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INFOGRAPHIC: New thinking required for retirement

Sep 19 2016 06:00

Everything we believe about retirement is fast becoming outdated. This is especially true regarding retirement savings and even wealthier retirees are likely to struggle if expenses are not carefully monitored and adjusted.

This fact requires completely new thinking around all retirement issues.

For years the investment advisory community have urged people to save more for retirement and have amended projections for what individuals will need for financial security once they stop earning an income.

“The entire conversation around retirement needs to change, not only the savings topic. British media reported in September 2015 that the first person likely to live to 135 has already been born; based on the research about longevity and ageing by Danish professor Rudi Westendorp. It is well documented that more and more people are living to be a 100 years old. The days of this making news as it used to are long gone, but never before has the implications been more relevant,” according to Brian Butchart, Managing Director of Brenthurst Wealth.

This much longer life expectancy means it is unrealistic to stop working and earning an income at age 60 hoping that retirement savings will cover 40+ years of living. This with savings produced from only 35 years of working if one assumes a person starts his/her working life at about age 25 after completing some or other higher education qualification. Should the person live to 120 retiring at 60 means that savings are needed to cover expenses for 60 years!

“Even in a low inflation environment it is unlikely that the average person will afford this. The financial advisory community reckons at current savings levels and not taking the longer life expectancy into account only 5% of South Africans will afford retirement,” Butchart added.

The first step you need to take is to seek financial planning advice, by hiring a financial advisor to make sure that you able to make the correct arrangements so that you are able to retire comfortably when you come to that age. It is of the utmost importance that you obtain advice from a qualified financial adviser who can take your personal circumstances into consideration.

Brenthurst Wealth Management has a team of highly-qualified advisors who provide clients with sound and impartial investment advice. They provide advice on an individual basis and tailor investment strategies for each client separately based on their specific circumstances. Brenthurst Wealth is registered at the FPI as an accredited professional business practice and was recently voted one of the top four boutique wealth management firms in South Africa. Find out more about their services

References: DailyBurn, Mirror, Allan Gray, Niel Fourie, the public policy actuary at the Actuarial Society


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