In South Africa, only about 6% of the working population will be in for a comfortable retirement. Unfortunately the rest of us will be at the mercy of family, friends or the pitiful pension paid out by the government.
Let’s face it… Unless a miracle happens, a lot of people are going to be left with far less money than they thought, after they get their golden handshake! You can avoid the trap by planning wisely and making the right decisions now using these six tips…
1. Plan your finances
Sound financial planning is a must as most of us are certainly in the dark when it comes to knowing just how much our money is going to be worth in 20 or 30 years’ time. So, approach a reputable financial advisor (preferably independent so as to offer you more choices). They will help you estimate how much money you are going to need to survive comfortably once you have retired. You can also get proactive and purchase specialised computer software that can quickly and easily forecast your retirement expenses. Such software include many financial tools and calculators such as retirement analysis, mortgage analysis, personal budgeting, investment and savings calculations, and future and residual value calculations.
2. Treat your house as your retirement fund
Forget your pension and take a look at your house. You’ve probably made a monthly contribution to your bond for 20 years, plus loads of little top-up payments (in the form of repairs and improvements) that have left you sitting on a pot of gold. Now, I know many people have a strong emotional attachment to their homes, especially if they’ve lived in the same house for years, but your home could be the key to starting an exciting new chapter in your life.
With the kids all moved out, most big homes are left unused by retired couples so consider selling up and moving to a smaller home, which can cut down on expenses quite remarkably… Saving you money month after month. Over a year, you will probably save a few hundred on building and content insurance, utility bills and garden maintenance, and this saving could amount to thousands by the time you retire!
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3. Don’t be fooled by the property hype!
Location, location… Look in cheaper areas for a good second-hand home instead of running north with the flock! For example, at the height of the recent property boom, it was considered ‘en vogue’ to buy a townhouse complex in the affluent northern suburb of Sandton, but because of their over-inflated prices these developments are now overpriced by approximately 30% as compared to the rest of the market! What is the point of sitting pretty in your new townhouse in Sandton if it is basically a white elephant that you will practically have to pay somebody to buy!
4. Your children need to grow up
Time to be firm…Stop subsidising your adult children! Unless your children are experiencing real difficulties or are going through a particularly bad patch, then you must stop thinking of them as dependents. And grandchildren can be an even greater ‘responsibility’… Building for their future, paying for university fees, helping with a deposit for a flat… The costs go on and on. It’s not that anyone’s taking advantage of you, it’s just how things have developed. If this is the situation you find yourself in, and you’re struggling, you need to sit down with your children and explain that if you don’t stop spending so much on them, they’ll wind up looking after you full time in a couple of years.
5. Check out discounts for seniors
Many hotels, restaurants, car hire firms, airlines and a whole host of other businesses offer good discounts to retirees. Most banks offer brilliant discounted rates to senior citizens of 55 and older and insurance companies also offer discounts. You can get up to 50% discount on bus trips. Furthermore, cinemas also offer pensioner discounts, as do certain theatres. Most major retail chains also offer pensioner discounts, but many businesses do not exactly do their best to promote these cheaper prices – so don’t be afraid to ask!
6. Turn your years of expertise into a decent second income
Yes, so you’ve retired, but that doesn’t mean you’re on the scrap heap! In fact, it can mean quite the opposite if you play your cards right. You have years and years of experience to offer, so consider becoming a consultant, where age is not important, but knowledge is! The first thing you MUST do is stay in touch with people at your old company. Find out what’s going on… What systems are changing, what products are being launched? Then when you see the chance, offer your services. It’s a great way to use your experience to make you ‘easy’ money and it helps keep you active and social.
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