Plan For Your Future

Plan For Your Future

Your retirement is important. This newsletter outlines some financial rescue remedies and helps you formulate a financial plan.

Planning is a detailed map for accomplishing a defined purpose. Without a map, how will you know where you're going?

All too often retirement is seen as a long way off and not necessarily something we give much thought to. We are too busy living to even plan for the future.

Some of us may be making additional savings and others hope that our pensions will be enough.

Unless you have actually sat down and thought about what you will do when you retire, where you will live and whether you will have enough money, you have not yet planned. Not many people have a plan, and without a plan, you have nothing.

Of a hundred 50-year-olds now, when they are age 63:
38 will be forced to continue working
36 will be dependent on the government
17 will need family support
5 will be financially independent
4 will be comfortably well-off

Only 9 have PLANNED for their retirement.

The big question – will you have saved enough?

Most people do not save for their retirement for the full 43 years for a number of reasons:
  • They cannot find a job.
  • They skip from job to job and have long gaps between various jobs.
  • They leave work to have a baby or babies.
  • They take time off to travel.
  • They withdraw their pension savings to pay for debts, holidays, or to live on while looking for another job.

We can come up with a multitude of reasons for not saving for the full 43 years, but the main reason is CHOICE. We make choices and have to live by the consequences of those choices.

From the age of 20 you have the potential of working for 43 years until age 63. If you stay in employment and contribute to a pension fund for the 43 years, you will not need to read this newsletter!

Example:

Assuming you retire after 43 years, the Fund tries to ensure that your pension is 70% of your final salary:
  • Final salary R10 000 per month
  • First pension R7 000 per month

To earn a pension equal to your final salary at retirement, you will need to invest in a pension fund for 43 years without a break. You need to save 15 times your final annual salary for this retirement plan to work. Then you can expect your pension and your final salary to be about the same.

Being financially independent does not happen on its own – you have to make it happen. It is an active process and requires hard work, sacrifices and, most of all, knowing where you're going.