What is an Independent Financial Advisor?
August 1, 2014
Employee Benefits – a balancing act
October 10, 2014
Have you saved enough for retirement?
Only 30% of pensioners believe they have saved enough to last them through retirement, according to the 2013 Sanlam Benchmark Survey. This is a sobering statistic that highlights a trend of general neglect for accurate retirement planning. Before you exclude yourself from this group, remember that regardless of your income, an inaccurate retirement plan can still see you running out of money when you need it most in your old age.
When last have you reviewed your retirement plan?
If you have a retirement plan in place, you may have followed good advice and started saving early during your 20’s. You no doubt would have created this retirement plan with the best intentions, however as you move into your 30’s, 40’s and 50’s, your lifestyle and financial requirements will be vastly different to those of your 20’s.
There are a number of factors that you may not have taken into consideration that will impact the accuracy of your retirement plan.
These include, underestimating:
- The cost of maintaining the lifestyle you are accustomed to, prior to retirement
- The cost of medical expenses as you become increasingly frail
- Your lifespan (Especially with the life expectancy of South Africans on the rise, having just been increased by one year)
To give you an example, the Old Mutual Retirement Monitor survey of 2011 found that 43% of worker’s who were interviewed, believed that they would only live for 10 years after they retired. However the mortality statistics paint a very different picture and show that more than 50% of men who survive to 65 years will live past 80 years old, while more than 50% of woman who survive to 65 years will live past 85 years old.
The consequences of underestimating your lifespan would be disastrous. Imagine depleting your retirement savings with more than 10 years of your life left!
These are realities and drive home the importance of keeping close tabs on your retirement plan.
How much do I need to retire?
You are unique and so is the lifestyle you lead. Therefore the amount you would need to have saved for retirement is highly dependent on areas like the cost of maintaining your lifestyle, plans you have for retirement, health considerations, etc.
As a rule of thumb and to check if you are on track to retire comfortably, you should save:
2 x your annual salary after 10 years of work
4 x your annual salary after 20 years of work
7 x your annual salary after 30 years of work
12 x your annual salary after 40 years of work
At GFB, your retirement plan forms part of your personal financial management plan and is reviewed at least annually, ensuring an accurate retirement plan that will protect your current lifestyle throughout retirement and factor in unknowns like medical expenses. We therefore advise our clients to work through a full retirement needs analysis with us.
We, at Ginsberg Financial Brokerage (GFB) believe in attention to detail and taking the time to truly understand your needs, which is why we only take on a limited number of clients. If you are interested in finding out more about how we can help you, contact Ivan on 021 434 8065.