How to Shrink Your Debt

Member Newsletter

Quarter 2 • 2022

An important step in planning for your retirement is to be debt free. When you retire, you want to ensure that you maintain your standard of living – but if you have debts to repay, it will decrease the amount of money that you have to spend. For the sake of your future, you need to take action today to eliminate your debt. Here we have some great tips on how to shrink your debt.

The Woolworths Group Retirement Fund uses asset management firms to invest your retirement savings according to the Fund’s investment strategy. In this newsletter we describe how your savings are invested. The investment of your retirement savings is long term. Remember, stay invested.

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How to shrink your Debt

One of the most important steps in preparing yourself for retirement is to have no debt.
HERE we include some great tips on how to shrink your DEBT.

You need to eliminate your debt before you retire. You do not want to be using your pension to repay your debts.

Depending on the size of your debt, there are various routes you can take to shrink your debt. It goes without saying that while doing this, you should not acquire any new debt!

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If you die while working for Woolworths, the death benefits that are payable to your beneficiaries are investigated and distributed by the Trustees. This is governed by section 37c of the Pension Funds Act.

Fund benefits do not form part of your estate and are therefore not distributed according to your Will.

Compound interest working against you

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To understand the true cost of debt, you have to understand the concept of compound interest. Compound interest is the interest that is added to the interest on your debt. The longer you take to pay off debt, the more interest you pay. The interest you pay on your debt is higher than the interest you can earn on any investments or savings.

To prepare for your retirement, it is important to get out of debt as soon as possible so that you can save more.

You must be debt free by the time you retire.

Make better choices

When you retire, your quality of life will depend on the choices you make today. If you make poor choices now, it is easy to end up in debt. You then end up paying back your debt and the interest, rather than saving for your retirement.

You may find that you sometimes struggle to make your money stretch through the month and need more money before your next pay day. If this is the case, do not take out a loan to cover your financial obligations because you will only get yourself deeper into debt. Rather make better choices. Draw up a budget and see where you can spend less every month.

Reduce all your debt and avoid using credit cards, retail accounts, loans and so on. Try to stay debt free.

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