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Planning: The Secret To Living Your Best Life After Retirement

Whether you’re in the early stages of thinking of your retirement or are ready to retire, it requires careful planning for you to ensure you have enough money to cater for your new chapter – one where you are effectively paying yourself a salary to last you the rest of your life.

This planning will most certainly involve expert financial advice. While many might argue that this is an unnecessary extra cost, we have seen that avoiding financial advice can actually cost a person a comfortable retirement. Don’t let it be you.

How you can prepare for and implement a sound retirement strategy:

Most importantly, you actually need to save for retirement. The earlier the better. If you start saving at the age of 20 and aim to retire at 65, for example, you effectively have 540 pay-days left. If you only start saving at 40, you have 300 pay-days left. Either way, if you retire at 65, and let’s say live until 85, you need to fund 240 pay-days yourself.

One of the most effective ways to save for retirement is to invest in a low-cost, tax-efficient retirement annuity which uses Exchange Traded Funds (ETFs) as the underlying investment portfolio option. Using a retirement annuity provides prudential investment guidelines, meaning your money is managed according to rules set out by the Pensions Fund Act (Reg 28). This way of investing also ensures that you can only access your money after the age of 55. This makes it a disciplined way to save.

Another way to save is to invest in low-cost ETF portfolios without the retirement annuity overlay, meaning you can access “riskier” assets that can potentially deliver higher returns in the long term – but understanding that you forfeit the tax efficiencies and discipline components that come with a retirement annuity.

Once you are all saved up and ready to retire, you will need to convert your total savings into a monthly salary. This is generally referred to as an annuity and you get different kinds of annuities – which is the reason that good financial advice is recommended because it will help you find the best option for you.

One popular option is a living annuity. This is, in essence, an investment portfolio where you decide how the portfolio is invested and how much you withdraw each month. You have greater investment and income flexibility and your beneficiaries inherit whatever is left of your funds after you pass away since your money has the potential to outlive you if invested correctly. But it is critical to speak to a financial adviser who can help you find the best option for you.

Retirement is a milestone and should be a time that you spend enjoying yourself rather than worrying about money. This is why it’s advisable to make sure that you are well prepared. Before you make any long-term financial decisions, you should familiarize yourself with the different options available to you through financial education as well as get advice from an expert. That could be the difference between a retirement where you need to watch every penny and one where you get to pursue your passions.

Contact us today to speak to one of our Financial Advisers for a free consultation. +27 14 594 2388