensibly," he said.
Asisa CEO Leon Campher said the best investment would always
be to pay off debts first, including mortgage bonds.
"If you have spare cash and you use it to invest while still
servicing debt, you are effectively borrowing money to invest on
the stock exchange."
Tjaart Esterhuyse, MD of RGA Reinsurance Company,
said a savings plan for retirement should be implemented as soon as
a person started earning a salary.
"Build a relationship with a trusted financial adviser who is
going to help you test regularly whether your current retirement
provision will lead to sufficient retirement income.
"If you find that you are not saving enough, adjust your savings
plan immediately."
Willie Lategan, CEO of Absa Financial Services, said the only way
to change the country's "dismal savings culture" was by teaching
children how to save from an early age.
However, he said adults had to set a good example.
"There is little point in telling children to save, if as adults
we cannot resist the urge for instant gratification."
Murray Anderson, MD of Atlantic Asset Management,
advised consumers to make sure exactly what their financial needs
would be at retirement.
"Then, work out a savings and investment strategy that will
enable you to achieve this goal," he added.
The first step should be to eradicate debt as swiftly as
possible, even if it means deferring material aspirations for a
couple of years, he said.
"Once your debt has been cleared, a disciplined savings
programme should be followed with a focus on rand cost averaging
and exposure to growth assets."
Rob Dower, chief operating officer at Allan Gray, advised against
borrowing money to buy things that were not going to increase in
value over time, such as holidays, television sets and cars.
"The monthly repayments and sacrifices you have to make to rid
yourself of all that debt would be much better put to use in a
regular savings plan that will make you money rather than cost you
interest."
- Sapa