Data provided by McGregor BFA
All data is delayed
Loading...
See More

Focus on retirement or face bleak future

Jan 29 2013 09:34
pension, retirement


Related Articles

How much do I need to retire?

Best retirement options

Retirement fund curbs on cards

UK over-50s ignorant about retirement

Retirement strategy for an expatriate

Taking up farming in retirement

 

Cape Town - It is unlikely that South Africa will follow the path of developed European countries by extending the official retirement age, as South Africa does not have an ageing population, therefore South Africans need to start adequate provision for retirement, says Windall Bekker, partner at Rezco Investment Consulting.

As the first month of 2013 comes to a close, most people are breathing a sigh of relief as their January salaries are finally paid, and for most, their New Year resolutions are now long forgotten and in the past.

However, if there is one set of New Year resolutions that should not be forgotten, it is the steadfast intention to ensure adequate provision for your retirement.

Bekker says this is particularly important as many people who believe they can simply carry on working after the normal retirement ages of 60 or 63 are often disappointed.

“In our experience, employers are not willing to extend the retirement age of employees unless they have specialist skill sets that cannot be easily found elsewhere.

Those members who do have specialist skill sets already tend to be higher income earners and are more likely to have provided sufficiently for their retirement, and so do not generally need to extend their working lives.

“One of the problems is that we tend to see lower skilled retirement fund members, who have not provided for their retirement adequately, needing to extend their working lives - and employers not being open to the idea.”

Bekker says it is also unlikely that South Africa will follow the path of developed European countries by extending the official retirement age, as South Africa does not have an ageing population.

“Combined with the extremely high levels of unemployment, especially among younger people, this means it is highly unlikely we will see retirement ages extended. Of course, older fund members with specialist skills remain in demand and will continue to be in a position to extend their working lives.”

For those people who believe they do not have sufficient retirement capital, there are various options available.

“Firstly, people need to reduce their lifestyle expectations post-retirement and accept that they will not be as financially secure as they would have liked. If they are still working, it is critical that they reduce their current consumption levels and increase monthly contributions to their retirement fund and try to put lump sums such as bonuses into their retirement fund.”

He notes that in tougher economic climates it may also be advisable to take other steps, such as making sure that you have sufficient savings to last if you become unemployed.

“Previously, people used to assume that three months of savings was sufficient to enable them to find another job but increasingly, and in the current economic environment, a year is no longer an unreasonable expectation.”

Bekker says it is also advisable to ensure that there are two breadwinners in the family and that these people ideally work for different companies in order to reduce the possible impact if a company decides to downsize.

“Should a redundancy happen and you are unable to preserve your retirement fund, then it is crucial to ensure that the money is placed into another investment vehicle, for example your mortgage bond, which will reduce debt levels but can still be easily accessed when required.”

He says it is a good idea for anyone who is committed to providing adequately for their retirement to speak to a qualified financial planner.

“People should, however, take special care when selecting a financial adviser and check such issues as whether they are independent or tied agents, whether they have the required qualifications and licences, and whether they are incentivised to recommend any particular products,” Bekker says. 



Follow Fin24 on Twitter, Facebook, Google+ and Pinterest.

investing  |  retirement
NEXT ON FIN24X

 
 
 

Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
12 comments
Add your comment
Comment 0 characters remaining
 

Company Snapshot

We're Talking About: Small Business

Standard Bank is looking for 12 entrepreneurs to participate in a 10-part TV series. They could win a R1m investment into their dream.
 
 

ANCYL: Not voting would be blasphemy

Not voting in the forthcoming elections would be blasphemy, the ANCYL says in a statement commemorating the 50th anniversary of struggle icon Nelson Mandela's Rivonia trial speech.

 
 

Latest elections multimedia

Why Jack Parow wants you to vote on 7 May
The ad the SABC doesn't want to air
Elections 2014 in one cartoon
This year's election posters

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...
Loading...