The transition for most South Africans into their retirement life is not as easy as they anticipate with only 6% of retirees holding sufficient savings to retire comfortably, according to Old Mutual’s OnTrack™ Research.
Most importantly financial freedom has become a difficult to reach summit for most who face a very different reality. The primary reason for this is lack of savings early in their working career or withdrawal of savings during this time. This linked with higher than anticipated cost of living are the key challenges faced.
The typical South African employed person’s expectation for retirement is just that: an expectation that remains unmet. The stark reality is that many are not able to make ends meet during retirement, have not accurately depicted monthly costs – including medical costs, groceries, having dependents to still take care of – let alone having any money left over for travel plans or to pass on to their children.
Putting these Concerns About Retirement to Bed
The key to conquering worry is to firstly acknowledge it and the situation of current savings and investments, and then to come up with a realistic plan and strategy to deal with it.
If you are in a relationship or marriage, it is equally important to work together on these strategies so that there is consensus on a way forward and an understanding of what your joint focus and priorities must be in order to find a stable future.
The plan must be one that is fully understood and that there is full commitment to by both partners
Steps to Dealing with Financial Worries in Retirement
- Come to terms with the financial position that you find yourself in. There is no point in destroying yourself and confidence in facing the future due to past errors and mistakes. What has happened is history. Move on from stress to a mind-set of discovering a way forward.
- Keep whatever reserves you do have in safe investments.
- Avoid ‘get rich quick’ schemes, that are often scams that promise to make their owners rich. Keep your money in a safe fund that you know you can trust.
- Make sure if you are still working that you reduce your expenses as far as possible and save whatever surplus you have
- Look for alternate income and passive income opportunities or side gigs that can boost your income and potentially provide ongoing income going into retirement. Look for things that you enjoy and can see yourself doing longer term.
- Be sure you research these opportunities deeply and have conversations with those who are already engaged in these opportunities to make sure you understand the risks and opportunities properly.
- Don’t go for quick profits but rather look at longer term opportunities that might include:
- Online selling of good to niche markets
- Network selling opportunities
- If you have writing or design skills these may become good ways to derive ongoing income from
- Remote working opportunities, particularly if these are paid in dollars or Euro’s this can become a healthy income stream for your retirement
- Draw up a budget of the income you will need once you retire, in terms of your most likely scenario. Allow for the effects of inflation. Be realistic. There is no point in denying reality. It is not going to change.
- See what costs you can cut out of your budget by doing things such as:
- Growing your own food
- Looking at alternative power supply (might be an initial cost but with massive downstream savings such as solar energy or even a solar geyser that can cut out major electricity consumption. Gas stoves can also provide positive savings on electricity consumption that is set to become increasingly expensive.
- Walk to the shops instead of driving. This will not only save you petrol and maintenance costs but also improve your health.
Advice on Work Opportunities
If you have no concerns about retiring, then you are an exception. Many seniors keep working after they retire, usually in non-management roles.
Their contributions are often delivered over the internet, but this is not necessarily the case. Your decades of experience will be in demand, when you search for opportunities with an open mind.
There is always a path towards financial improvements but this may not be what you expected or hoped for. Perhaps the lifestyle you envisaged on at a beachside retirement village with plenty of available funds to splurge on travel is not on the cards, however there may well be a comfortable way to continue with a decent lifestyle if you are prepared to work at it.
Don’t Miss out on Part 1 and Part 3 Coming Soon
If you missed out on Part one – you can read it here: https://www.businesstechafrica.co.za/features/2024/12/30/retirement-planning-part-1/
Part-3 of Retirement Planning – looks at smart investment strategies for retirement