This one decision can give you a carefree retirement

Imagine you’re in your late 60s: You’ve just received a standing ovation for your great teamwork, clinked a last ‘cheers’ with your colleagues, packed your desk and removed your work email from your cellphone. You’re ready to ease yourself into a comfortable retirement where you get to spend your time exactly how you like it. At this point, the difference between a good and bad retirement depends on one decision you make now: to start saving. 

Thinking ahead

According to the 2019 10X Retirement Reality Report, more than two-thirds of economically active South Africans earning in excess of R7 600 per month indicated they had no savings plan in place for their retirement. Without a plan, the chances you’ll be able to sit back and enjoy your later years start getting slimmer.

That is, unless you make a very important decision: to start saving for your retirement right now. If you prioritise putting money towards a savings plan for your retirement over other expenses, you’re less likely to work beyond your retirement age to afford the lifestyle you’ve gotten used to.

The magic of time

By thinking about your retirement now as opposed to in a month, or a year, or 10 years, you capitalise on the element of time. With time comes a brilliant moneymaking concept: compound interest. Compound interest is what you get when you earn interest not only on the initial amount you invested, but also on the accumulated interest. The longer the investment period, the greater the amount of compound interest. 

Want to see this in action? Try Capitec’s handy savings calculator, and work out how much your money would grow in 6, 12, or 24 months. 

Simplify retirement

The trick with compound interest is that the longer it works, the more you earn. It’s simple, really. Your retirement savings can work hard for you; all you need to do is to start sooner rather than later. 

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This post and content was written, sponsored and provided by Capitec.