RETIREMENT is a dreaded word in this country, where fewer than 10% of retirees are able to be financially independent at retirement. There are always so many pressing issues at hand that looking years and years ahead into how our finances will look at the age of 60 can seem distant and unimportant.
We all know how quickly time goes by and this period in your life creeps ever closer year by year; the critical factor is simple – the earlier you start, the better. Someone investing R500 a month at the age of 20, given an 8% growth per year and a retirement age of 60, could see their investment grow to over R1.7m in 40 years.
However, someone only starting to save for retirement at the age of 30 would need to invest R1 200 every month to get the same end result. The beauty of compound interest means the younger you start, the easier this whole process is going to be. The scary thing is that only about a quarter of individuals between the ages of 18 and 30 are saving for retirement.