Retirement planning needs constant adjustment, depending on your age and circumstances. A 55-year-old Cape Town resident - let's call her Catherine Swart - tells us how she’s ramped up her investments while focusing on reducing risk as she approaches retirement, and shares her tips on taking control of her post-working years.
When did you start saving for retirement, and what made you start?
When I started working I was a member of a pension fund, so effectively I started saving for retirement in the traditional way right from the day I started working. In addition, I also put small amounts into unit trusts (or collective investment schemes) on a monthly basis. I started saving because I was brought up with a sense of “save today for a nest egg tomorrow”.
Have you had to play ‘catch-up’?
After a few years in the first job, I moved on. I used the money that was paid out to pay off the bond on my house. I continued with my monthly unit trust contributions, but I felt that I had to do more. That’s why I decided to buy a second property – the thinking was that servicing a bond would force me to put away money every month to pay off my investment.
What is your saving strategy as your retirement date nears?
I feel that putting savings into more than one basket is a good principle to follow. With my retirement approaching, I have started relooking my investments with this in mind.
Have you had to make compromises in other areas of your spending because of your retirement savings?
I think the one thing I do that is potentially different to what most people do, is that I do not spend money just for the sake of it and because it is available – for example, I invest a big part of my bonus.
How did you work out how much you need to save for retirement? Did you rely on the help of a financial adviser?
A financial adviser is critical to give guidance on planning for retirement.
Do you regularly keep track of your investments and measure these against what you need to save for retirement?
Yes, I monitor my investments in a spreadsheet. This is not because I worry about them, but this way there are no surprises – it keeps me in touch!
Any tips for people who are in their 30s and 40s and haven’t started saving for retirement yet?
Firstly, get yourself a financial adviser – do not postpone – and start following a plan as soon as possible. Picture yourself retired and wanting to enjoy your life – maybe it helps to motivate you to start saving today! You deserve a comfortable retirement and you have to start saving early because the impact of compounding over the years must never be underestimated.
For more information on investing for retirement, speak to your financial adviser.
This Q&A is part of an investment series by Discovery Invest
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